Michael Brown v State of New South Wales

Breen v Williams (1996) 186 CLR 71 Commonwealth v Smith [2005] NSWCA 478 Harris v Digital Pulse Pty Ltd [2003] NSWCA 10; (2003) 56 NSWLR 298 CASES CITED: Hornby v The Nominal Defendant [2007] NSWCA 222 House v The King (1936) 55 CLR 499 Paramasivam v Flynn (1998) 90 FCR 489 Webber v New South Wales [2003] NSWSC 1263; (2003) 31 Fam LR 425

PARTIES: Michael Brown (Appellant/Applicant) State of New South Wales (Respondent)

COUNSEL: B Hull, L Grindlay (Appellant/Applicant) J Graves SC, L Boyd (Respondent)

SOLICITORS: Crown Solicitors Office (Respondent)

LOWER COURT JURISDICTION: DC 912/01 District Court of New South Wales; SC 6216/03 Supreme Court of New South Wales

LOWER COURT FILE NUMBER(S): DC 912/01; SC 6216/03

LOWER COURT JUDICIAL OFFICER: DC 912/01 Sidis DCJ; SC 6216/03 Macready AsJ

LOWER COURT DATE OF DECISION: DC 912/01 15 April 2003; SC 6216/03 20 September 2006

• 13 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40022/07 CA 40837/07

SPIGELMAN CJ BEAZLEY JA HANDLEY AJA

Thursday 6 November 2008 Michael Brown v State of New South Wales Judgment 1 SPIGELMAN CJ: Mr Brown alleges that he was sexually abused by employees of the Department of Community Services in 1977 when, after conviction for criminal offences, he was confined to the Daruk Training School operated by the Department on behalf of the State of New South Wales. In July 2001 he commenced proceedings in the District Court of New South Wales seeking damages. By Notice of Motion of April 2002 he sought orders extending time to commence such proceedings, pursuant to the Limitation Act 1969. That Notice of Motion was heard on 13 December 2002 and 19 February 2003. By judgment of 15 April 2003 her Honour Judge Sidis dismissed the motion. No attempt was made to appeal from this judgment until July 2007. The issue before this Court in this respect is an application to extend time for leave to appeal from the judgment of Judge Sidis. 2 In December 2003 Mr Brown commenced proceedings in the Equity Division of the Supreme Court seeking equitable compensation on the basis of alleged breach of fiduciary duty. In September 2006 Associate Justice Macready heard an application on the part of the respondent for dismissal of the proceedings. His Honour made the order sought on the basis that an equitable claim was not maintainable. Mr Brown appeals from his Honour's decision.

