THE HEARING: MR SOBEY'S ADJOURNMENT APPLICATION
29 At a directions hearing on 4 September 2006, the Court directed that Mr Sobey, or any other party claiming an interest in the surplus proceeds of sale of the Jerningham Street property, should file and serve an interlocutory application and any affidavit relied upon in support of that application by 25 September 2006. Mr Sobey was then represented, and it was indicated that he proposed to oppose the order sought on the motion. The application was listed for hearing on 6 November 2006.
30 Mr Sobey did not comply with that direction by filing any material by 25 September 2006. Mr Nicol and Mr Davies (who by then had been joined as a co-plaintiff) then called the matter on for further directions. On 12 October 2006 I varied the orders previously made, by fixing 3 November 2006 as the date by which Mr Sobey should file and serve his material and fixing 24 November 2006 as the date for hearing. The explanation offered on behalf of Mr Sobey for his failure to file material was that he had been unwell and could not comply with the earlier order. It was anticipated that he would be able to comply within the extended time. I directed that medical evidence in support of that assertion as to his previous inability to comply with the proposed order should be filed and served also by 3 November 2006.
31 On 8 November 2006, the solicitors for Mr Sobey filed an affidavit indicating that they had written to a Dr Wright on 4 October 2006 to obtain a report in relation to Mr Sobey's medical condition, and had subsequently followed that request up by letter of 30 October 2006. They had also, on 2 November 2006, telephoned the doctor's rooms and were informed that Mr Sobey had arranged to see that doctor on 14 November 2006 for an examination prior to providing any medical report. On 3 November 2006, another solicitor in the firm acting for Mr Sobey had deposed to a belief that Mr Sobey had undergone hip replacement surgery in early August 2006, that it had produced severe pain, requiring heavy medication, and that Mr Sobey had therefore found it difficult to provide accurate and detailed instructions in the matter. It also referred to Mr Sobey in early September 2006 having suffered complications, namely a blood clot, and after being discharged from hospital was re-admitted on 25 September 2006 with similar complications. It was therefore asserted that the "required documentation for this action" could not be completed because of the difficulty of obtaining proper instructions from Mr Sobey. That affidavit also stated that on 4 October 2006 a letter had been sent to a Dr Mintz requesting a medical report concerning Mr Sobey's condition. That report was received by way of letter from Dr Mintz on 5 October 2006.
32 Dr Mintz's report confirmed that, as at that date, Mr Sobey was in the recovery period after a resurfacing hip replacement done on 10 August 2006. It said his recovery had been slowed by a pulmonary embolus in the post-operative period, which required further management in the form of Warfarin, and that Mr Sobey had been re-admitted under a physician after his initial discharge from hospital. It indicated that Mr Sobey was then still on pain relieving medication as well as Warfarin to thin his blood after his pulmonary embolus. It concluded:
"It would be reasonable to presume that the pain relieving medication will have some ongoing influence on his concentration span. As an estimate, I would assess that Mr Sobey would be well on the road to recovery by the end of November."
That report does not provide a foundation for any claim that, apart from his periods of hospitalisation, Mr Sobey could not adequately give instructions.
33 On the morning of the hearing, counsel for Mr Sobey applied to adjourn the hearing. He relied upon a further affidavit from a solicitor for Mr Sobey which exhibited a report from Dr Wright dated 20 November 2006.
34 Dr Wright first saw Mr Sobey in August 2001 to assist in the management of chronic back pain following a fall, and had seen him in the intervening years for prescription of medication and advice on how to manage his lower back pain. On 18 April 2004, Mr Sobey had had a left hip resurfacing operation with a good result. As his right hip then further deteriorated, on 10 August 2006 Dr Mintz had performed a right resurfacing hip operation. Mr Sobey was hospitalised in the orthopaedic ward for one week and then transferred to rehabilitation and discharged on 28 August 2006.
35 According to the history recorded in Dr Wright's report, on 16 September 2006 Mr Sobey developed shortness of breath and was hospitalised with a diagnosis of pulmonary embolus. He was treated with medication. Dr Wright saw him for advice on analgesia on 20 September 2006. Mr Sobey was discharged from hospital on 25 September 2006. However, he was re-admitted on 27 September 2006 with an abscess in the chest wall arising from a needle site for subcutaneous analgesia. The abscess was surgically released. Following antibiotic treatment, Mr Sobey was discharged on 6 October 2006. He has not been hospitalised since.
36 It does not appear, on the material before the Court, that Mr Sobey thereafter required or had any ongoing medical supervision.
