Turner v O'Bryan-Turner

Procedural history of the matter

1. The proceedings have had a somewhat tortured procedural history and both sides accept some share of the blame in this regard.
2. The principal claim was commenced by the filing of a statement of claim on or about 15 March 2017. The cross-claim was filed in May 2017.
3. The proceedings were commenced in the expedition list, having regard to the fact that Wendy had been diagnosed with a terminal illness and there was a need for Wendy's oral evidence to be taken as soon as practicable. Wendy's evidence was subsequently taken on commission by a Registrar of the Local Court of New South Wales at Parkes, having regard to Wendy's medical condition.
4. By notice of motion filed 8 September 2017 (the 2017 Motion), the David/Karl interests sought, inter alia, to remove Nick as John's tutor. They also sought orders to remove the solicitors currently on the record as John's solicitors in the principal claim from acting for any party in the proceeding.
5. A mediation was held (evidently unsuccessfully) in Parkes in November 2017.
6. On 13 December 2017, orders were made by Sackar J (according to the Court's record, by consent) to the effect that, subject to further order, each of the plaintiffs (Nick, as tutor for John, and Allawah) and the defendants (then, Wendy, David and Karl) (and their servants and agents) be restrained from acting or holding himself, herself or itself out as entitled to act as attorney for John (Order 2) and for the temporary appointment (pending determination of the question whether John is able to manage his own affairs or until further order) of the NSW Trustee and Guardian as the receiver and manager of John's estate.
7. The 2017 Motion was heard by Sackar J on 26 and 27 June 2018. On that occasion, the David/Karl interests did not press their application to remove Nick as John's tutor on the principal claim (pressing only, and unsuccessfully, for the removal of the solicitors on the record for him).
8. On 20 July 2018, the David/Karl interests filed a notice of motion seeking to 'lift' the injunction imposed by Sackar J's 13 December 2017 orders and leave to file an amended statement of cross-claim (the 2018 Motion).
9. Complaint is made by Nick (of relevance in due course when considering the question of costs) that, since the 2018 Motion, there have been six further iterations of the 2018 Motion "seeking numerous different orders, some of which have been abandoned entirely, some of which have evolved and some of which have been abandoned and reintroduced".
10. Following Wendy's death on 26 August 2018, Rees J ordered on 9 October 2018 that the David/Karl interests file a notice of motion as to: the appointment of a representative to Wendy's estate pursuant to r 7.10 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR); the appointment of a person to act as tutor for John as cross-claimant; and leave to amend the cross-claim. (Nick says that the failure to comply with Rees J's orders in a timely manner was the subject of a later hearing resulting in indemnity costs orders against the David/Karl interests.) On 14 February 2019, the matter came before me and I made further orders for the filing of such a notice of motion.
11. On 21 February 2019, a notice of motion was filed (Nick complains that the relief there sought was contrary to that which was the subject of the orders that had been made by Rees J and by me), seeking orders that: Nick be restrained from acting as tutor; leave be given to the defendants to proceed by cross-claim against a solicitor (Ms Stephanie Hughes); and as to leasing the Trundle properties. That motion was subsequently abandoned.
12. On 22 March 2019, a fresh notice of motion was filed (the March Motion) seeking (again, Nick says, contrary to the orders that had been made for the filing of a motion) orders that: Nick be restrained from acting as tutor; Angelena be appointed as representative of Wendy's estate on the cross-claim; the defendants be given leave to proceed against Ms Hughes on the cross-claim; the defendants be given leave to file an amended cross-claim; the defendants be given leave to amend the defence; directions as to the mortgagee (NAB)'s role in the proceeding; and as to leasing of the Trundle properties.
13. Following the listing of the March Motion (for hearing of the relief sought in prayers 1-7 only - i.e., not to deal with the application for orders for the leasing of the Trundle properties), the David/Karl interests notified Nick of their intention to seek orders under a further version of the notice of motion served on 12 June 2019. Subsequently, on 17 June 2019, an amended notice of motion was served by the David/Karl interests (that being the version of the interlocutory application now being dealt with) (the Amended Motion).
14. The relief sought under the Amended Motion (for which leave to file was sought at the hearing of the present application) was, relevantly, as follows: 1. Order 2 made on 13 December 2017 and entered 14 December 2017 be lifted for the purpose of seeking the orders below. 2. That Nicholas John Turner be restrained from acting as Tutor for Owen John Turner in the Plaintiffs' Claim. 3 That Angelena May O'Bryan be appointed pursuant to UCPR 7.10 to be the representative of the estate of the late Wendy Joan O'Bryan Turner in each of the Plaintiffs' Claim and the Cross Claim herein. 3A That Angelena May O'Bryan be appointed as Tutor for Owen John Turner on the First Cross Claim. 3B That leave be granted to file an amended Cross-claim in the form of Annexure A to the affidavit of Paul Richard Hargreaves sworn 12 June 2019. 3C In the alternative, leave be granted to David John Turner. Karl John Turner and Angelena May O'Bryan as executor of the estate of the late Wendy Joan O'Bryan-Turner to file a dross [sic] claim in the form of annexure A to the affidavit of Paul Richard Hargreaves sworn 12 June 2019 (with appropriate changes to the names of the parties). 3D That leave be granted for the Defendants to File an Amended Defence pleading therein an additional paragraph in the following words ' [sic] '69. In the exercise of its discretion, the Court should decline to grant the equitable relief sought by the Plaintiffs in their Summons and Statement of Claim'. 3E That the substantive proceedings herein be listed for hearing. …
15. Leave to file the Amended Motion was opposed by Nick. Complaint was made that the David/Karl interests had not taken steps to relist the proceeding before me to deal with those matters in advance of the listed hearing on 21 June 2019 and that they had not explained, or adequately explained, the basis for not complying with the earlier orders made by Rees J and by me in relation to the filing of a notice of motion of the kind there described.
16. Nick maintained that leave should not be granted for the amendment of any motion to include the orders contained in the Amended Motion; alternatively, that if leave be granted for the filing of the Amended Motion and the motion heard, the plaintiffs ought be awarded costs on an indemnity basis against the defendants.
17. I gave leave for the filing of the Amended Motion. I was not persuaded that there was any prejudice that would be suffered by Nick by proceeding to deal with the relief now being sought that could not adequately (and consistently with the overriding purpose mandated for the conduct of litigation in this Court) be met by a costs order in due course; and I was of the opinion that it was in the interests of the just, quick and cheap resolution of the real issues in dispute to settle the complaints about the constitution of the proceedings once and for all. I deal with the question of costs later in these reasons.