The Common Law Proceedings 3 As the decision of Sidis DCJ was delivered on 15 April 2003, the application for an extension of time to file an application for leave to appeal is more than four years late. The explanation proffered on the part of the applicant is contained in a letter signed by him and tendered in this Court. He said, relevantly: "1. Reason being that my solicitor Greg Schipp of Bail and Boshev lawyers Beaumont Street Hamilton NSW and Barrister Peter Kirby of King St Newcastle had told me that I could not appeal Judge Sidis decision and that I should take my case to the supreme court Sydney equity court. They informed me that it was the only way I could go and that she had left a door open for me in the equity court Sydney nsw." 4 The applicant notes the history of his relationship with his lawyers: the original lawyers ceased to act for him, he successfully pursued a victim's compensation claim, and many of his documents were lost in the process. He finally asserts that if he had not been advised originally that he should pursue an equity proceeding in the Supreme Court he would have sought to appeal from the judgment of Judge Sidis. No explanation is proffered as to why the proceedings were regarded as inconsistent with each other. There is no suggestion that any lawyer advised that they were. 5 It appears to be clear that, on legal advice, a decision was taken to pursue an equitable remedy and not to appeal the District Court decision. Having in mind the fact that the District Court decision was itself an application for extension of time under the Limitation Act, the period of over four years is clearly excessive. In the circumstances there is no proper basis for extending time for leave to appeal. 6 In my opinion, the application to extend time should be rejected on these grounds. 7 The applicant has made additional submissions with which it is appropriate to deal. Counsel for the applicant accepted that her Honour's judgment was a discretionary decision and that he had to demonstrate error of the nature identified in House v The King (1936) 55 CLR 499 at 504-505 (See Hornby v The Nominal Defendant [2007] NSWCA 222 at [53] and [58] per Tobias JA, Mason P agreeing; Commonwealth v Smith [2005] NSWCA 478 at [122]-[129] per Santow JA, Handley and Basten JJA agreeing.) I am unable to detect any such error. 8 If I had not been of the opinion that the application should be refused for the above reasons, I would have refused leave on the basis that the appeal had no reasonable prospects of success. 9 The application before her Honour was for the exercise of a discretion under s 60G of the Limitation Act. Her Honour proceeded on the assumption, without deciding, that the applicant satisfied the gateway in s 60I of that Act. However, her Honour determined that she was not satisfied that it was "just and reasonable" to order that the limitation period be extended pursuant to s 60G. Her Honour's ultimate statement of her reasons for reaching this conclusion was that: "[I]t would not be possible for the respondent … to secure a fair hearing of the issues relating to the causes for the applicant's mental health …" 10 The primary submission of the applicant that her Honour committed a relevant error in the exercise of the s 60G(2) discretion was an alleged inadequacy of reasons and, in one respect, that her Honour made a significant factual error. The principal thrust of the submissions focused on her Honour's recitation of the psychiatric evidence, particularly the evidence that there was a diagnosis of a psychiatric condition many years before the commencement of the limitation period, and the extent of the applicant's knowledge and understanding of that fact. 11 Upon a review of this evidence the applicant contended for a positive finding under s 60I. However, as I have noted, her Honour assumed, without deciding, that the applicant had satisfied the s 60I gateway. I should say that I can see no relevant error on the part of Sidis DCJ but, in any event, none of the assertions constitute error which would have entitled this Court to intervene. 12 The issue of causation to which her Honour referred in the conclusion set out at [9] above arose by reason of the multiple trauma that the applicant had suffered over an extended period of time. 13 In this regard her Honour referred to a considerable body of medical evidence and particularly emphasised the following: "The medical reports detail the dysfunctional nature of the applicant's childhood prior to the order for detention. Mr Thompson reported that he had been given a history of a very dysfunctional childhood where the applicant had suffered several traumatic experiences. He said the applicant had been able to relate in detail the matter of his father threatening to cut off his hand with an axe when he was a child of about five years of age. The applicant also reported that he had witnessed his father assault his mother on numerous occasions. There is also material in the reports of the psychologists and psychiatrists before me indicating that the applicant's father was not only a violent man, but was the victim of alcohol addiction and was thus a person of some volatility. After release from the Daruk Children's Home towards the end of 1977 the applicant stated that he continued in criminal activity, receiving custodial sentences from time to time including a seven year term imposed in 1983 for sexual assault. I mention this criminal history not in reference to any credit of the applicant, but by way of background to the question of whether his current medical condition can clearly be identified as related to the sexual assaults of which he complained. There is also material in the medical evidence to suggest that the applicant's experiences in gaol after 1977 were also of some difficulty and trauma. In July 1999 Dr Lovell, forensic psychiatrist reported that the applicant had been suffering from longstanding history of chronic depression, although at that stage Dr Lovell was not satisfied that the applicant suffered from any psychological diagnosis. Dr Parmagani, consultant psychiatrist in his report of 6 November 2002 came to the conclusion that the contribution from the alleged sexual assault in 1977 to the applicant's current symptomatology could not be safely determined by reason of the issues that I have already raised. Aside from those issues there was also evidence that the applicant suffered a physical injury to his back and his left leg in a work related incident as a result of which there was material which suggested he suffered from depression and in respect of which he was referred to Mr Thompson for treatment before any complaint or diagnosis in relation to the sexual assaults were made. In addition I have noted in Dr Thompson's records inconsistencies relating to the precise nature of the sexual assaults alleged and the extent of those assaults. These are matters which appear to me to militate very strongly against the grant of the relief sought by the applicant …" 14 These were plainly relevant considerations and the weight to which they were entitled was a matter for her Honour. A further five years has now been added to the prejudice inevitably attendant upon such a lengthy period of delay in what would be, to a substantial degree, a word against word case. 15 The applicant challenged her Honour's reasoning on the basis that it is possible to unravel such complex histories and that the expert evidence suggested that it could be done. The applicant's submissions failed to identify a relevant error. The submissions invite the Court to form its own opinion upon certain facts and then to conclude that her Honour's reasons were defective to the requisite degree. Such an approach is not consistent with the legal principles applicable to an appeal from a discretionary decision. 