Glenda Phillips v James Phillips; John Matthew Phillips by his Tutor NSW Trustee & Guardian v James Phillips

Legal Principles

1. I set out the legal principles applicable to an amendment application in my judgment in Macquarie International Healthy Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd [2013] NSWSC 764: "48 The parties, correctly, agreed that I had power to permit Macquarie's amendment under s 64 of the Civil Procedure Act 2005 (NSW) ("the CP Act"), which provides: (1) At any stage of proceedings, the court may order: (a) that any document in the proceedings be amended, or (b) that leave be granted to a party to amend any document in the proceedings. (2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. … 49 Section 58 of the CP Act provides: (1) In deciding: (a) whether to make any order or direction for the management of proceedings, including: (i) any order for the amendment of a document, and … (b) the terms in which any such order or direction is to be made, the court must seek to act in accordance with the dictates of justice. (2) For the purpose of determining what are the dictates of justice in a particular case, the court: (a) must have regard to the provisions of sections 56 and 57, and (b) may have regard to the following matters to the extent to which it considers them relevant: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, … (v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case. 50 Pausing there, I therefore proceed on the basis that the prima facie mandatory requirement for all necessary amendments to be made under s 64(2) is to be exercised subject to the requirements of s 58. In doing so it is mandatory for the Court to have regard to the provisions of ss 56 and 57 of the CP Act and permissible for the Court to have regard to the matters listed in s 58(2)(b). I have reproduced above those permissive matters listed in s 58(2)(b) which I consider to be relevant to the present application and which I have in fact taken into account. 51 Section 56 requires the Court, in an application of this kind, to give effect to the overriding purpose of the CP Act, which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 52 Section 57(1) of the CP Act requires the overriding purpose to be effected having regard to the following objects: (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. 53 The enactment of the CP Act has meant that the case law developed before that legislation relating to matters such as amendment of pleadings is no longer directly relevant. Nevertheless, that case law can provide a useful guide, particularly as to discretionary considerations of the kind which fall within s 58(2)(b)(vii) of the CP Act. 54 In the course of argument before me there was discussion as to the applicability, by analogy, of cases dealing with, for example, applications for leave to reopen proceedings following the delivery of judgment (e.g., Smith v NSW Bar Association (1992) 176 CLR 256 at 266-267) or where, on appeal, matters not raised below are sought to be relied upon for the first time (e.g., Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438). However, while cases of that kind may point to discretionary considerations which could be relevant to the present case, I do not propose to seek to apply such cases by analogy. I respectfully agree with the observation of the Court of Appeal in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178 ("Walker Corporation") (upholding a decision of Biscoe J in the Land and Environment Court refusing a party leave to amend its points of claim after the matter had been remitted to his Honour from the Court of Appeal) where at [92] Basten JA (with whom Beazley and Young JJA agreed) said: … The danger of relying upon analogy is that it will distract attention from the specific circumstances of the particular case. Appropriate guidelines promote uniformity of approach and are desirable; guidelines adopted by analogy may be helpful in some situations, but not in others.
2. In a further decision in that litigation I also said (Macquarie International Healthy Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd [No 6] [2014] NSWSC 1549): "38 Since I delivered the First Amendment Judgment the Court of Appeal has considered the proper approach to an amendment application under s 64 of the Act in Kelly v Mina [2014] NSWCA 9 ("Kelly") per Barrett JA, with whom Ward and Leeming JJA agreed: "44. The appellant says that the judge's decision to refuse leave to amend affected the result of the trial in a fundamentally adverse way entailing miscarriage of justice that requires correction of the interlocutory decision: Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478 at [4] - [8]. 45. The amendment application was governed by s 64 of the Civil Procedure Act 2005 which, in subsection (1), provides that, at any stage of proceedings, the court may order that any document in the proceedings be amended, or that leave be granted to a party to amend any document in the proceedings. Section 64(2) then provides: "Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. 46. The judge's decision was obviously discretionary, so that appellate intervention will be warranted only upon the principles stated in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505. The fact that the decision was a decision on a matter of practice and procedure means that this Court should be slow to interfere and ought not to reverse the judge's decision unless convinced that it is plainly erroneous: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170. As Bryson JA said in State of New South Wales v Mulcahy [2006] NSWCA 303 at [3], "such appeals are, appropriately, kept on a tight rein". 47. Particularly in light of the opening words of s 64(2), it is not controversial that the provisions in Part 6 Division 1 of the Civil Procedure Act were binding on the primary judge and that, in accordance with s 58, his Honour was bound to seek to act in accordance with the dictates of justice and, in so doing, to have regard to s 56 concerning the "overriding purpose" of the Act and rules of court in their application to civil proceedings; also that, in addressing the amendment application in the particular statutory context, his Honour was required to take into account a combination of factors identified by the High Court in Aon Risk Services Pty Ltd v Australian National University [2009] HCA 29: (2009) 239 CLR 175 and usefully summarised by Vickery J in Namberry Craft Pty Ltd v Watson [2011] VSC 136 (at [38]) as follows: … (a) Whether there will be substantial delay caused by the amendment; (b) The extent of wasted costs that will be incurred; (c) Whether there is an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed upon corporations, which cannot be adequately compensated for, whatever costs may be awarded; (d) Concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the court is a publicly funded resource, and whether the grant of the amendment will result in inefficiencies arising from the vacation or adjournment of trials; (e) Whether the grant of the amendment will lessen public confidence in the judicial system; and (f) Whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought." 48. As this Court has emphasised more than once, Part 6 Division 1 of the Civil Procedure Act made substantive and important changes to the law so that considerations of promptness and efficiency in the conduct of civil litigation are afforded a new and special importance which may sometimes provoke a sense of injustice in a party who has failed to proceed with despatch: see, for example, Dennis v Australian Broadcasting Corporation [2008] NSWCA 37; Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243 at [160]- [161]; Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230; Halpin v Lumley General Insurance Ltd [2009] NSWCA 372; Bi v Mourad [2010] NSWCA 17; Richards v Cornford (No 3) [2010] NSWCA 134. 39 The decision in Kelly confirms that in adjudicating upon Macquarie's application the Court is exercising a statutory power informed by the factors which the Court of Appeal found to have been summarised in the decision of Vickery J to which their Honours referred. I set out my understanding of the statutory regime in paragraphs [38] to [55] of the First Amendment Judgment. Nothing in Kelly suggests my understanding is in error and I will proceed so to apply s 64 of the Act and the related provisions. I will also take into account the factors identified by Vickery J. In doing so it will be apparent that, in large part, those factors overlap or raise the same subject matter as the relevant provisions of the Act. A summary of the decisive matters which I have taken into account unencumbered by cross-referencing to the various statutory provisions is set out in paragraphs [7] to [9] above."

