First Plaintiff v First Defendant

2 The subject matter of the plaintiffs' summons is an affidavit sworn by Leonie Cappelleri on 9 November 2020 (Leonie's affidavit). The plaintiffs submitted that, given that Leonie had become incapacitated, it was appropriate for the Court to make orders pursuant to r 40.03(1)(b) and r 40.03(3) of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules) that Leonie's evidence at trial be given by her affidavit dated 9 November 2020 and that her attendance at Court be dispensed with. It is anticipated that the proceeding will shortly be fixed for trial.[3]

3 The plaintiffs' application was opposed by the defendants who are Frank's brothers, Domenico Cappelleri and Mario Cappelleri, and a company, F&L Pty Ltd.

4 The background to this proceeding, the nature of the parties' claims and aspects of the procedural history were summarised by McMillan J in her Honour's reasons for judgment in appointing Vincenzo as Leonie's litigation guardian:[4]

A summary of the disputes as at 2020 is set out by Derham AsJ in Cappelleri v Cappelleri.[5] His Honour described the proceeding as concerning the ownership of a number of properties and control of F&L and how the ownership of these assets effects the deceased's estate. Domenico and Mario assert that F&L was always controlled by the deceased and, after the deceased separated from Leonie, the deceased changed the shareholdings and directorship in F&L into the name of Domenico. They pleaded that Domenico holds the shares on trust for Mario and the estate of Anna Rosa Cappelleri.

Since then, Domenico and Mario filed a counterclaim on 19 June 2020 against Leonie, in her personal capacity and in her capacity as the executor of the deceased's estate, Vincenzo, the Australian Securities and Investment Commission ('ASIC'), the Registrar of Titles and F&L. Vincenzo and Leonie filed their defence to counterclaim on 3 July 2020.

The trial of the proceeding was listed to commence on 8 June 2021. Leading up to the trial date, Leonie's solicitors and medical practitioners had monitored her cognitive ability. She had previously been assessed as having cognitive ability but closer to the trial, her solicitor noticed a deterioration in her capacity. Subject to Leonie having cognitive ability, the trial was ready to proceed.

On 2 June 2021 the Deputy Chief Health Officer issued a stay at home direction under the Covid-19 pandemic restrictions. The effect of the direction was that no one could visit Leonie at the nursing home where she resides and the nursing home did not have the resources to assist her for the trial. Leonie's medical practitioners and solicitors were also unable to assess her cognitive ability. As a result, the trial was adjourned.

Subsequently, on 23 June 2021 Leonie was assessed by her medical practitioner as having dementia. It was concluded that she has the cognitive capacity of a five year old child, is not capable of giving evidence at the trial and has limited capacity to provide instructions to her solicitors.

Initially Leonie's prognosis was not accepted by Domenico and Mario. As at the date of the hearing of this application, they accepted her prognosis of incapacity.

5 Further to the above matters, it is also to be noted that Frank left a will dated 19 May 2003 in relation to which Leonie was granted probate on 18 December 2014. After Vincenzo was appointed as Leonie's litigation guardian, on 22 December 2021, and as later varied by orders made on 26 January 2022, Leonie was discharged as executor of Frank's estate and Vincenzo was appointed as administrator with the will dated 19 May 2003 annexed in her place. On 6 April 2022, the Court made orders pursuant to r 9.06(c) of the Rules that Leonie be substituted for Vincenzo in his representative capacity as administrator with the will annexed of Frank's estate.

6 To a significant extent, the defendants' objections to the Court receiving Leonie's affidavit as evidence at trial turn upon a consideration of the assessments made about Leonie's capacity and when those assessments were made relative to the swearing of her affidavit on 9 November 2020. The material before me establishes that various assessments were made about Leonie's capacity in 2020 and 2021.

7 On 15 May 2020, Dr Tan, an Aged Care Registrar at the Royal Park Campus of the Royal Melbourne Hospital provided a letter to the plaintiffs' solicitor which indicated that Leonie had been admitted to hospital on 8 May 2020 and had been an inpatient at Royal Park since 11 May 2020. Dr Tan, Leonie's treating doctor, recorded that she had been asked to provide information about Leonie's current medical condition and whether she had capacity to provide instructions with regard to her legal proceedings. Dr Tan assessed Leonie's capacity as follows:

During her time so far in hospital, Leonie has demonstrated reasonable cognition albeit with slow thought processing, which may be due to her superimposed mood disorder. As such, I do not believe that there is enough evidence to state that she does not have capacity - ergo, I believe that she does currently have capacity to make decisions with regards to her legal proceedings.

