The Disability Issue
53 The provisions of O 43 r 13 are triggered if the person to be served is a 'person under disability'. Where it is said that the person is a 'mentally disabled person' rather than an infant or minor the relevant question is: Is the person concerned a person who, owing to mental illness, is incapable of managing his or her affairs in respect of the proceedings? The words 'in respect of the proceedings' are important because they focus upon the person's ability to bring or defend proceedings rather than whether the person is able to manage his or her affairs generally or in relation to some other transaction. Such an approach is consonant with the common law approach to capacity. For example, in Gibbons v Wright (1953) 91 CLR 423 the High Court said (at 437):
'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.'
54 In Masterman-Lister v Brutton & Co (Nos 1 and 2) (CA) [2003] 1 WLR 1511 Chadwick LJ illustrated the point (at 1538-9) by reference to the case of In Re C (Adult: Refusal of treatment) [1994] 1 WLR 290:
'C had been admitted to a secure hospital as a patient under Part III of the Mental Health Act 1983. He was subsequently diagnosed as suffering from gangrene in the foot. Acting by his next friend he sought an injunction to restrain the hospital from amputating. Thorpe J held that C had the requisite mental capacity to make a decision to refuse treatment. As he put it, at p 295:
"Although his general capacity is impaired by schizophrenia, it has not been established that he does not sufficiently understand the nature, purpose and effects of the treatment he refuses. Indeed, I am satisfied that he has understood and retained the relevant treatment information, that in his own way he believes it, and that in the same fashion he has arrived at a clear choice."
Nevertheless, it was never in doubt that C was a patient for the purposes of the procedural rule which required that his suit could not have been brought except with the interposition of a next friend. There is no inconsistency between the requirement that a party to legal proceedings comply with Order 80 and a decision that he has an understanding of the nature, purpose and effects of the medical treatment which is under consideration in those proceedings. The test is issue specific; and, when applied to different issues, it may yield different answers.'
55 Once it is accepted that the exigencies of bringing or defending the proceedings are the focal point of the test of capacity for the purposes of the FCR, the next question is what are the considerations to which the Court should have regard in applying that test?
56 Masterman's case provides much assistance in this regard. There the plaintiff brought an action for personal injuries compensation which he settled. Later the plaintiff sought to re-open the claim on the basis that it had never received the approval of the court as required by the rules in the case of a person under disability. It was therefore necessary to determine whether the plaintiff was such a person. The relevant test was whether the plaintiff was, by reason of mental disorder within the meaning of the Mental Health Act 1983 (UK), incapable of managing and administering his property and affairs. The Court of Appeal held that the test was addressed specifically to the plaintiff's capacity to conduct and compromise the proceedings: see 1521-1524 per Kennedy LJ; 1533-1535 per Chadwick LJ; Potter LJ agreeing. The Court of Appeal's interpretation of the test as being issue specific aligns it more closely to the test under the FCR which makes express provision in that regard.
57 In applying the test Chadwick LJ said (at 1539):
'75 For the purposes of Order 80 and now CPR Pt 21 the test to be applied, as it seems to me, is whether the party to legal proceedings is capable of understanding, with the assistance of such proper explanation from legal advisers and experts in other disciplines as the case may require, the issues on which his consent or decision is likely to be necessary in the course of those proceedings. If he has capacity to understand that which he needs to understand in order to pursue or defend a claim, I can see no reason why the law whether substantive or procedural should require the interposition of a next friend or guardian ad litem (or, as such a person is now described in the Civil Procedure Rules, a litigation friend).'