Tender of "without prejudice" correspondence

1. At the hearing of the present application, the David/Karl interests sought to tender certain "without prejudice" correspondence relating to settlement discussions. The tender of that correspondence, pursuant to s 131(2)(g) of the Evidence Act 1995 (NSW), was put on the basis that unless such evidence is admitted the affidavit evidence of Nick or inferences from that evidence (to the effect that he does not seek any personal relief from these proceedings; has brought the proceedings to restore his father's estate; and has no direct interest in these proceedings) is likely to mislead the Court (see Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190). Nick objected to the admission of that "without prejudice" correspondence and opposed the proposition that unless the "without prejudice" correspondence were to be admitted the Court would be likely to be misled that he was only and always acting purely in his father's interests in relation to the principal claim.
2. The David/Karl interests maintain that the "without prejudice" correspondence, if admitted, would prove that Nick seeks personal financial gain in these proceedings, at least in terms of settlement. It is submitted that seeking personal financial gain in settlement discussions when he is acting as John's tutor demonstrates the conflict between Nick's own personal interests and the interests of John in the principal claim.
3. I provisionally admitted the evidence sought to be tendered but I am not persuaded that it is necessary to have regard to any settlement offers that have been made. It seems to me to be obvious that a party in Nick's position (particularly one who has already foreshadowed a challenge to the provisions of the Will and who in any event would be in a position to determine the distribution of assets and income by the trustee company if the 2010 and 2015 transactions are not set aside) has at the very least an indirect personal interest in the outcome of the proceedings (and any settlement of those proceedings). While that does not necessarily give him an interest adverse to the incapacitated person, in the sense that both have an interest in the restoration of property to the incapacitated person and the question is only then what happens to that property, given the manner in which I consider this application should be dealt with from a practical point of view, it is not necessary to consider the settlement offers that were made during the course of discussions on a without prejudice basis and I have not had regard to that material in reaching my conclusion on the present application. Accordingly, I formally reject the tender of that material.