8 On 27 August 2020, Sue Packer, a neuropsychologist with North Western Mental Health, provided a report in relation to Leonie based upon an assessment undertaken on 20 August 2020. Leonie had been referred for assessment about the possible presence of a neurodegenerative disorder. In her report, Ms Packer noted that Leonie had been recently admitted to Broadmeadows Aged Persons' Mental Health Unit (BAPMHU) 'for treatment of psychotic symptoms that have largely settled since she had an unconscious collapse on 4/08/2020 following an ECG'. She provided the following opinion:

Leonie is a 69 year old woman currently readmitted to BAPMHU for treatment of psychotic symptoms following medical admissions. There is a possibility that the onset of psychosis was secondary a delirium on the background of a reported five year history of functional decline. Her first admission to BAPMHU led to an admission to TNH following a collapse with LOC. This was believed to have been a pseudoseizure, and she was reported as having catatonic-like events during her admission to RMH in June. Her psychotic symptoms have subsequently resolved, however she exhibits ongoing cognitive and functional impairments.

Overall the present findings suggested slow processing speed, attentional fluctuations, moderate to severe executive dysfunction, mild to moderate visuospatial difficulty and mild naming difficulties. New verbal learning was severely impaired and although she retained a small amount of information over time, recognition was impaired and there was evidence of rapid forgetting.

These results are suggestive of a neurodegenerative process. While FTD is possible, the reported five year history of functional decline and Leonie's concern about her son are considered to argue against this. The current profile is more consistent with AD, possibly a frontal variant as her executive function difficulties are quite marked, although her nygromas may have contributed to the frontal atrophy on recent imaging.

A mixed neurodegenerative process is also possible and may include AD together with some vascular and/or Lewy Body pathology. Her recent collapse and periods of fixed staring have raised the question of pseudoseizures and dissociative episodes, however these types of phenomena are also often seen in LBD and resonate with impression of attentional fluctuations.

9 On 15 October 2020, while Leonie was an inpatient at BAPMHU, her solicitor discussed Leonie's capacity with Dr Thomas Rego, a consulting psychiatrist and Leonie's treating physician. Dr Rego sent an email to Leonie's solicitor in which he stated:

I can confirm that based on my reviews today 15/10/20, 6/10/20 and 30/9/20, Miss Leonie Tenace (DOB 20/8/1951) has capacity to provide instructions to her solicitor and to sign documents accordingly.

10 In support of the application for an appointment of a litigation guardian for Leonie, the plaintiffs relied on a report by Dr Nadja Berberovic, a senior clinical neuropsychologist, about whether she had capacity to instruct solicitors in legal proceedings and whether she has capacity to give evidence in legal proceedings. In their correspondence with Dr Berberovic on 15 June 2021, the plaintiffs' solicitors stated that 'recently we have become aware that Leonie is potentially in the early stages of dementia, and we are concerned as to whether she has capacity to give instructions and participate in legal proceedings'. Dr Berberovic subsequently undertook a comprehensive neuropsychological assessment of Leonie from which she concluded, in a report dated 6 July 2021, that Leonie was not capable of giving evidence in legal proceedings and had limited capacity to provide her lawyers with instructions relating to the current legal proceedings.

Defendants' opposition to plaintiffs' application

11 The defendants advanced four reasons why the plaintiffs' application should be dismissed.

Reason 1: Failure to provide all relevant medical reports

12 The first reason advanced by the defendants in opposition to the plaintiffs' application was that the plaintiffs had not placed all relevant medical reports concerning Leonie before the Court.

13 This objection is without merit. The plaintiffs' application proceeds from the basis that Leonie presently lacks the capacity to be involved in the trial of the proceeding. The material directly relevant to that proposition is Dr Berberovic's report dated 6 July 2021 which was previously filed with the Court. In the face of the plaintiffs' application, the defendants have put in issue the question of Leonie's capacity at an earlier time, being when she swore her affidavit on 9 November 2020. In doing so, the relevant material, which I have summarised above and which I discuss further below, has been placed before the Court.

Reason 2: 'If Leonie has "lost capacity" it remains unclear whether she was competent to make her affidavit of 9 November 2020'

14 The expression of this reason for objection reveals in its terms a fundamental misconception which underlies the defendants' opposition to the plaintiffs' application: the claim wrongly assumes and implies that the plaintiffs carried an onus to affirmatively prove that Leonie had legal capacity when she made her affidavit. As stated by Bell J in Goddard Elliott v Fritsch:[6]

... 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.