37 On 14 November 2006 Mr Sobey was examined by Dr Wright. Mr Sobey (who has not provided any affidavit in support of his complaints) is recorded as saying that he felt confused, was sweating excessively, had chest pain and difficulty breathing, and was excessively fatigued and worried. He said he could not remember everyday things and was distressed by that. He said his back pain was worse, his chest felt as if it was "caving in", he felt restless and needed to "get away". Dr Wright noted stressors on Mr Sobey, including worries about his health following his hip operation in August and the complications, as well as family circumstances and having to deal with a complex legal matter.
38 Dr Wright recorded that the current complaints developed following Mr Sobey's most recent admission to hospital in September/October 2006. Apart from observing Mr Sobey being restless and breathing heavily at times during the examination, and apparently not having a good memory for details of recent events, and being anxious, Dr Wright noted that there was no significant abnormality in his speech or conversation and no evidence of thought disorder. His physical examination was normal, although palpation of the chest produced significant pain widely in the anterior chest.
39 Dr Wright diagnosed an adjustment disorder with acute anxiety, caused principally by the right hip re-surfacing operation and its consequential complications, as well as additional stressors.
40 Dr Wright said that the medications Mr Sobey "has been prescribed" are analgesia as Kapanol (oral morphine) 100 mg daily; during the admission beginning 17 September 2006, Clexane, an anti-coagulant, and subsequently oral Warfarin as an anti-coagulant (which he still takes), and antibiotics for chest wall abscess. It concluded that Mr Sobey
" … has significant anxiety symptoms, with excessive worry, restlessness, fatigue, his mind going blank, muscle tension and sleep disturbance. His anxiety is sufficient to cause significant distress, and impairment in his cognitive functioning. In my opinion, his anxiety is sufficient to have an effect on his ability to provide you with instructions".
41 It continued:
"In my opinion, your client is not medically fit to provide detailed instructions."
Dr Wright has referred Mr Sobey to a psychologist. Dr Wright's report said he expected with time and insight about his condition, Mr Sobey would improve and be able to provide instructions in three months. He added:
"I will further discuss with Mr Sobey the likely benefits of taking medication for anxiety, but at this stage Mr Sobey would prefer to manage this condition without the use of medication."
42 Dr Wright is an occupational physician with a medical degree and is a Fellow of the Faculty of Occupational Medicine, Royal Australasian College of Physicians.
43 I declined the application for an adjournment for the following reasons.
44 Mr Sobey, as early as 13 December 2005, had given instructions as to the basis upon which he proposed to bring proceedings to assert and establish his entitlement to participate in the surplus funds from the sale of the Jerningham Street property, to the extent of the alleged security he held and the outstanding indebtedness in respect of it. Despite his solicitors asserting the instructions to bring such a proceeding on his behalf on 13 December 2005, and despite the extensive correspondence exchanged between the solicitors for Mr Sobey and for Mr Nicol (and later Mr Nicol and Mr Davies) thereafter, those proceedings were never instituted. There is no reason to think that Mr Sobey was unable fully to give those instructions at any time up to his initial operation on 10 August 2006, nor indeed, having regard to his solicitors' correspondence, to believe that he had not done so well before, or at least by 10 August 2006. Indeed, it is inconsistent with the claim of the solicitors that he had not been able to give those instructions, because they assert that he had, in fact, given those instructions. It may be significant that, in the face of Mr Sobey's evidence at his examination on 22 December 2005 (as asserted in the letter from Mr Nicol's solicitors of 28 February 2006), no further detailed provision of material by Mr Sobey occurred.
45 Secondly, there is ample evidence otherwise available to Mr Sobey to support his claim to have advanced funds to Mr Mercorella on the basis he claims, and that those funds have not been repaid. The nature of that evidence was identified on a number of occasions by the solicitors for Mr Nicol in the course of correspondence. There is documentary evidence from his bank statements which would demonstrate the withdrawal of the funds said to be the subject of the cheques. There is, if Mr Sobey's assertions are correct, documentary evidence to confirm the drawing of two loan agreements in March and April 2004 and the preparation of a mortgage document at that time. The solicitors then acting for him, whose names were identified in the course of the communications, could readily (by his waiver of privilege) have produced their own evidence of having received those instructions and having prepared that documentation. In addition, Mr Sobey's accountant was also identified as a potential source of information in the course of the communication. The fact is that Mr Sobey did not take up any of those opportunities in the eight months or so between the issue first specifically arising and the date of his operation on 10 August 2006. There is no explanation by Mr Sobey or on his behalf why no such evidentiary material has not been presented or could not have been presented.
46 I accept that Mr Sobey was unfit to give instructions for a period of about two weeks from the date of his operation on 10 August 2006 to 28 August 2006 when his hospitalisation was completed. There is then a period of a little over two weeks, during which the order was made for his material to be filed and served and during which he could, even then, have given any further instructions which were required. There is no evidence that he gave any instructions in that time until his pulmonary embolus on 16 September 2006.