Submissions for the David/Karl interests

1. The David/Karl interests note that at present there is no independent tutor available. They say that both sides have their own interests in pursuing and defending the principal claim and the cross-claim, respectively. It is submitted that, in the particular circumstances of this case, neither side is conflicted in terms of pursuing and defending the principal claim and the cross-claim, respectively; but that if there be a conflict, there is no solution available which would remove the conflict and allow the respective claims to be litigated.
2. As noted above, the David/Karl interests maintain that there is no conflict of interest in the principal claim and cross-claim being dealt with in the same proceedings as presently constituted (but that if there is then the same conflict also affects Nick's position).
3. They accept that there is factual overlap between the claims but say that the two sets of transactions on both sides of the record are "completely distinct" (see T 24.10ff). In effect, what is said is that one side of the family wants to represent John in relation to transactions that might be thought to be on that side of the family's interests and the other wants to represent John to set aside different transactions on that side of the family's interests (T 25.23). It is said that if the principal claim succeeds, and the cross-claim fails, the properties are in John's name and that Nick, as the sole determining mind of the two wholly discretionary trusts, is, for all intents and purposes, the trustee and would have a sole discretion to distribute those properties to himself (T 25.28); whereas, if the principal claim succeeds, but the cross-claim also succeeds, then the properties would still go back to John but there would be no loan to Allawah anymore and, when John ultimately dies, the assets would be distributed as per that last Will (subject to Nick's foreshadowed challenge to that Will) (see T 25.33).
4. Thus, the submission of the David/Karl interests is that Angelena should be appointed John's tutor on the cross-claim (and the proceedings be listed for hearing) but that, if Angelena is not permitted to be John's tutor on the cross-claim, then the same reasoning underpinning that refusal would lead to the removal of Nick as John's tutor on the principal claim.
5. Alternatively, the David/Karl interests seek leave for the filing of a cross-claim by Angelena (as executrix of Wendy's estate), David and Karl in the same form as that already drafted, for the purpose of litigating the claims against Nick and Allawah.
6. The David/Karl interests submit that there has been no relevant delay in dealing with the conflict issue, that having earlier been raised when the matter was before Sackar J in the expedition list and there then having been urgency in taking Wendy's oral evidence without delay (and no independent tutor then having been able to be found).
7. It was made clear in the course of oral submissions that the David/Karl interests only press the relief seeking to remove Nick as tutor if Angelena is not appointed as tutor on the cross-claim "just so there is equality of the two sides of the family" (T 26.37). In other words, if Angelena is appointed as tutor for John on the cross-claim, and leave is granted to amend the cross-claim as now sought, there is no challenge to Nick as his father's tutor on the principal claim.