58 All of the members of the Court of Appeal endorsed the approach taken by Boreham J in the unreported case of White v Fell, 12 November 1987, where the issue of incapacity arose in the context of the limitation of actions. In that case his Honour observed:
'The expression "incapable of managing her own affairs and property" must be construed in a common sense way as a whole. It does not call for proof of complete incapacity. On the other hand, it is not enough to prove that the plaintiff is now substantially less capable of managing her own affairs and property than she would have been had the accident not occurred. I have no doubt that the plaintiff is quite incapable of managing unaided a large sum of money such as the sort of sum that would be appropriate compensation for her injuries. That, however, is not conclusive. Few people have the capacity to manage all their affairs unaided ... It may be that she would have chosen, and would choose now, not to take advice, but that is not the question. The question is: is she capable of doing so? To have that capacity she requires first the insight and understanding of the fact that she has a problem in respect of which she needs advice ... Secondly, having identified the problem, it will be necessary for her to seek an appropriate adviser and to instruct him with sufficient clarity to enable him to understand the problem and to advise her appropriately ... Finally, she needs sufficient mental capacity to understand and to make decisions based upon, or otherwise give effect to, such advice as she may receive.' (Emphasis added)
59 The ability to properly instruct an advisor was also referred to by Lord Denning MR in the limitation case of Kirby v Leather [1965] 2 QB 367. In upholding the trial judge's decision that the plaintiff was of unsound mind so as to prevent the relevant period of limitation from running against him, his Lordship said, at 384:
'After a time he was to some extent able to appreciate (from being told by others) something of what had happened to him, and indeed to his scooter. But he could not concentrate on it for any length of time: not long enough to be able to appreciate the nature and extent of any claim that he might have. In particular he had no insight at all into his own mental state. He was not capable of instructing a solicitor properly. He certainly was not capable of exercising any reasonable judgment upon a possible settlement.'
60 See also Martin v Azzopardi (1973) 20 FLR 345 at 347 per Fox J where his Honour considered the content of the test under the ACT Supreme Court Rules.
61 In light of what is said in these authorities and having regard to the use of the words 'in respect of the proceedings' in the FCR, the following are relevant to determining capacity in the present case:
(a) Whether Ms Cross had the ability to understand that she required advice in respect of the Creditor's petition which had been left with her;
(b) whether she had the ability to communicate this requirement to someone who could arrange an appointment with an appropriate advisor or, alternatively, that she could arrange such an appointment of her own accord;
(c) whether she had the ability to instruct her advisor with sufficient clarity to enable him or her to understand the situation and to advise her appropriately; and
(d) whether she had the ability to make decisions and give instructions based upon, or otherwise give effect to, such advice as she might receive.
62 Mr Bentley submitted that the test of capacity is to be applied as at the time Ms Cross was given the Creditor's petition on 13 July 2004. This submission is undoubtedly correct.
63 None of the parties adduced any expert evidence going to the issue of whether Ms Cross was a mentally disabled person for the purposes of the FCR at the time she was given the Creditor's petition nor, for that matter, at any other time.
64 Counsel for Ms Cross, over objection, tendered a copy of a report of Dr Janet Johnson, Staff Specialist Psychiatrist at Sutherland Hospital, Caringbah dated 8 April 2005 and a copy of a report of Melissa de Rooy, Occupational Therapist at that hospital, dated 6 April 2005. I allowed the tender subject to relevance. Dr Johnson's report referred to an application to the Mental Health Review Tribunal for a Protected Estate Order when Ms Cross was in hospital in July 2004. Apparently it was declined because of Ms Cross' refusal to disclose any details about her finances. Ms de Rooy's report stated, inter alia:
'Involvement with Ms Jean Cross
Ms Cross has been known to the Sutherland Division of Mental Health since March 1st 2004, when she was admitted to the psychiatric inpatient ward. Following this admission, Ms Cross has received services from a Primary Clinician within the Community Mental Health Team. I have been Ms Cross' Primary Clinician since December 2004.
Initially Ms Cross refused to engage with myself due to false beliefs that her recently changed medication was making her unwell. However Ms Cross' mental state improved as her illness began to respond to the medication (administered as per her Community Treatment Order) and thus Ms Cross is currently well engaged with myself. I have contact with Ms Cross approximately once a week, either at her home, at a community venue or within the community rooms at the hospital. At present Ms Cross willingly engages with myself and willingly attends reviews with a psychiatrist when required to.