15 In his submissions to the Court, counsel for the plaintiffs acknowledged that Leonie's capacity to instruct her solicitors and to exercise her legal rights was an issue from when her current solicitors commenced their retainer in May 2020. In addition to the matters referred to in [7]- [10], the material before me indicates that Leonie was suffering serious mental health issues in the first few months of 2020. The matters to which I have referred in [7]- [10] support the plaintiffs' submission that, since their retainer commenced, Leonie's solicitors have actively monitored Leonie's medical condition relevant to her capacity.

16 I accept that the contents of Ms Packer's report dated 27 August 2020, viewed in isolation, raises a doubt about whether or not Leonie had legal capacity at that time. However, the report expressly states that it was an assessment conducted for 'clinical and VCAT purposes' and was not intended for use in other medico-legal proceedings. More importantly, two months later, Dr Rego, a psychiatrist, confirmed to the plaintiffs' solicitors that, based on three reviews undertaken in the previous two weeks, Leonie had capacity to provide instructions and to sign documents accordingly. This assessment is closest in time to when Leonie made her affidavit on 9 November 2020.

17 In Goddard Elliott v Fritsch, Bell J observed that 'the standard of capacity which is required for a person to participate in legal proceedings is the same standard of capacity which is required for a person to enter into legal transactions'.[7] His Honour referred to the statement by Dixon CJ, Kitto and Taylor JJ in Gibbons v Wright that:[8]

The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation.

Bell J observed that the understanding which is required 'is contextual and relates to the nature of what the person is doing'.[9]

18 I have had regard to these principles in considering the present application. It is true that Leonie's affidavit is a substantial document which deals with a chronology of events over may years. The affidavit extends over 21 pages and is accompanied by 78 exhibits comprising 442 pages. However, the following aspects relevant to its preparation are also of importance. The plaintiffs' solicitor deposed that on 16 July 2020 a draft witness statement 23 pages in length - which I infer was a draft of what ultimately became Leonie's affidavit - had been prepared for Leonie, based on preliminary instructions received by telephone from her and Vincenzo. The solicitor also deposed that she liaised with Leonie to draft the affidavit between 19 October 2020 and 6 November 2020 and that on 9 November 2020 she visited Leonie personally at an aged care facility. The solicitor stated that, having reviewed her affidavit together, 'Leonie confirmed it was all correct save for an error she identified at paragraph 6. This error was corrected by hand'. The solicitor then witnessed Leonie swear the affidavit.

19 Critically, the defendants have failed to produce any evidence that Leonie lacked capacity when she made her affidavit on 9 November 2020. Save for Ms Packer's report, the evidence and, in particular, the opinion expressed by Dr Rego, is to the opposite effect. This includes the evidence about the preparation of the affidavit referred to in the previous paragraph. In that regard, noting that it is the primary responsibility of a lawyer to be satisfied that their client has the mental capacity to instruct,[10] there is no basis in the material before me to suggest that the plaintiffs' solicitors have failed their responsibility in this regard in relation to the preparation of Leonie's affidavit. To the contrary, the matters to which I have referred indicates that they have been concerned to ascertain Leonie's capacity at different times in circumstances where she self-evidently was suffering from complex mental health conditions. There is no basis to the defendants' submission that the plaintiffs' solicitors were in some way required to explain why they sought the opinions of Dr Tan and Dr Rego; it is the content of those opinions which matters. Neither is there any substance to the complaint that that the plaintiffs' solicitors were required to provide the opinions of Dr Tan and Dr Rego to Dr Berberovic for the purposes of making her assessment.

20 In support of their case, the defendants relied upon the judgment of Anderson J in Re O'Neil deceased.[11] In that case, Anderson J determined not to act upon an affidavit made by a deceased who was not available for cross-examination. This was because the affidavit contained 'significant contradictions'.[12] His Honour continued:[13]

In principle, there seems to be no difference between the non-availability of the deponent for cross-examination due to wilful absence and non-availability due to death or illness. It will depend on the particular circumstances including the nature of the proceedings whether such an affidavit will be rejected or if admitted the weight to be given to it. It appears, however, that the admission of an affidavit which cannot be tested by cross-examination is a matter of determination by the court.