Submissions for Nick

1. Certain of the relief sought in the Amended Motion was not opposed. In that regard, Nick's position may be summarised as follows: 1. Order 1 is opposed, on the basis that there is no requirement for the injunction to be lifted to determine the orders sought in the Amended Motion. 2. Order 2 (seeking to restrain Nick from acting as John's tutor on the principal claim) is opposed. 3. As to Order 3 (the appointment of Angelena as representative of Wendy's estate), it is said that r 7.10 of the UCPR does not apply but, if it does, the order is not opposed in relation to the plaintiffs' claim but is opposed in relation to the proposed cross-claim sought under Order 3C. 4. Order 3A (the appointment of Angelena as tutor of John on the cross-claim) is opposed (it being noted that this order was not sought in the March Motion). 5. Order 3B (leave to file the amended cross-claim) is opposed (it being noted that, to the extent that leave is sought by the defendants to file a cross-claim with John as cross-claimant, this order was not sought in the March Motion). 6. Order 3C (the alternative claim for leave for the cross-claim to be brought in the same form but by the David/Karl interests in their own right and not as John's tutor) is opposed. 7. Order 3D (leave to amend the amended defence) is not opposed. 8. Order 3E (listing the proceedings for hearing) is opposed, to the extent that a final hearing is sought.
2. Any order for costs was also opposed.
3. Before turning to those matters, I note that Nick has complained as to the compliance by the solicitors currently acting for the David/Karl interests with a subpoena issued seeking documents in respect of a claimed charge for unpaid legal fees. It is said that although the former solicitors produced 212 pages of material, the current solicitors produced only two documents (a letter from the solicitors to the defendants and a retainer agreement). The relevance of the retainer arrangements to the present application is as to the existence of an equitable charge over the Trundle properties in respect of solicitors' costs. Complaint was made that the granting or taking of such a charge might be contrary to the express terms of Order 3 of the orders of Sackar J dated 7 April 2017 which, according to the court file, are that: 3. Until further order of the Court each of the First, Second, Third and Fourth Defendants, by himself or herself or any agent or servant on his or her behalf, be restrained from dealing in any way (including but not limited to assigning, selling, transferring, further leasing, licensing, encumbering or further encumbering, lodging or recording any dealing on the register at Land and Property Information ("LPI") save for a dealing which records this order) with: (a) The [Trundle properties] [identified and listed individually]
4. Insofar as information was not provided as to the quantum of the charge and how it was comprised, it was said by Nick that the plaintiffs had been prejudiced in preparing for the hearing of the present application. That issue, ultimately, went away during the course of the oral hearing insofar as instructions were received to the effect that the solicitor would "deal with the executor formally and discharge that part of the charge over property transferred from John to Wendy" (T 41.25); so that the charge in question in respect of Angelena's legal costs of the proceedings "will disappear over the property the subject of the principal proceedings" (T 41.28). (Though, to the extent that the issue of costs illustrates how there is potentially an adverse interest on the part of Angelena in the proceedings, the removal of the charge does not address that core concern as expressed by Nick; i.e., that John is a contingent creditor in Wendy's estate by reason of a costs order made by Sackar J, a further costs order I had made, and that there was the prospect of more adverse costs orders.)
5. As to the proposed Order 1, the position put for Nick, quite simply, is that the injunction granted by Sackar J does not preclude the bringing of the current application because what it is restraining is acting as attorney (i.e., under the power of attorney).
6. As to the proposed Order 2, that Nick be restrained from acting as tutor for John on the principal claim, Nick complains that this is the second attempt to remove him as John's tutor, the first (under the 2017 Motion) not having been pressed at the hearing of the 2017 Motion in June 2018. It is noted that, by that time, the David/Karl interests were aware that the NSW Trustee and Guardian had declined to act to represent John (referring to a letter dated 13 May 2018 from their solicitor in which this was acknowledged).
7. It is submitted that relief by way of removal of Nick should not be granted because the David/Karl interests failed properly to prosecute relief to remove Nick; the plaintiffs incurred costs in preparing for the hearing of the 2017 Motion and have now incurred the costs of preparing for the hearing of the Amended Motion (which includes the previously abandoned relief in the March Motion and earlier versions thereof); and that to allow the David/Karl interests to have a second attempt to remove Nick as tutor approximately 27 months after the commencement of proceedings and on a second application, with six iterations, is contrary to ss 56 to 58 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act).
8. Nick accepts that under r 7.18 of the UCPR, the Court may remove a tutor in a proceeding; that the power is discretionary; and that the power can be exercised in circumstances where the tutor has an adverse interest; but maintains that he does not have an adverse interest to John in respect of the claim. It is submitted that the relief sought in the principal claim benefits only John, including, relevantly, that: the Trundle properties be re-transferred to John; a constructive trust be declared over the Trundle properties in favour of John; and that the defendants pay the value of the Trundle properties to John by way of equitable compensation. Nick emphasises that he does not seek any relief for himself in this proceeding. It is noted that there is no allegation in the defence which alleges that Nick caused, or participated in causing, or knowingly received the benefit of, the alleged unlawful transfers; and thus it is said that, if the claim is successful, Nick will neither receive a benefit nor suffer any detriment or loss.
9. Reference is made to South v Northern Sydney Area Health Service [2003] NSWSC 479, where the removal of a tutor for a person under a legal incapacity was ordered because the tutor had an interest adverse to that person (that case concerning medical negligence where there was a possibility that the tutor may have been implicated). It is submitted, and I accept, that the case is distinguishable in that it is not here alleged that Nick is implicated in the alleged unlawful transfers.
10. It is further submitted that there are relevant discretionary factors, namely that: the motion is being heard approximately 27 months after the proceeding commenced and the claim (as distinct from the cross-claim) is at an advanced stage with most of the evidence having been filed; this is the second attempt by the defendants to remove Nick as John's tutor; Nick has incurred substantial legal costs in his appointment as tutor to his detriment and his family's detriment (referring to Sackar J's reasons on the application to restrain Nick's solicitors from acting and that Nick and his family lived in rural New South Wales (Forbes) and his income from his business has been significantly affected by the rural drought); that Nick has competently prosecuted the proceeding as tutor; that John has no assets; that the NSW Trustee and Guardian has declined to accept the appointment as John's tutor because John has no assets and hence there will be difficulty in obtaining a new tutor willing to accept liability for costs of the whole proceedings; and the removal of Nicholas as tutor will stay the claim until a new tutor is found, if one can be found. It is submitted that the David/Karl interests should not be permitted, by seeking to remove Nick as John's tutor, to prevent or delay the determination of John's claim for the wrongful taking of the assets by the defendants.