Diagnosis
Ms Jean Cross was diagnosed with schizophrenia in March 2004, however it is believed by the treating team that Ms Cross has had this illness for many years, with it being untreated until 2004. Ms Cross currently receives the anti-psychotic medication, Risperidone, in injection form, fortnightly. Ms Cross does not believe that she has schizophrenia however acknowledges that the medication helps her stay "cool, calm and collected".
Ms Cross had two admissions to the psychiatric inpatient unit in 2004. During her first admission Ms Cross displayed symptoms of thought disorder, paranoid and persecutory delusions about foreign people, the government and her neighbours (whom she wielded a knife at following their request that she move her car which was blocking a common driveway). Ms Cross was diagnosed with breast cancer during her admission and a mastectomy was consented [to] by the Mental Health Review Tribunal, as Ms Cross was too delusional to understand the seriousness of her condition. Ms Cross also had a preoccupation with the USA and believed that there were creatures like dragons in her garden. Ms Cross displayed similar psychotic symptoms during her second admission including persecutory delusions about the FBI and the British. Ms Cross refused to discuss her financial difficulties and held false beliefs that all the banks were closed and that the government did not pay single women. Ms Cross also believed that the body corporate of her home did not exist and thus refused to pay them any money.'
65 In addition to what is set out at [10] - [26] supra, on the basis of the evidence referred to at [64] supra, I find that in 2004 Ms Cross was admitted to the Psychiatric Unit of Sutherland Hospital twice. The first period of admission was from 1 March to 12 May during which time she was diagnosed with breast cancer and a mastectomy was consented to by the Mental Health Review Tribunal. The second was from 23 June until 15 July as an involuntary patient. During the second period of admission an application was made to the Mental Health Review Tribunal for a Protected Estates Order in respect of Ms Cross. Such an order was not made because Ms Cross would not disclose any details about her finances. Some months later, on 11 April 2005, the Protective Commissioner was appointed as financial manager of Ms Cross' estate pursuant to the Protected Estates Act 1983 (NSW).
66 It is a principle of long standing that the law presumes every person to be sane and, in modern times, the principle has been expressed as a presumption that a person of full age is capable of managing his or her affairs: Murphy v Doman (2003) 58 NSWLR 51 at [36] per Handley JA. It follows that the person who asserts incapacity must prove it.
67 In his text, A Practical Treatise of the Law Concerning Lunatics, Idiots, and Persons of Unsound Mind, 2nd edn, S Sweet, London 1847, Shelford sets out the way in which the law has approached the proof of insanity (at 56):
'The burthen of proof of insanity lies on those asserting its existence. - The presumption of law is in favour of sanity: and, therefore, if a person has never been subject to a commission of lunacy, nor has had an unsound state of mind imputed to him by his friends or relations, or even by common fame… the burthen of proof is cast upon those who impeach his understanding. And where a particular transaction is sought to be avoided on the ground of insanity, the evidence of it ought to apply to that particular period; and the question in such a case is, not whether the party had ever been insane before, but whether he was of sufficient sound mind on the day of the contract in question. On the other hand, as the law presumes the state of a man's mind to continue unchanged until the contrary be made manifest; if a person has ever been subject to a commission, or to any restraint permitted by law even a domestic restraint, clearly and plainly imposed upon him in consequence of undisputed insanity, the burthen of proof shewing sanity is thrown upon those who seek to establish a lucid interval, or the soundness of his understanding [citing White v Wilson, 13 Ves 88] But where there is satisfactory evidence of sanity of a party at the time of a contract, the antecedent state of his mind, and the causes of it, may be laid totally out of view [citing 1 Dow. P.C. 177].'
