Plaintiffs v Defendants

LEONIE CAPPELLERI (as executrix of the estate of FRANK CAPPELLERI, deceased)

1 On 31 July 2017 Vincenzo Cappelleri ('Vincenzo') and his mother, Leonie Cappelleri ('Leonie'), in her personal capacity and in her capacity as the executor of the estate of her late husband, Frank Cappelleri deceased ('the deceased's estate'), issued a proceeding against the deceased's brothers, Domenico Cappelleri ('Domenico') and Mario Cappelleri ('Mario') and a family company, F & J Pty Ltd ('F&L').

2 A summary of the disputes as at 2020 is set out by Derham AsJ in Capelleri v Capelleri.[1] His Honour described the proceeding as concerning the ownership of a number of properties and control of F&L and how the ownership of these assets effects the deceased's estate. Domenico and Mario assert that F&L was always controlled by the deceased and, after the deceased separated from Leonie, the deceased changed the shareholdings and directorship in F&L into the name of Domenico. They pleaded that Domenico holds the shares on trust for Mario and the estate of Anna Rosa Cappelleri.

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

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

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

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

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

8 On 21 July 2021 Vincenzo filed a summons seeking orders to be appointed as Leonie's litigation guardian, in both her personal capacity and in her capacity as the executor of the estate of the deceased.

9 Vincenzo is the only child of Leonie and the deceased. Under the deceased's will, Leonie is the executor and sole beneficiary of the estate. In the event that Leonie had predeceased the deceased, Vincenzo would have been the executor and sole beneficiary of the estate. Vincenzo holds a power of attorney for Leonie. He is a party to the proceeding and is familiar with the facts and circumstances arising in the proceeding.

10 Domenico and Mario oppose the application on the ground that there is no evidence to show that Vincenzo is a fit and proper person to be appointed as Leonie's litigation guardian and based on paras 3 and 8 of the defence to counterclaim filed by Vincenzo and Leonie, it is open to the Court to conclude that he is not a fit and proper person.

11 Domenico and Mario submit that it is plain from the ASIC searches that Vincenzo falsely represented that the documents he lodged were certified and lodged by Mick Cappelleri ('Mick'). In the defence to counterclaim, Leonie and Vincenzo admit to having filed documents with ASIC altering the registered address, directorship, office bearers and shareholding of F&L from Domenico and Mario to Leonie and Vincenzo and that the alterations were not authorised by the person purporting to lodge them. Consequently, the documents lodged with ASIC were false and any endorsement or authorisation purporting to be the endorsement or authorisation of Mick on those documents was false. A person who has lodged false documents with a statutory authority lacks integrity and fidelity and is therefore not suitable to be appointed a litigation guardian.

12 Vincenzo submits that the parts of the defence to counterclaim relied on by Domenico and Mario are not admissions that he filed false documents. He submits that the named persons who are said to have filed the documents are not known to him and he filed further documents with ASIC to reflect the correct situation. These are issues in the proceeding which the Court will determine after hearing evidence and cross examination in the ordinary course of a trial.

13 It is common ground between the parties that a litigation guardian must be appointed to represent Leonie's interests in the proceeding. Pursuant to r 15.03(1) a person may be a litigation guardian of a person under a disability if they are not under a disability and have no interest in the proceeding adverse to that of the person under disability.

14 As to the first requirement, Vincenzo is not under a disability. Vincenzo also has the advantage of instructing the same solicitor as Leonie and he is also familiar with the proceeding. It is also likely to be costly for an outsider to become familiar with the proceeding just before the trial. The litigation has been on foot for over four years and there is a substantial amount of material to consider for the purposes of the trial.

15 As a general proposition, it is desirable that a person appointed as litigation guardian be connected with the party, such as a parent, relation or friend, as opposed to a stranger. An example of this proposition can be found in Nemeck v Nemeck where the Court appointed an adult child as litigation guardian for a parent in a contested family law proceeding as it is in the public interest that elderly litigants be represented by a family member because of the warmth and trust that should naturally arise between parent and child.[2]

16 The second requirement is that a litigation guardian should not have any interest in the proceeding adverse to that of the person under disability. The purpose of this requirement is for the protection of the person under disability and for the proper conduct of the proceeding. This does not mean that the person should have no interest in the proceeding. The rule is limited to circumstances where the litigation guardian has an interest adverse to the person under a disability.[3] Vincenzo's interest in the proceeding arises from being a registered proprietor of one of the properties and a joint registered proprietor with the estate of the deceased of another property. These properties form part of the dispute in the proceeding. Vincenzo and Leonie say that any claims under mortgages held by F&L are statute barred and, further, because no funds were transferred by F&L in respect of those mortgages, they seek removal of both mortgages. Vincenzo's interest in the proceeding is not adverse to Leonie's interest in the proceeding.