11. It is noted that there is an inherent jurisdiction, regarding procedural and administrative concerns arising in a proceeding, to facilitate a proceeding which is just and expeditious and Nick submits that, in weighing the above factors, Nick should remain as tutor.
12. As to the proposed Order 3 (appointment of a representative to Wendy on the claim and on the cross-claim), Nick opposes this order in relation to the cross-claim on the basis that Angelena has an adverse interest to John under r 7.18(5)(b) of the UCPR. It is submitted that there is no basis for Angelena, as Wendy's executrix, to seek to become a cross-claimant.
13. As to the proposed Order 3A (the appointment of Angelena as tutor for John), it is accepted that the power to appoint a tutor under r 7.18 of the UCPR is discretionary but it is submitted that it will not be exercised if the proposed tutor has an adverse interest.
14. Nick points to r 7.18(5)(b) of the UCPR, which requires that there be evidence that the proposed tutor does not have an interest in the proceedings adverse to the interests of the person under legal capacity. It is noted that Angelena has not sworn an affidavit deposing to why she considers she is acting in, and not adverse to, John's interests by seeking to take on the dual roles (as Wendy's representative and John's tutor) and that there is no other evidence in the Amended Motion regarding her interests in relation to John. It is noted that the affidavit from the solicitor, Mr Hargreaves, gives evidence on information and belief and that Mr Hargreaves does not give evidence as to this matter concerning whether there is an adverse interest.
15. Nick argues that, contextually, on the one hand Angelena seeks appointment as tutor to John in a cross-claim to protect John's interests; while on the other hand, Angelena seeks appointment as representative to Wendy who is preventing John from protecting his interests; and submits that this is an adverse interest within the meaning of r 7.18(5)(b) of the UCPR.
16. It is submitted that if Angelena, as Wendy's executrix, is the representative of Wendy in the principal claim, then she represents the interests of a defendant who allegedly unlawfully transferred all of John's real property for no consideration to herself and her sons (David and Karl), which real property comprised substantially all of John's assets and did so at a time when John lacked mental capacity and thereafter had no assets of his own to meet his needs, including fulltime care at a nursing home; and that the defendant allegedly engaged in this conduct by misuse of the power of attorney granted by John in breach of fiduciary duties owed to John.
17. It is said that Wendy's pleaded interests are to defend the allegation for the purpose of maintaining Wendy's, David's and Karl's interests in the properties; and that, in substance, Angelena, as Wendy's representative in the defence, is preventing John from recovering his previous assets or the value of those assets. Hence, it is said that this interest is adverse to John's interests within the meaning of r 7.18(5)(b) of the UCPR.
18. Nick accepts that John's interests might potentially be to remove the charges created by the 2010 and 2015 transactions for the purpose of increasing the value or equity of the Trundle properties in circumstances where those properties are transferred back to John but that it is not in John's interests to remove the charges created by those transactions where the purpose is to increase the value of the assets held by the David/Karl interests.
19. Nick submits that in substance, by seeking to become John's tutor on the cross-claim, whilst at the same time representing Wendy in the defence to John's claim, Angelena is seeking to increase the value of assets of Wendy's estate, as well as the assets of David and Karl, and to diminish the value of the assets of John's estate; and that this is an adverse interest within the meaning of r 7.18(5)(b) of the UCPR.
20. Insofar as Angelena, together with David and Karl, have charged John's assets (which John is seeking to recover/retain the value of by the principal claim), with payment of legal fees from the very lawyers whom Angelena has retained to defend John's claim; and, at the same time, to act for Angelena as John's tutor on the cross-claim, it is submitted that this is a further adverse interest under r 7.18(5)(b) of the UCPR.
21. Thus, it is submitted that Angelena's interests are adverse to John and she should not be appointed as John's tutor on the cross-claim; that the cross-claim should be stayed; and that the principal claim should proceed to hearing.
22. As to the proposed Order 3B (leave to file an amended cross-claim), in principle, the plaintiffs do not oppose the substance of the amended pleading, being the addition of a cause of action based on unconscionable conduct, provided that there is a proper party who has standing to propound the cross-claim or the proposed amended cross-claim. It is said that success on the cross-claim has no impact on the plaintiffs' claim because the 2010 and 2015 transactions do not touch upon the alleged unlawful transfers; and that if the 2010 and 2015 transactions are set aside for any reason, the principal cause of action against the defendants remains unaffected.
23. Opposition to the amendment is raised here because it is said that the cross-claim was never properly commenced in accordance with the UCPR because a "Consent to Act as Tutor" (including a relevant solicitor's certificate as to whether the proposed tutor has an adverse interest) was not filed at the same time as the filing of the cross-claim (a matter pleaded at [1A] of the defence to the cross-claim filed on 13 July 2017). Thus, it is said that there has never been a lawfully appointed tutor for John as cross-claimant.
24. As to the proposed Order 3C (leave for the defendants to proceed by cross-claim against Nick and Allawah), it is submitted that there is no basis to permit this. It is noted that the relief sought in the cross-claim concerns: declarations as to the validity of certain promissory notes; declarations as to the validity and effect of loan agreements and mortgages; John's entry into transactions and signing documents being obtained by unconscionable conduct or undue influence by (or to the knowledge of) Nick and Allawah; and an order setting aside those transactions and documents.
25. It is said that the proposed amended cross-claim does not plead a basis for the defendants' standing to obtain that relief. Nick notes in this regard that the defendants were not parties to any of the 2010 transactions (including the promissory notes, loan agreement and mortgages) nor did they sign any documents nor were they involved in, or victims of, or directly affected by, the alleged unconscionable conduct or undue influence.
26. As to the proposed Order 3E (that the proceeding be listed for hearing), it is submitted that if leave to file an amended cross-claim is granted, the cross-defendants will require time to consider and/or file an amended defence to the cross-claim and the cross-claimants will require time to consider and/or file an amended reply to that defence; the parties will require time to put on further evidence in support of their pleadings; the parties will require time to consider categories of discovery; and the parties will require time to consider whether further subpoenas should be issued.
27. In essence, the position of Nick is that if the principal claim is heard first, the issue of adverse interest would go away; and argued for an outcome that would permit that to occur. Concern was raised as to the opening of the floodgates if case management powers were used in the context of this application as to who should be the tutor. It was said that if the principal claim were to be heard first (and were to be successful) then the NSW Trustee and Guardian would step in to manage John's estate and could then consider the merits of proceeding with the cross-claim, thus dealing with the whole issue.