16 In addition to the element of causation, her Honour referred to some evidence concerning possible prejudice to the respondent in the following terms: " … Aside from these matters, the defendant raised in its claim of prejudice material suggesting that the alleged offenders were unavailable to give evidence. The evidence indicated that Mr Barraclough was suffering from a psychiatric condition which would not enable him to give evidence and that Mr Holt was overseas and it was not known when he would be returning to Australia. The evidence to support these contentions was in my view not conclusive against the applicant's interests, but coupled with the material concerning the plaintiff's treatment at the hands of his family prior to his committal to the Daruck Boys' Home and his life and lifestyle in the 25 years since 1977, I am lead to the conclusion that it would not be possible for the respondent to the motion to secure a fair hearing of the issues relating to the causes for the applicant's mental health and that thus it would not be just and reasonable to grant the relief sought under the Limitations Act. " 17 It appears the correct spelling of the name of the alleged abuser was "Barracluff". 18 Counsel for the applicant submitted that this constituted a relevant legal error. He focused on an alleged factual error in her Honour's reasons underlying the prejudice that the respondent would suffer by reason of the unavailability of Mr Barracluff and Mr Holt as witnesses. However, her Honour herself described this material as "not conclusive". Counsel for the respondent in this Court accepted that the two men were available to give evidence and it was common ground that they had provided statements to the respondent. 19 Her Honour, however, was obliged to determine the matter upon the evidence before her. At the time the matter was argued before her Honour on 13 December 2002 the relevant evidence was contained in an affidavit of 4 November 2002 by a solicitor for the respondent who said: "12 I am informed and verily believe from information given to me by an officer at the Department of Public Prosecutions, Mr Barraclough was subpoenaed by that department to give evidence for the prosecution in the last two years and that Mr Barraclough produced medical certificates explaining his inability to attend court due to a medical condition. I am informed and verily believe that is an ongoing condition. 13 I requested copies of those medical reports but the Department of Public Prosecutions required that I subpoena those reports. The subpoena was issued on 31 October 2002 and is returnable on or about the end of November 2002. 14 I am currently trying to make contact with Mr Barraclough and Mr Holt. At last information Shane Holt is in Vietnam and is expected to return to Australia on or about the end of November 2002. 15 I have not interviewed either person. I do not know whether either person has any recollection of the plaintiff or the events complained of in the Statement of Claim, which allegedly occurred 25 years ago. 16 Any attempts to locate and interview Mr Holt and Mr Barraclough are continuing." 20 Counsel for the applicant submitted that there was a clear factual error by her Honour because of the reference in this affidavit to Mr Holt being expected to return "on or about the end of November 2002". Nevertheless her Honour stated that, as quoted, "it was not known when he would be returning to Australia". 21 It is relevant to note that although the original affidavit suggested that Mr Holt would be returning about "the end of November 2002", her Honour was not informed that he had returned, either at the hearing on 13 December 2002 nor at the adjourned hearing on 19 February 2003. In the absence of any updated evidence or cross-examination with respect to this issue, it was open to her Honour to conclude that the expectation as to Mr Holt's return to Australia had not been met. 22 In the case of Mr Barracluff her Honour had before her a letter from him of 6 November 2002 in which he said: "You are correct in that I had a nervous breakdown when Superintendent of the Keelong Juvenile Justice Centre, Unanderra on 19th October, 1995. Since that time I have never really recovered and continue to suffer severe depression, high blood pressure and diabetes. I have been hospitalised no less than six times for acute depression and attempts at suicide since 1995. It now takes very little for me to become stressed, anxious and then very depressed with serious consequences as a result. I advise, however, that I do understand your situation and while I will assist you if possible, I will first seek the opinion of my G.P. as soon as I can make an appointment tomorrow (Thursday). Following that opinion and guidance, I will again make contact with you as a matter of some urgency." 23 Again it does not appear that there was an updating of the material on the two occasions that the matter was before the Court for argument. In any event it does not substantially detract from her Honour's finding that Mr Barracluff would be unable to give evidence because of a medical condition. Indeed, it supports her finding. 24 In any event, her Honour referred to the unavailability of Mr Holt and Mr Barracluff in qualified terms - "the evidence … was not conclusive". Nevertheless, it was entitled to some weight. How much was a matter for her Honour. 25 Subsequent to the determination of Sidis DCJ, the respondent made further inquiries and obtained detailed statements from both Mr Holt and Mr Barracluff. On the face of those statements it appears that each person is able to give evidence. However, that is not sufficient to justify this Court intervening with a discretionary decision where the relevant factor was mentioned, in a manner qualified by the inconclusiveness of the evidence, and given little weight. (Compare the reference to "militate very strongly" in relation to the causation element, with the reference to the evidence being "not conclusive", in relation to the availability of Mr Holt and Mr Barracluff.) 26 Nor was it contended that, if leave had been granted, the test for adducing additional evidence in this Court could be met. 27 The application for leave to extend time to appeal should be refused.