James' evidence

1. James was cross-examined on the voir dire by Mr Cheshire on the affidavit which James had filed in support of his amendment application. It was not in contest that the matters which now had led to a real constraint on James' earning capacity had only come to a head in late December 2016. James saw his solicitor on 30 January 2017 and conceded to Mr Cheshire that they had discussed the possibility of James bringing a claim for provision at that meeting. It was, James said, "strongly being considered" and he accepted that, at the end of the meeting, it was "likely" to be done.
2. Turning to when James' cross-claim had originally been filed on 17 November 2015 (seeking only declarations that Bill had capacity at the relevant times), James accepted that he "hadn't ruled it out" that he would bring a claim for provision. However, he denied that his desire to represent the estate was a factor, at that time, as to why he did not bring a claim.

The parties' submissions

1. Citing Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, Mr Cheshire initially submitted that the lateness of the amendment and the potential prejudice to his clients required James to provide an explanation for the delay. The explanation offered by Mr Morrissey, and supported by affidavit, was the recent downturn in James' financial circumstances.
2. Mr Cheshire next submitted that James could not continue to represent Bill's estate if he was himself making a claim against the estate. Mr Morrissey responded that the plaintiffs could sufficiently act as contradictors to the claim or, alternatively, the Court could grant administration to a third party for the purpose of dealing with the application: see s 91 of the Succession Act 2009 (NSW).
3. In addition, Mr Cheshire identified three sources of alleged prejudice.
4. First, by failing to make his claim for family provision earlier, James had ensured his continued position as executor of Bill's estate. This course allegedly undermined settlement negotiations, by depriving the estate of any disinterested third-party representation, and benefited James, by empowering him to pay his legal bills from the estate and mortgage property to pay for legacies.
5. Mr Cheshire submitted that such prejudice was relevant in the exercise of the Court's discretion, even though s 58(2)(b)(vi) of the Civil Procedure Act 2005 (NSW), only directed attention to injustice suffered "as a consequence of" the order for amendment. In particular, he noted that it was not mandatory for the considerations in s 58(2)(b) to be taken into account.
6. Secondly, it was submitted that the family provision claim proposed by the amendment could reduce the plaintiffs' potential entitlements out of the estate.
7. Thirdly, Mr Cheshire submitted that he had made a forensic decision not to scrutinise James' financial circumstances because of the absence of any family provision claim by James. As a result, the amendment would require him to redirect resources to this issue during the hearing, including by preparing a cross-examination and seeking a schedule of income and expenditure. Also, subpoenas and notices to produce that might have been issued had not been pursued. Mr Morrissey responded that matters relevant to James' proposed claim were already put in issue by his status as a competing claimant in the plaintiffs' family provision claims: see ss 60(2)(b), 60(2)(d) and 60(2)(f) of the Succession Act 2006 (NSW),. However, Mr Cheshire submitted that parties might reasonably devote fewer resources to dealing with a competing claim as opposed to a positive claim for additional provision.