Costs

1. As to costs of the motion, the plaintiffs seek costs pursuant to s 99 of the Civil Procedure Act on an indemnity basis forthwith or, alternatively, an order that the defendants pay the plaintiffs' costs on an indemnity basis forthwith. The plaintiffs sought to deal with the issue of costs on the provision of submissions by the parties and their legal representatives and that they be determined on the papers.

Determination

1. There is no dispute that John is under a relevant legal incapacity. Rule 7.14(1) of the UCPR precludes a person under legal incapacity from commencing or carrying on proceedings except by his or her tutor. Rule 7.14(2) of the UCPR prevents the tutor of a person under legal incapacity from commencing or carrying on proceedings except by a solicitor, unless the court orders otherwise.
2. In Masterman-Lister v Brutton & Co (Nos 1 and 2); Masterman-Lister v Jewell [2003] 1 WLR 1511, Kennedy LJ (at [31]) noted that: … In the context of litigation, rules as to capacity are designed to ensure that plaintiffs and defendants who would otherwise be at a disadvantage are properly protected, and in some cases that the parties to litigation are not pestered by other parties who should be to some extent restrained.
3. In the same case, Chadwick LJ noted (at [65]) that a "defendant is entitled to expect that he will not be required to defend proceedings brought against him by a person of unsound mind acting without a next friend".
4. Rule 7.15(2) of the UCPR provides that any natural person is eligible to be the tutor of a person under legal incapacity, in respect of any proceedings, unless the person is, amongst other things, a person who has an interest in the proceedings adverse to the interests of the person under legal incapacity (r 7.15(2)(c)). Any legally capable, "unconflicted" and "disinterested" person within the jurisdiction may be a tutor (see Ritchie's Uniform Civil Procedure NSW, vol 1 (Ritchie's) at [7.15.10], referring to R v Registrar of Melbourne County Court; Ex parte Farrington [1927] VLR 406; (1927) 33 ALR 270). It therefore follows naturally as a matter of common sense that a defendant cannot be appointed tutor where the legally incapacitated person is a plaintiff; nor can a plaintiff or a co-defendant be appointed tutor where the legally incapacitated person is a defendant. Also excluded are persons closely associated with an opposing party (including their mere nominee) (see Re Burgess, Burgess v Bottomley (1883) 25 Ch D 243 (Cotton and Lindley LJJ) (Re Burgess); Rappard v Williams [2013] NSWSC 1279 (Hallen J) at [69]). In Re Burgess, Lindley LJ (at 246) said: [The tutor] is in substance, though not in form, one of the Defendants; he is connected with and appointed by them, and is not in a position, and is not in the least likely, to look after the interests of the infant if they should conflict with the interest of the executors.
5. There is also no doubt that the Court may dispense with the requirement for a tutor to be appointed in particular cases - see Mao v AMP Superannuation Ltd [2015] NSWCA 252 (Mao) and Kostov v YPOL Pty Ltd [2018] NSWCA 306. However, in those cases the person under the incapacity was seeking to represent herself, whereas in the present case John is not only incapable of doing so but has not sought to do so. Moreover, it is clear that the discretion to dispense with the requirement for a tutor should be exercised with caution and only in limited circumstances.
6. The function of a tutor is two-fold, as was explained by Sir Robert Megarry V-C, in In re E. (mental health patient) [1984] 1 WLR 320 at 324 (a decision reversed on appeal but without question as to its dicta): The main function of a next friend appears to be to carry on the litigation on behalf of the plaintiff and in his best interests. For this purpose the next friend must make all the decisions that the plaintiff would have made, had he been able. The next friend may, on behalf of the plaintiff, do anything which the Rules of the Supreme Court require or authorise the plaintiff to do, though the next friend must act by a solicitor. See R.S.C., Ord 80, r. 2. It is the next friend who is responsible to the court for the propriety and the progress of the proceedings. The next friend does not, however, become a litigant himself; his functions are essentially vicarious. Nevertheless, it is an important part of his functions that by acting he makes himself personally liable to the other party to the litigation for the costs of unsuccessful proceedings, and also for any damages under an undertaking in damages. On the other hand, if it was proper to institute the proceedings, and they have been conducted with propriety, the next friend will be entitled to be indemnified in respect of the costs by the plaintiff, or at least out of the plaintiff's estate: see, e.g., Steeden v. Walden [1910] 2 Ch. 393 …
7. The requirement that a tutor not possess an adverse interest follows logically from the proposition that the tutor's appointment is for the protection of the incapacitated person in the context of litigation (see, for example the comments in Moore v Platel (1845) 49 ER 1192 at 1193 by Lord Langdale MR, and in Clayton v Clarke (1860) 66 ER 241 at 244 by Sir John Stuart V-C). Jessel MR in Re Taylor; Taylor v Taylor [1881] WN 81; 25 SJ 525 at 525 noted that "[t]he real objection to a person acting as next friend was where he had an adverse interest and could not serve two masters".
8. In Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] HCA 1 (Dey), Williams J, having quoted from Bowen LJ in Rhodes v Swithbank [1899] 22 WBD 577 at 579, noted the dual purposes of appointment of a next friend but made clear that principally the appointment was for the proper protection of the interests of the person under an incapacity and that "[t]he next friend will be removed by the court if he has an interest, or is closely connected with some person who has an interest, which is adverse to that of the infant, or if for any reason the court considers that the infant's interests will not be properly protected by him". Thus, the removal of a tutor with an adverse interest is a longstanding practice. Such a power should be employed by the court where the incapacitated person's interests are at risk of not being upheld.