17 Domenico and Mario do not take issue with the requirements of r 15.03(1). Their objection to Vincenzo's appointment as Leonie's litigation guardian is based on paras 3 and 8 of the defence to counterclaim. Paragraphs 3 and 8 of the counterclaim need to be considered with paras 1 and 2 of the counterclaim.

18 Paragraph 1 of the counterclaim refers to details in the ASIC records for F&L as at 9.18 pm on 18 October 2019. At that time and date, the registered address of F&L was shown as 70A Rosamond Road, Maribyrnong, the directors of F&L were recorded as Mick and Mario, Mick was recorded as the secretary of F&L and Mick was recorded as the holder of 2 shares in F&L.

19 Paragraph 2 refers to seven documents filed with ASIC between 9.18 pm on 18 October 2019 and 1.42 am on 19 October 2019. Five of the documents are said to have purportedly been lodged by Mick and two by Vincenzo. Of the documents said to have been lodged by Mick, their effect was to change the registered address of F&L, replace Mario and Mick as the directors of F&L with Vincenzo and Leonie, record Vincenzo as the secretary of F&L and the shareholding of F&L was changed by decreasing the shareholding of Mick and increasing the shareholding of Vincenzo. Of the documents said to have been lodged by Vincenzo, one was a notice that Mick had ceased to be an office holder of F&L and Leonie Mary Tenace was appointed an office holder of F&L.

20 In the defence to counterclaim, Leonie and Vincenzo admit paras 1 and 2 and say further that the records referred to in para 1 of the counterclaim were incorrect and the documents filed with ASIC to give effect to the records described in para 1 were void ab initio and/or otherwise of no effect for the reasons set out in the statement of claim and the amendments did no more than correct ASIC's records.

21 Paragraph 3 of the counterclaim pleads that none of the documents purportedly lodged by Mick were lodged by him or authorised by him.

22 Leonie and Vincenzo admit para 3 of the counterclaim and plead that all documents purportedly lodged with ASIC by 'Mick Cappelleri' or 'Michael Cappelleri' were not lodged by a person of that name/description or otherwise authorised by a person of that name/description and ASIC's records were amended accordingly.

23 Paragraph 8 of the counterclaim pleads that the purported transfer of shares is invalid and ineffective.

24 Leonie and Vincenzo admit the allegations in para 8 of the counterclaim and plead further that 'Mick Cappelleri' or 'Michael Cappelleri' could not transfer the shares as there is no person of that name or description and they never owned the shares and the ASIC records were corrected accordingly.

25 It is clear that the matters raised in these paragraphs go to the main issue in the proceeding, that is, the ownership of the properties and control of F&L and how the ownership of these assets effects the deceased's estate. The reliance on pleadings to conclude that Vincenzo is not a fit and proper person to be appointed as Leonie's litigation guardian is misconceived. The issues arising from paras 3 and 8 of the defence to counterclaim are not findings of fact or final conclusions. They are issues at the trial of the proceeding to be determined by the Court after hearing the evidence in chief, cross examination and submissions, not on an application for the appointment of a litigation guardian.

26 For the reasons set out, it is appropriate that Vincenzo be appointed as the litigation guardian for Leonie. As Leonie has lost capacity, an application must be made for Leonie to be discharged as executor of the estate of the deceased. In the circumstances, Vincenzo is the appropriate person to make that application and also seek that he be appointed as administrator of the estate. In making that application, it will be necessary for Leonie to have another litigation guardian. Once the orders for discharge and appointment are made, the title of the proceeding can be amended in this proceeding. In the usual course, this would be done on the papers.

(a) pursuant to r 15.03(4)(a) of the Supreme Court (General Civil Procedure) Rules 2015, Vincenzo Cappelleri be appointed litigation guardian of Leonie Cappelleri in her personal capacity and the title to the proceeding be amended accordingly;

(b) Costs reserved.

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

[2] [2019] FCAA 3205, [79] (Brown J). See also Vishniakov v Lay [2019] VSC 403, [33] (Derham AsJ).

[3] Vishniakov v Lay (n 2) [38] (Derham AsJ).