Consideration

1. Three preliminary matters need to be noted.
2. First, I had been informed during the openings that the parties' respective positions in relation to their applications for additional provision were to some extent dependent upon whether the Court upheld the 2008 Will, the 2006 Will or neither so that there was an intestacy. John pressed for provision irrespective of the outcome. James' proposed application would only continue if the Court found there was an intestacy. Mr Cheshire indicated that, depending on the outcome, at least one or possibly two of his clients may not press their applications for provision. Therefore, the Court's determination in relation to Bill's testamentary capacity was likely to have a real impact upon which claims for provision would be pressed.
3. The second matter, and arising from the first, was that I did raise with the parties at the start of the hearing whether they saw any advantage in the Court determining testamentary capacity as a separate, preliminary question. At that point I said that I would only do so if all the parties consented. The idea went no further because Mr Cheshire informed me that his clients did not consent.
4. The third preliminary matter was that if James' amendment was allowed, it would mean that his application for a family provision order was being commenced later than 12 months after Bill's death. In those circumstances, the first question which the Court would have to consider would be the issue of leave to bring the application out of time under s 58(2) of the Succession Act 2006 (NSW).
5. This raised an anterior question for the purposes of the amendment application, namely whether there was an arguable case for leave to bring the application out of time. If the leave application was hopeless, then there would be no point in granting the amendment application.
6. James filed an affidavit in which he explained why he was bringing the application so late. For present purposes it is not necessary to set out the reasons in any detail, other than to note his evidence that his capacity to earn an income as an osteopath had been significantly reduced as a result of events which had occurred in late December 2015. That circumstance had given rise to the need upon which he would rely for the purposes of his provision application.
7. Without deciding the application for leave, I was satisfied that his affidavit disclosed an arguable case that leave should be granted. For that reason I proceeded to consider the merits of his amendment application.
8. In my view, James' application fell within s 64(2) of the Civil Procedure Act 2005 (NSW) (the "CP Act"), insofar as it was a "necessary amendment" to be "made for the purpose of determining the real questions raised by … the proceedings, … and avoiding multiplicity of proceedings". The issue of adequate provision for other family members was squarely before the Court. Furthermore, there could be a multiplicity of proceedings because, quite apart from amending his cross-claim, there was nothing to stop James filing a fresh summons for provision.
9. On that analysis, subject to s 58 of the CP Act, this was an amendment that had to be allowed. In the circumstances of this case the key factors which then had to be considered were the questions of delay, prejudice to Mr Cheshire's clients and the extent to which that prejudice could be ameliorated.
10. Because of the intervening holiday period, I was not concerned that James did not see his solicitors between Christmas 2016 and 30 January 2017. However, there had been nearly four weeks delay from James' conference with his solicitor on 30 January 2017, after which the bringing of the claim was likely, to when the amendment application was made on the first day of the hearing (27 February 2017). The other parties had been given no prior notice of the application. No explanation was offered about the delay between 30 January and 27 February 2017. In particular, the proceedings had been before me for pre-trial directions on 7 February 2017 and no reason was given as to why the question of an amendment had not been raised then.
11. If delay had been the only criterion then I would have refused the application. I accept Mr Cheshire's submission that, given the lack of proper explanation, waiting until the first day of the hearing was a serious disentitling factor. However, delay is not the only matter to be taken into account. The question then becomes whether the prejudice caused by the delay, if the application were granted, is so serious as to preclude granting the application. The Court will consider the matters raised by Mr Cheshire (see paragraphs [11] to [14] above) in turn.