9. There is no power to make an order that an unidentified person be appointed as a tutor (Mao at [50]). However, an order appointing a tutor may be conditional, such as being subject to the provision of the necessary evidence under r 7.18(5) of the UCPR (Porter v Le [2010] NSWSC 998 at [6], where Harrison J appointed a new tutor subject to the provision of evidence of disinterest). If an incapacitated person lacks the ability to find an appropriate tutor, or the means to meet their expenses, it is likely to be desirable for the court to invite the Law Society, the Bar Association or the Pro Bono Panel to provide assistance (see Iskandar v Mahbur [2011] NSWSC 1056 at [16] (Slattery J); r 7.36 of the UCPR). However, attempts to identify an alternative tutor in the present case were not successful. Kunc J observed in Saravinovska v Saravinovski (No 5) [2015] NSWSC 128 (at [49]) that "the fundamental concern to ensure that the proposed tutor does not have an interest in the proceedings adverse to the person under legal incapacity remains relevant today".
10. In the present case, it is evident that Angelena, as executrix of Wendy's estate, has an interest in the proceedings which is adverse to that of John - namely to defend the claim in relation to the alleged wrongful transfer of John's real property to the David/Karl interests and the alleged misuse of the power of attorney; whereas John's interest (if the alleged wrongdoing be established) is to recover the properties wrongly transferred. The potential for adverse costs orders also presents an adverse interest to that of John. Nick, on the other hand, whilst having a personal interest (at least indirectly) in the outcome of the proceedings, and hence a potential conflict when it comes to potential settlement of the proceedings, does not have an adverse interest in that it is in both his and John's interest that the properties be restored to his estate (assuming a wrongful transfer in the first place).
11. However, that gives rise to the practical dilemma as to how best to manage the respective claim and cross-claim in accordance with the overriding purpose mandated by s 56(1) of the Civil Procedure Act namely, "to facilitate the just, quick and cheap resolution of the real issues in the proceedings". This statement of purpose is complemented by the court's obligation as stated in s 56(2), that, it "must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or any such rule". The combined effect of these two subsections (as noted in Ritchie's at [s 56.5]), is to "emphasise the fundamental judicial obligation to determine the real disputed issues justly, with appropriate expedition and without unnecessary cost".
12. Section 61(1) of the Civil Procedure Act authorises the court to give any direction "it thinks fit (whether or not inconsistent with the rules of court) for the speedy determination of the real issues between the parties to the proceedings" (see also s 62 of the Civil Procedure Act and r 2.1 of the UCPR). The overriding purpose of civil proceedings is further emphasised by the powers contained in s 14 of the Civil Procedure Act (the power to dispense with compliance with the rules in particular cases) and r 1.12 of the UCPR (the power to extend or abridge times provided by orders, judgments and rules). Ritchie's at [s 56.5] observes: All of these provisions echo the sentiment expressed in the frequently stated proposition that procedural rules are the servants, not the masters, of justice: Harding v Bourke (2000) 48 NSWLR 598; [2000] NSWCA 60 at [26] per Mason P. That proposition, and the generality that underlies it, permit courts both to dispense with the formal rule requirements, and to impose requirements different from the rules, where they are satisfied such a course is appropriate to the circumstances of the particular case.
13. Regard must therefore be had to: the "case management" objectives stated in s 57 of the Civil Procedure Act; the "dictates of justice"; the statutory objectives of avoiding delay and minimising the cost of proceedings (ss 59 and 60 of the Civil Procedure Act); and the powers in ss 61(1)-(2) and 62(1)-(3) of the Civil Procedure Act (see Ritchie's at [s 56.10])). See also Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 (per French CJ, Kiefel, Bell, Gageler and Keane JJ).
14. It was accepted by Counsel appearing for Nick that the issue of adverse interest would not have arisen (as it has here) had the cross-claim been commenced in a separate proceeding. In those circumstances, and particularly, having regard to the obvious overlap in relation to evidence as to John's capacity and susceptibility to undue influence at the relevant times (from 2010 through to 2015), I consider that it is not in accordance with the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings to, in effect, bifurcate the hearing of the claims and stall the progress of the cross-claim pending determination of the principal claim.
15. Therefore, in circumstances where I accepted that Angelena, as Wendy's executrix, has an interest adverse to John in relation to the principal claim, and where I was concerned not to set any precedent as to the dispensation of the requirement for a tutor in proceedings of this kind, I reached the view that the appropriate course was not to permit Angelena to be appointed as John's tutor to prosecute the cross-claim in the present proceedings (nor to grant the alternative relief to permit the cross-claim to be brought by the David/Karl interests in their own right - as I am not persuaded that they have standing to seek the relief here sought in relation to the 2010 and 2015 transactions); but instead to put in place a regime whereby the cross-claim be discontinued but that Angelena have leave to commence fresh proceedings as John's tutor - with those proceedings to be heard consecutively after the hearing of the principal claim by the same judge and with evidence in the principal proceedings that is relevant in the second set of proceedings (primarily, I would assume, the medical evidence) being treated as evidence in that second set of proceedings. That seems to me to comply with the requirement to facilitate the statutory purpose mandated by the Civil Procedure Act particularly where it is not likely that the principal claim will be able to be heard this year - and hence the delay occasioned by having both proceedings travel together, so to speak, will not countervail the economies to be achieved by not having duplication of evidence and the like.