21 While this principle may be accepted, ultimately, as his Honour stated, its application must depend upon the circumstances of the case. In this matter, unlike in Re O'Neil, the defendants acknowledge that there were no inconsistencies within Leonie's affidavit itself. Instead they point to alleged inconsistencies with other affidavits said to have been made by Leonie and claims for and receipt of Centrelink payments. The nature and extent of any such inconsistencies are matters which may bear upon the weight which the Court may ultimately give to Leonie's affidavit, rather than its admissibility. While there may be cases where, on the face of an affidavit, the Court has no confidence in acting upon its contents where its maker is unavailable for cross-examination and as a result the Court may exercise its discretion not to receive such an affidavit into evidence, I otherwise generally agree with the following observations by Young J in Curley v Duff that:[14]

... There is no reason in policy why an affidavit, which was taken before a Justice of the Peace or a solicitor and is in proper form and deals with admissible and relevant material, should not be received by the court and indeed, in the interest of justice it should be because otherwise the court is faced with almost the farce of saying that there is no evidence on a matter when evidence in proper form could be put before it. If, of course, a party says that he would have liked to cross-examine the deponent, but cannot do so because she is dead, that is a matter that will be taken into consideration in the weight that the evidence will have, but I do not see why it is inadmissible. ...

Reason 3: If Leonie was competent to make her affidavit of 9 November 2020, the Court should not exercise its discretion to admit that affidavit because its creation was highly irregular, anticipatory and constituted an abuse of process

22 The foundation of this objection to the Court receiving Leonie's affidavit into evidence at trial was the terms of the procedural orders made by Keith JR on 19 October 2020 which relevantly included the following in relation to witness statements:

1. Subject to any order of the Judge, evidence in the trial be by witness statement.
2. By 4.00 pm on 6 November 2020 the Plaintiffs file and serve any witness statements on which they intend to rely at trial.
3. By 4.00 pm on 3 December 2020 the Defendants file and serve any witness statements on which they intend to rely at trial.
4. Each party have available for use by the Judge a copy of all its witness statements in paper form and in electronic form.

5. Each witness statement satisfy the following formal requirements:

a. it should be set out in numbered paragraphs;

1. as far as possible, it should be expressed in the witness's own words;

2. it should contain evidence only in admissible form. For example, hearsay should be avoided;

3. where the witness statement contains conversations these should, if the witness's recollection permits, be expressed in direct speech. If this is not possible, this fact should be stated and the witness's best recollection or the substance of the conversation may be set out;

4. it should contain at the end of the statement the following verification:

I verify that I have read the contents of this my witness statement and the documents referred to in it and that I am satisfied that this is the evidence in chief which I wish to give at the trial of the proceeding.

1. Where the statement of the witness, if admitted in evidence, proves a document, a copy of the document may be annexed to the witness statement or the document may be identified and tendered separately whether in the Court Book or otherwise.

23 The defendants submitted that the 'clearest inference' the Court could draw 'from the circumstances' was that the preparation of a statement 'in affidavit form' occurred to ensure that the affidavit could be available should Leonie's condition deteriorate. They submitted that it was open to the plaintiffs to apply for Leonie to be examined pursuant to O 41 of the Rules, but that they 'chose not to take this course which would have exposed Leonie to cross-examination'; if the plaintiffs' solicitors had sought such an examination, the defendants would have had an opportunity to cross-examine Leonie, which opportunity is now denied to them. They further submitted that the weight to be given to the absence of any application under r 41.01 of the Rules 'turns on whether the solicitors for Leonie had concerns as to her ability to give evidence at trial' at the time Leonie swore her affidavit. They submitted that it was clear from the sequence of events and previous affidavits sworn by the plaintiffs' solicitors that the plaintiffs' solicitor had some concerns about Leonie's capacity.

24 In the absence of any explanation being provided as to why the plaintiffs' solicitors decided to obtain an affidavit, instead of a statement, from Leonie, the defendants submitted that 'the only plausible reason for that decision is that the plaintiffs and Leonie's legal advisers anticipated, and desired to avoid, the potential incapacity of Leonie to give evidence at the trial'. Having obtained an affidavit from Leonie, the plaintiffs' solicitors failed by not taking any step to formalise her evidence under r 41.01. In those circumstances, the plaintiffs should not 'profit' from their failure to take appropriate steps to make Leonie's affidavit admissible under r 40.07. The defendants identified a number of specific matters referred to in Leonie's affidavit about which they would have cross-examined Leonie if an application under r 41.01 had been made.

25 This objection rests upon alleged serious failings by the plaintiffs' solicitors in the preparation of Leonie's affidavit. Those claims are without foundation.