12. Mr Cheshire's first point was that by failing to make his claim for family provision earlier, James had entrenched his position as executor of Bill's estate and, it was said by way of example, undermined settlement negotiations. I expressly refrain from making any finding beyond noting that it was the fact that James continued as executor.
13. The real difficulty with this first point is that it was retrospective. While matters which the Court can consider on such an application are at large, I do not accept this consideration to be relevant in the circumstances of this case. Section 58(2)(b)(vi) of the CP Act directs attention to "the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction" (emphasis added). Whatever "injustice" may or may not have arisen as a result of James retaining his position as executor, it was certainly not injustice that would be caused as a consequence of allowing the amendment. Nor, in the circumstances of this application, was it past conduct of a kind which could be relevant to the exercise of the Court's discretion.
14. Mr Cheshire's second argument was that, if successful, James' claim could reduce the potential entitlements of the other claimants. I do not accept that as a relevant consideration. Assuming that possibility becomes the reality, it is not an example of injustice or prejudice. It is a consequence of the working out of the legal entitlements of the parties.
15. Mr Cheshire's third submission raised what the Court considers was the possibility of relevant prejudice to his clients. He accepted that James had always had a role in the proceedings as a competing claimant for the purposes of the plaintiffs' family provision claims. However, where he was only a competing claimant and not a party actively seeking additional provision, Mr Cheshire informed the Court that a forensic decision had been made on behalf of the plaintiffs not to investigate James' evidence about his financial circumstances in the same depth as would have been the case if James had been seeking provision. Therefore, various subpoenas and notices to produce had not been issued and Mr Cheshire had not prepared any cross-examination directed to the specifics of James' finances.
16. I do not think Mr Cheshire can be criticised for taking the forensic decision which he did. I also accept that, if the amendment had been allowed and the hearing immediately continued on the basis that James' claim was a live one, Mr Cheshire's clients would have been prejudiced. However, Mr Cheshire also, with respect properly, acknowledged that the additional inquiries that would have be made were quite narrow, as would be any additional areas for cross-examination. Furthermore, if the Court upheld either the 2008 Will or the 2006 Will, James' claim would not be pressed and the further enquiries and additional cross-examination would not be required.
17. Taking all of the matters referred to in paragraphs [29] and [30] into account, I came to the view that the amendment should be allowed and steps taken to ameliorate the prejudice identified by Mr Cheshire and still utilise all of the Court time that had been set aside for the hearing of the proceedings. That could be done by hearing all of the evidence on all of the issues (other than as to James' finances), but determining Bill's capacity first before all of the other issues in the proceedings. I was fortified in this approach by the fact that not only would the determination of Bill's capacity govern whether or not James' application proceeded, but also one or two of Mr Cheshire's clients' claims. In other words, everyone would know where they stood if Bill's testamentary capacity was established first.
18. I also took into account that if, as has in fact now occurred, the Court came to the view that Bill died intestate, the additional evidence to be sought by Mr Cheshire's clients and any further cross-examination would be in a narrow compass. In any event, the presentation of the arguments in relation to the provision claims would have to happen at a later time. The intervening period could be used to complete whatever interlocutory steps were required to enable Mr Cheshire's clients to meet James' claim if it was pressed. It could also provide an opportunity for the parties to explore settlement knowing who was still making a claim and whether the background to that claim was one of the wills or an intestacy.
19. I was satisfied that approaching the matter in the way I have set out in paragraphs [31] and [32] above would facilitate the just, quick and cheap resolution of the proceedings in the interests of all parties. The Court allowed the amendment accordingly.

Amendments 22 March 2017 - No amendment DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 March 2017