The Equitable Claim 28 Macready AsJ set out the background history of the proceedings and summarised the Statement of Claim by characterising the proceedings as equitable compensation for breach of fiduciary duty. His Honour referred to the then recent judgment of Dunford J in Webber v New South Wales [2003] NSWSC 1263; (2003) 31 Fam LR 425. Macready AsJ referred to the close analogy between the facts of that case and the facts of this case. 29 His Honour specifically set out Dunford J's summary of the relevant case law, where his Honour said: "[47] In the light of the foregoing, I am satisfied that even if one person stands in a fiduciary relationship to another, such as guardian and ward, the fiduciary duties which arise from such relationship and breach of which gives rise to a right to equitable compensation: a) are confined to cases where the fiduciary acts for, or exercises a discretion on behalf of, the other party; b) concern economic or proprietorial rights only, including possibly confidential information (which is itself really a form of property); c) are proscriptive and not prescriptive; and d) are not a substitute or alternative description for breaches of duty owed in tort or contract arising out of the same facts or circumstances." 30 Macready AsJ said that he agreed with Dunford J's analysis of the authorities and, in any event, he was obliged to follow the judgment unless he thought it was wrong, which his Honour did not. 31 I note that the appellant did not contend that the loss or damage he suffered could be characterised as economic or proprietory. 32 The submissions of the appellant invited the Court to adopt the approach of the Canadian Supreme Court with respect to the identification of fiduciary duties on the award of equitable compensation for breach of such duties. I repeat my own remarks in this regard in Harris v Digital Pulse Pty Ltd [2003] NSWCA 10; (2003) 56 NSWLR 298: "[31] … Canadian equity jurisprudence, perhaps under the influence of United States law, has developed in a quite different way to that of Australia. (See, for example, Breen v Williams (1996) 186 CLR 71 especially at 83, 94-95, 112-113, 137; Pilmer v Duke Corp ( at 194); Bodney v Westralia Airports Corporation Pty Ltd (2000) 109 FCR 178 at 200-205; Sir Anthony Mason, "The Place of Equity and Equitable Remedies in the Contemporary Common Law World" (1994) 110 Law Quarterly Review 238 at 246-248; S Dorsett, "Comparing Apples and Oranges: The Fiduciary Principle in Australia and Canada after Breen v Williams " (1986) 8 Bond Law Review 158 passim ; P Parkinson, "Fiduciary Law and Access to Medical Records: Breen v Williams " (1995) 17 Sydney Law Review 433 especially at 439-443.) [32] In many respects Canadian fiduciary law has developed as an addition to the law of tort. This has not happened in Australia. Canadian authorities on equity must be treated with considerable caution. (The distinctiveness of Canadian equity jurisprudence is highlighted by D W M Waters, "The Reception of Equity in the Supreme Court of Canada (1875-2000)" (2001) 80 Canadian Bar Review 620; J Berryman, "Recent Developments in the Law of Equitable Remedies: What Canada Can Do For You" (2002) 33 Victoria University of Wellington Law Review 51.)" 33 Nothing has changed since that judgment to lead me to the conclusion that Australian law on fiduciary duties has developed in such a way as to make the Canadian authorities applicable here. (See, for example, G Dempsey and A Greinke "Proscriptive Duties in Australia" (2004) 25 Australian Bar Review 1.) 34 I do not find it necessary to consider the full range of Australian authority which supports the reasoning of Dunford J and Macready AsJ. It is sufficient to refer to the joint judgment of the Full Court in Paramasivam v Flynn (1998) 90 FCR 489, which applied the authoritative approach to fiduciary duty of the High Court in Breen v Williams (1996) 186 CLR 71 to a factual situation closely analogous to the present case. 35 In Paramasivam the existence of a fiduciary duty fell to be determined in a case of alleged sexual assault by a guardian of a girl. The assaults were said to have commenced when the girl was 11 and to have continued for some years. 36 Paramasivam was an appeal from a judgment dismissing an application for an extension of time to sue and granting leave to the respondent to enter summary judgment. The consideration of the strength of the fiduciary claim was not, however, directed, in terms, to the issue of summary judgment. It was considered in the context of assessing the strength of the plaintiff's case for purposes of the application to extend time. The test applied was whether the court was satisfied that the plaintiff "had real prospects of success". (See at 504 C-O, 508 D-C.) This does differ from the strike out test, which requires the court to be satisfied that there was no real prospect of success. 