68 In the present case it is important to have regard to the second 'presumption' mentioned above, namely that the law presumes a person's state of mind to continue unchanged. Such a presumption is one application of the more general 'presumption of continuance', which Kirby P discussed in Mason v Tritton (1994) 34 NSWLR 572 at 587 - 588. In its application to mental illness, Wigmore explained the role of that principle in the following way:
'A condition of mental disease is always a more or less continuous one, either in latent tendency or in manifest operation. It is therefore proper, in order to ascertain the fact of its existence at a certain time, to consider its existence at a prior or subsequent time. The degree of continuity varies infinitely in various cases, and hence there can be little certainty in the inference from one period to another. Nevertheless, since it can never be known beforehand to what variety the case in question belongs in this respect, the facts of prior and subsequent existence cannot be absolutely known beforehand to be relevant. Much must depend on the type of insanity, as preliminarily indicated by the person's conduct at the time in question. There is also a further element of uncertainty in criminal cases, in that the accused has a strong motive to feign insanity after the act charged; and thus particular scrutiny is required in weighing the evidence of the accused person's subsequent insane conduct.
In spite, however, of these uncertainties and difficulties, Courts are to-day universally agreed that both prior and subsequent mental condition, within some limits, are receivable for consideration; stress being always laid on the truth that these conditions are merely evidential towards ascertaining the mental condition at the precise time of the act in issue.' (Emphasis added)
(See J H Wigmore, A Treatise on the Anglo-American System of Evidence in Trials at Common Law, 3rd edn,Little Brown & Co., Boston, 1940, Vol 2 par s233.)
69 In relation to the presumption of continuance generally, Wigmore said (at s437):
'The opponent… may always attempt to explain away the effect of the evidence by showing that in the meantime other circumstances have occurred to raise a probability of change instead of continuance.'
70 In the present case Ms Cross' representatives bear the burden of proving that Ms Cross was incapable of managing her affairs in respect of the proceedings as at the time of service of the Creditor's petition. The best way to discharge that burden would be by expert evidence in proper form directed to the test of capacity under the FCR, including the matters set out at [61] supra, and focussed upon Ms Cross' state of mind at the time of service.
71 However, that is not to say that the burden may not be discharged in other ways. One way in which that burden might be discharged is by establishing Ms Cross' incapacity at some other point in time and inviting the Court to infer that Ms Cross' state of capacity had remained unchanged between the time of such proven incapacity and the time of service of the Creditor's petition. A similar course was taken in Murphy v Doman (2003) 58 NSWLR 51. That case concerned a litigant in person who suffered the effects of mental illness during the course of the proceedings. He was required to file written submissions by a certain date, which was extended. At the expiration of the extended period he appeared before the court and behaved in a bizarre manner, refusing to tender the submissions he had brought that day (6 August 2001). On 18 September the matter was listed for judgment and that morning the trial judge received a letter from Mr Murphy explaining that he had been admitted to a psychiatric hospital shortly after 6 August and asking for leave to file and serve his submissions.
72 One of the questions which arose before the Court of Appeal was whether Mr Murphy was incompetent on 6 August 2001. There was evidence confirming Mr Murphy's assertion that a few days later he had been admitted as an involuntary psychiatric patient. In his judgment Handley JA held (at 57) that the later involuntary admission was evidence of Mr Murphy's previous psychiatric condition 'because of the retrospective presumption of continuance'. At 58 his Honour said:
'There is a presumption of sanity which applies unless and until the contrary is proved. Attorney-General v Parthner (1792) 3 Bro CC 441 at 443; 29 ER 632 at 634; M'Naghten's Case (1843) 10 Cl & F 200 at 210; 8 ER 718 at 722. This means in modern terms, that there is a presumption that a person of full age is capable of managing his or her affairs.
[Mr Murphy's] bizarre behaviour on 6 August, when he declined to tender the written submissions he had brought to court, did not alert the judge or defendant's counsel to the fact that the plaintiff was an incompetent person. However, viewed in light of the evidence available on 18 September, it showed that on 6 August the plaintiff was incapable of managing his affairs and in particular the legal proceedings he was attempting to conduct on his own behalf.'