26 The defendants' complaints proceed from the false premise that the filing of Leonie's affidavit could not satisfy the requirements imposed by the orders of the Court made on 19 October 2020 in relation to witness statements. Paragraph 5 of those orders set out above prescribes the formal requirements to be satisfied by a witness statement. Other than whether particular evidence is not in admissible form - which can be dealt with a trial in the usual way - it is apparent that, except for the fact that it is sworn as an affidavit, Leonie's affidavit satisfies all these formal requirements. The fact that Leonie's affidavit is a sworn document is not contrary to any of the requirements prescribed by the orders made on 19 October 2020. Neither is it otherwise contrary to any rule of Court or Practice Note: the Rules do not regulate the formal content of witness statements and there is no Practice Note with current application to the Common Law Division which relates to witness statements.[15] By filing Leonie's affidavit, the plaintiffs satisfied the obligations imposed by orders made on 19 October 2020.

27 The defendants' complaint proceeds from the further misconception that the plaintiffs were under some duty or responsibility to have Leonie examined under O 41 of the Rules. No such obligation emerges from the terms of O 41. Further, as was submitted on behalf of the plaintiffs, at the time Leonie's affidavit was sworn the proceeding had not been fixed for trial.

28 There is no basis to the defendants' claim that the preparation of Leonie's affidavit was highly irregular and that it constituted an abuse of process. I accordingly reject the third reason advanced by the defendants as to why Leonie's affidavit should not be received into evidence.

Reason 4: The plaintiffs would suffer 'substantial and incurable prejudice' if Leonie's affidavit is admitted into evidence at trial without her being available for cross-examination

29 The defendants submitted that they wished to cross-examine Leonie and establish what they claim to be the falsity of many of the claims made by her in her affidavit. They also identified claimed inconsistencies between parts of Leonie's affidavit and previous affidavits made by her. They submit that, because they sought to establish the falsity of many of the claims made in Leonie's affidavit, her unavailability for cross-examination meant they would suffer 'incurable prejudice'. They also argue that certain information held in the files of the Family Court relating to Leonie and Frank as well as a decision of the Commonwealth Social Security Appeals Tribunal were matters which cannot properly be explored without cross-examination.

30 I accept that the receipt into evidence of Leonie's affidavit will likely be, at least to some extent, prejudicial to the defendants' case at trial. The defendants will be unable to cross-examine Leonie about the contents of her affidavit and it would appear likely that there are at least some factual matters about which the defendants would have otherwise sought to cross-examine her. Such a state of affairs does not uncommonly arise where there are factual disputes and a witness is unavailable for cross-examination.

31 However, it is another thing to assert that the prejudice to which the defendants may be subject as the result of the receipt of Leonie's affidavit into evidence is in some way 'incurable'. That submission must be rejected as it conflates the issue of admissibility with the issue of weight. It is trite that the admission of any material into evidence does not thereby determine the weight to be given to it. Theoretically, and without making any observation about is actual contents, it is possible that, if Leonie's affidavit is admitted into evidence, all or parts of it may be given little or no weight. An important matter which may bear upon the weight to be given to the contents of Leonie's affidavit is the extent to which it is inconsistent with other documents or previous statements made by Leonie. In that regard, the defendants will have every opportunity to seek to tender into evidence documents which they submit contradict the content of Leonie's affidavit.

32 I accordingly reject the submission that the defendants will suffer incurable prejudice if Leonie's affidavit is admitted into evidence.

33 For the foregoing reasons, the Court will order pursuant to rr 40.03(1)(b) and 40.03(3) of the Rules that Leonie's evidence at the trial of this proceeding be given by her affidavit sworn on 9 November 2020 and that her attendance be dispensed with.

34 I will hear the parties on costs at the directions hearing listed for 13 October 2022.

[1] In the interests of clarity and without intending any disrespect, in this ruling I generally refer to the parties by their first names.

[3] The trial was initially fixed for trial on 8 June 2021 but was adjourned for the reasons generally outlined in [4].

[4] Cappelleri v Cappelleri (No 2) [2021] VSC 535, [2]-[7].

[5] Cappelleri v Cappelleri [2020] VSC 306 (Derham AsJ).

[6] [2012] VSC 87, [546], omitting citations.

[8] [1954] HCA 17; (1954) 91 CLR 423, 437.

[9] Goddard Elliott v Fritsch (n 6), [555].

[10] Goddard Elliott v Fritsch (n 6), [568].

[11] [1972] VicRp 35; [1972] VR 327.

[14] (1985) 2 NSWLR 716, 718.

[15] Although Practice Note SC CC 1 includes provisions relating to witness statements, its application is limited to the Commercial Court. Practice Note No 3 of 1995, which dealt with matters including witness statements in Common Law Division cases, has been revoked: see para 6.1 of Practice Note SC Gen 1.