47 I accept that Mr Sobey was then unfit to give instructions for a period of about two to three weeks between 16 September 2006 and 6 October 2006.
48 There is then no evidence that he consulted any doctors between 6 October 2006 and 14 November 2006 when he next saw Dr Wright (who had last seen him on 20 September 2006) other than perhaps Dr Mintz up to about 6 October 2006. Dr Mintz did not, at the time of that discharge or in his report, suggest any significant psychological problems impairing Mr Sobey's capacity to give instructions and, indeed, his report does not suggest that Mr Sobey was not capable of functioning at such a level as to be incapable of giving instructions in that period of time, at least up to some time prior to 14 November 2006.
49 Dr Wright's report does not identify precisely when, on Mr Sobey's history, he began to experience the symptoms which led to the diagnosis to which Dr Wright refers.
50 Senior counsel for Mr Nicol and Mr Davies submitted that Dr Wright's report of 20 November 2006 does not provide a sufficient foundation in any event for adjourning the hearing, either in respect of any difficulty that Mr Sobey had experienced from some time after 6 October 2006 and prior to his actual presentation to Dr Wright on 14 November 2006, or thereafter. The point was made that there was no information given to Dr Wright as to the nature of the instructions which might have been required to enable Mr Sobey's case to be presented, and the extent to which, if at all, those instructions had not already been given (as the solicitors asserted as early as 13 December 2005). The question upon which Dr Wright was asked to comment was a very broad one. It was whether Mr Sobey's medical condition/problem/complications and/or any medications that have been prescribed "may have an effect on his ability to provide us with instructions as to the action". The nature of the instructions to be required is relatively straightforward. It is self-evident from the recital of the nature of the matters in issue, and the past history. It was submitted that Dr Wright has not addressed specifically Mr Sobey's inability to give that sort of instruction. I agree. Moreover, senior counsel submitted that Dr Wright's report should not be given much weight because the solicitors for Mr Nicol and Mr Davies had requested that Mr Sobey's medical records be produced and that request had not been met, and because they had requested Dr Wright to be available for cross-examination, and he was not. Of course, I accept that the request for Dr Wright to be available for cross-examination (even by telephone) could only have been made belatedly because of the date of his report, and I am not to be taken as being critical of him for not being available on such short notice for cross-examination. However, the fact of the matter is that Mr Sobey was seeking to rely upon his report and the need for him to be cross-examined could readily have been anticipated and arrangements made.
51 I do not think Dr Wright's report, in all the circumstances, is sufficiently precise to indicate that Mr Sobey was himself or through others unable to identify and produce contemporarily the loan agreement to which Mr Sobey referred, evidence of the payment by him of the money (beyond the copy cheques) by bank statements or similar records, and evidence of the extent to which interest payments had been made. There is no allegation that the arrangements between himself and Mr Mercorella were oral, so Mr Sobey's case (as asserted) does not depend upon his version of any particular occasion being given orally. Even if he had not completed his instructions prior to 10 August 2006, the nature of what was required of him (and which largely could not have been sought through others in any event) is not shown to have been beyond Mr Sobey except during his periods of hospitalisation.
52 In addition, there was another reason to question the significance of Dr Wright's views, at least insofar as they support the contention that Mr Sobey's mental functioning and so his capacity to give any instructions has been impaired by taking medication. There is no evidence that Warfarin, an anti-coagulant, has any side effects in terms of intellectual functioning. There is no suggestion that Mr Sobey is continuing to take antibiotics. The evidence demonstrates that in fact from 14 November 2005 Mr Wright was authorised by the Department of Health of South Australia to prescribe controlled release morphine to Mr Sobey, and that the authority to do so had persisted until the end of November 2006. That prescription was authorised in 50 mg capsules of one per day. It therefore appears that Mr Sobey has been prescribed morphine since about November 2005, and there is no special reason to think that his capacity to give instructions has been impaired more recently by reason of that type of medication, even if he is still taking it.
53 I note also, as I observed above, that Dr Mintz, the orthopaedic surgeon who apparently saw Mr Sobey at least up to 6 October 2006, did not then observe that he was so dysfunctional intellectually so as to be incapable of giving instructions.
54 I note the submission of counsel for Mr Sobey that the nature of the application, being an interlocutory one, was not, and should not be treated as an application for final relief, but should be determined upon summary judgment principles. That is not the nature of the application. It was clearly not so understood by solicitors for Mr Sobey. It was an application for a final determination of the issue, made in accordance with the Federal Court (Corporations) Rules 2000. Upon seeking instructions, counsel for Mr Sobey did not persist in any assertion that the solicitors for Mr Sobey, or Mr Sobey, thought that the Court would not proceed on the hearing to finally determine the issue.
55 It is necessary finally to turn to the determination of the application.