73 It follows that Ms Cross' representatives may properly rely upon evidence as to her capacity which has its origin before and after 13 July 2004 in discharging the burden of proving her incapacity on that day. In particular, they may rely upon evidence of Ms Cross' previous admission to the Psychiatric Unit of Sutherland Hospital between 1 March and 12 May 2004 and, subsequently, her involuntary admission to that unit which occurred on 23 June 2004 and continued until 15 July 2004.
74 In his submissions, Mr Bentley argued that evidence of Ms Cross' admission did not show that she was, owing to mental illness, incapable of managing her affairs in respect of the proceedings. In support of his argument Mr Bentley referred to certain provisions of the Mental Health Act 1990 (NSW). Whether a person may be admitted or detained as an involuntary patient under that Act turns upon whether the person is a 'mentally ill person' or a 'mentally disordered person' as defined. The definitions of those phrases are found in ss 9 and 10:
'9 Mentally ill persons
(1) A person is a mentally ill person if the person is suffering from mental illness and, owing to that illness, there are reasonable grounds for believing that care, treatment or control of the person is necessary:
(a) for the person's own protection from serious harm, or
(b) for the protection of others from serious harm.
(2) In considering whether a person is a mentally ill person, the continuing condition of the person, including any likely deterioration in the person's condition and the likely effects of any such deterioration, are to be taken into account.
10 Mentally disordered persons
A person (whether or not the person is suffering from mental illness) is a mentally disordered person if the person's behaviour for the time being is so irrational as to justify a conclusion on reasonable grounds that temporary care, treatment or control of the person is necessary:
(a) for the person's own protection from serious physical harm, or
(b) for the protection of others from serious physical harm.'
75 Mr Bentley is correct, insofar as he submits, that the evidence of involuntary admission does not conclusively prove that Ms Cross was a mentally disabled person for the purposes of the FCR in respect of the Creditor's petition at the time she was admitted. The tests under the Mental Health Act differ from the test which falls to be applied under the FCR. However, evidence of involuntary admission is relevant to the question of capacity under the FCR because it could rationally affect the assessment of the probability of the existence or non-existence of that capacity: Evidence Act 1955 (Cth) s 55. For example, such evidence tends to suggest that Ms Cross was not capable of communicating with or instructing a solicitor or advisor at that time.
76 At its highest, Mr Bentley's submission is that it is possible for a person to be an involuntary patient at a psychiatric hospital or psychiatric unit of a hospital but nevertheless have the capacity to manage his or her affairs in respect of certain proceedings. Even if that is possible, the question which must be answered is: Is the Court satisfied, on the balance of probabilities, that Ms Cross was incapable of managing her affairs in respect of the proceedings when she was admitted as an involuntary patient? The further question may then arise as to whether an inference should be drawn concerning the continuation of that incapacity and, as contemplated by Wigmore in [69] supra, Mr Bentley drew attention to the following matters, each suggesting that Ms Cross may have had capacity at times after she was given the Creditor's petition:
1. Ms Cross was due to be released from involuntary detention on 14 July 2004 and in fact was released on 15 July 2004.
2. Ms Cross was served in the presence of a social worker who arranged an appointment for her to see a Legal Aid solicitor to which appointment Ms Cross agreed. Clearly the social worker thought that Ms Cross could manage her affairs in respect of the proceedings otherwise why make an appointment for her to see a solicitor?
3. The Legal Aid solicitor saw her on 16 and 30 September 2004 and then again on 23 March 2005. The solicitor took instructions on an ongoing basis which can only give rise to the conclusion that he considered that Ms Cross could manage her affairs in respect of the proceedings. On 23 March 2005 he saw her with Ms de Rooy, an occupational therapist, at a time when an application had been made on 4 March 2005 for a Financial Management Order. Those circumstances seem not to have affected the view of either Ms de Rooy or the solicitor as to Ms Cross' ability to provide instructions for the carriage of proceedings.