Orders

1. For the above reasons, on 11 September 2019 I indicated the decision I had reached and the parties then prepared short minutes to reflect that decision, which orders I made on 12 September 2019. Relevantly, in relation to the current proceedings, those orders were as follows: 1. Angelena May O'Bryan in her capacity as the Executrix of the Estate of Wendy Joan O'Bryan-Turner (now deceased) replace and be substituted for Wendy Joan O'Bryan Turner (now deceased) as the first defendant. 2. By 21 September 2019, the solicitor for the defendants presently on the record for Wendy Joan O'Bryan Turner file and serve an amended notice of appearance which indicates that such solicitor now acts for Angelena May O'Bryan in her capacity as the Executrix of the Estate of Wendy Joan O'Bryan-Turner (now deceased). 3. The plaintiffs file and serve the amended statement of claim by 26 September 2019. 4. Grant leave for the defendants to file and serve an amended defence by 10 October 2019 by adding the words: "69. In the exercise of its discretion, the Court should decline to grant the equitable relief sought by the Plaintiffs in their Summons and Statement of Claim", and any amendments to the defence arising out of any amendments to the statement of claim. 5. The plaintiffs are to file and serve any reply to the amended defence by 17 October 2019. 6. The cross-claim is discontinued by leave. 7. Reserve the question of costs of the cross-claim. 8. The issues pleaded in the discontinued cross-claim may be litigated by separate proceedings in accordance with the undertakings referred to in Order 13. 9. The plaintiffs are to serve any further evidence on which they rely by 8 November 2019. 10. The defendants are to file and serve any further evidence upon which they intend to rely by 13 December 2019. 11. The plaintiffs are to file and serve any evidence in reply upon which they intend to rely in reply by 31 January 2020. 12. The proceedings be listed for directions on 10 October 2019 at 9.30am before Ward CJ in Eq.
2. I noted various undertakings given by the parties in relation to the proposed new proceedings and as to the preparation of a proposed trial schedule for the hearing tentatively listed to commence on 9 June 2020 with an estimate of seven days.

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: 04 October 2019