37 In a joint judgment of the Full Federal Court, of which one member was the late Justice Lehane, one of Australia's foremost equity scholars, their Honours said at 504-505: "In Anglo-Australian law, the interests which the equitable doctrines invoked by the appellant, and related doctrines, have hitherto protected are economic interests. If property is transferred or a transaction entered into as a result of undue influence, then the transaction may be set aside or, no doubt, the appellant may be compensated for loss resulting from the transaction; similarly if a transaction is induced by unconscionable conduct; so, in cases usually classified as involving fiduciary obligations not to allow interest to conflict with duty, the interests protected have been economic. If a fiduciary, within the scope of the fiduciary obligation, makes an unauthorised profit or takes for himself or herself an unauthorised commercial advantage, then the person to whom the duty is owed has a remedy." 38 Their Honours also said at 505: "Of course, conduct such as that alleged against the respondent in this case can readily be described in terms of abuse of a position of trust or confidence, or even in terms of the undertaking of a role which may in some respects be representative and, within the scope of that role, allowing personal interest (in the form of self gratification) to displace a duty to protect the appellant's interests. But it should not be concluded, simply because the allegations can be described in those terms, that the appellant should succeed in an action for breach of fiduciary duty if the allegations are made good. What the apparent applicability of the descriptions illustrates is not only the incompleteness but also the imperfection of all the individual formulae which have at various times been suggested as encapsulating fiduciary relationship or duty. The principles can be understood only in the context of the way in which the courts have applied them. In that context the success of the appellant's fiduciary claims, in this case, would indeed be a novelty. To say of a claim that it is a novelty is not necessarily to condemn it or to require the conclusion that it cannot succeed. It is sufficient to demonstrate this point merely to refer to the gradual extension, during this century, of the kinds of loss for which damages are recoverable in tort - particularly in negligence. But an advance must be justifiable in principle. Here, the conduct complained of is in within the purview of the law of tort, which has worked out and elaborated principles according to which various kinds of loss and damage, resulting from intentional or negligent wrongful conduct, are to be compensated. That is not a field on which there is any obvious need for equity to enter and there is no obvious advantage to be gained from equity's entry upon it. And such an extension would, in our view, involve a leap not easily to be justified in terms of conventional legal reasoning." 39 After recitation of authority their Honours said at 507-508: "All those considerations lead us firmly to the conclusion that a fiduciary claim, such as that made by the plaintiff in this case, is most unlikely to be upheld by Australian courts. Equity, through the principles it has developed about fiduciary duty, protects particular interests which differ from those protected by the law of contract and tort, and protects those interests from a standpoint which is peculiar to those principles. The truth of that is not at all undermined by the undoubted fact that fiduciary duties may arise within a relationship governed by contract or that liability in equity may co-exist with liability in tort. To say, truly, that categories are not closed does not justify so radical a departure from underlying principle. Those propositions, in our view, lie at the heart of the High Court authorities to which we have referred, particularly, perhaps, Breen ." 40 In my opinion, this analysis is applicable, without amendment, to the claim in the present case. As noted above, the issue before the Court involved a test with different emphasis to that applicable in the present case. However, the reasoning I have set out is compelling and is expressed in such a way as to be equally applicable to a strike out application. This Court should follow it. 41 As I have noted, there was no suggestion in this case that the interest to be protected was economic or proprietory. The appeal should be dismissed.

Conclusion 42 The orders I propose are: 1 Leave to extend time to appeal from the judgment of Sidis DCJ of 15 April 2003 refused. 2 Appeal from the judgment of Macready AsJ of 20 September 2006 dismissed. 3 The appellant/applicant pay the respondent's costs. 43 BEAZLEY JA: I agree with Spigelman CJ. 44 HANDLEY AJA: I agree with the Chief Justice. **********

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