4. Moreover, the Financial Management Order, which was given on 11 April 2005, is of no relevance as to Ms Cross' capacity as at 13 July 2004.
77 The first submission does not take the Creditor's case very far. The provisions of the Mental Health Act set in place a detailed regime which regulates the involuntary admission and detention of patients. Though it is possible that a person would be discharged under that Act because the person is no longer a mentally disordered person or a mentally ill person: see, for example, ss 29(2), 33(2), 35, 52 and 57, it is equally true that a person would be discharged where care of a less restrictive kind is appropriate and reasonably available to the person: see, for example, ss 20, 40, and 57. There is simply no evidence about why Ms Cross was discharged. It is very difficult to determine how the evidence of her discharge should be treated except to say that the fact that advance notice of it was given tends to show that consideration had been given to whether it was necessary to continue Ms Cross' detention at the hospital and that it had been determined that her detention was necessary until 14 July 2004. The fact that Ms Cross was not released on that day but was made to wait until 15 July also speaks against drawing any inference from these events favourable to the Creditor.
78 The second submission is not supported by the evidence. In a letter dated 7 October 2005 Ms Sanders writes of the events of 13 July 2004:
'I recall that the papers were handed to Ms Cross and that she retained possession of these. I also note that at the time Ms Cross did not appear to understand the serious nature of the documents she had been handed. Despite this, I encouraged Ms Cross to seek legal advice to which she agreed, and as such we telephoned the Sutherland Office of Legal Aid and arranged for an appointment…'
79 Even if it were relevant, Ms Sanders' view appears to be that Ms Cross should see a solicitor whatever the extent of her capacity might be. Indeed, Ms Sanders took care to assist Ms Cross to make the appointment rather than leave Ms Cross to undertake that task herself which would tend to suggest incapacity rather than capacity. In any event, for the reasons in [24] and [25] supra, it was, with respect, a case of the 'blind leading the blind'.
80 The third submission focuses on evidence of what occurred at the earliest in September 2004 over a month after the proceedings, at least from the Creditor's point of view, had finished and over two months after the purported service of the Creditor's petition. In any event, the evidence is that Ms Cross attended the solicitor 'with a worker from Sutherland Hospital' and in the Legal Aid Commission's view its involvement was:
'… to provide advice to [Ms] Cross about documents that she had with her when she attended appointments at Sutherland Legal Aid office on 16 and 30 September 2004; to advise her as to her entitlements to social security benefits and to write letters to relevant organisations to obtain information regarding her financial situation …'
81 It appears that the Commission found out that Ms Cross was bankrupt on or about 30 September 2004, that is, nearly two months after she had been declared bankrupt.
82 Even if any inference of the kind described by Mr Bentley could be drawn from this evidence, it has little weight in the scheme of the other evidence.
83 As to the submission that the financial management order is not relevant to the question of capacity, such a submission cannot be sustained in view of the test in s 55 of the Evidence Act and what has been set out above in relation to proving capacity.
84 A further submission was advanced on the basis of Ms Gupta's indication on 7 July 2004 that she could not respond to the Creditor's solicitor's enquires without Ms Cross' consent. It was submitted 'How could Ms Cross give that consent if she was incapable of managing her affairs in respect of the proceedings?' One answer may be that Ms Gupta could not provide the information because Ms Cross could not, and in fact did not, give her consent.
85 I have come to the conclusion and am satisfied on the balance of probabilities that Ms Cross was incapable of managing her affairs in respect of the Creditor's petition when she was admitted as an involuntary psychiatric patient on 23 June 2004. The next question is whether an inference should be drawn that Ms Cross' incapacity continued up to and including the time that she was served with the Creditor's petition on 13 July 2004. I have concluded that the inference should be drawn in the present case and I do so. It follows that Ms Cross was a mentally disabled person for the purposes of the FCR when she was given the Creditor's petition and that the Creditor has failed to comply with the provisions of O 43 r 13.