Andrews v Andrews (No 2)
[2021] VSC 251
•11 May 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2019 04634
| GARY PETER ANDREWS 1964 PTY LTD | Plaintiffs |
| v | |
| KATHLEEN PHILOMENA ANDREWS NORMAN SAME | Defendants |
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JUDGE: | NICHOLS J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 11 May 2021 |
CASE MAY BE CITED AS: | Andrews v Andrews (No 2) |
MEDIUM NEUTRAL CITATION: | [2021] VSC 251 |
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DECLARATORY RELIEF – Discretion – Circumstances where properly exercised – Declarations made by consent – Whether declaration will have foreseeable consequence – Director of Consumer Affairs Victoria v Mecon Insurance Pty Ltd [2016] VSC 42 – IMF (Australia) Ltd v Sons of Gwalia Ltd (admin appointed) (2004) 211 ALR 231 – Powers of Attorney Act 2014 (Vic), s 119.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | N/A | Nathan Kuperholz |
| For the Defendants | N/A | Suzanne M Lyttleton |
HER HONOUR:
Kathleen Andrews and Gary Andrews are mother and son. In 2014 and 2015, Kathleen advanced some $4.5 million to Gary (the first plaintiff) and a company controlled by him (1964 Pty Ltd, the second plaintiff) by way of loans to each of them (the Personal Loan and the 1964 Loan, respectively), secured against Gary’s home, a property situated in Hampton.
On 30 January 2019 Kathleen executed an enduring power of attorney in favour of Norman Same (the second defendant) (the 2019 EPA).
Purportedly acting pursuant to the 2019 EPA, Same issued:
(a)on 24 June 2019, a demand on Gary to repay the sum of $2,836,216 advanced to him, by 5 July 2019; and a demand on 1964 to repay the sum of $1,903,027 advanced to it, by 5 July 2019 (the 24 June 2019 Demands);
(c)on 1 July 2019, demands repeating in substance the 24 June 2019 demands (the 1 July 2019 Demands);
(d)on 19 July 2019, further or amended demands for payment by Gary and 1964 of the amounts demanded on 24 June 2019, purportedly extending the time for payment to 23 September 2019 (the 19 July 2019 Demands);
(e)on 24 September 2019, notices of default and demand under s 76 of the Transfer of Land Act 1958 (Vic) in respect of the Personal Loan Agreement and the 1964 Loan Agreement (the Notices of Default and Demand),
(collectively, the Demands).
Gary and 1964 issued these proceedings in October 2019, by which they relevantly sought interlocutory and permanent injunctions restraining each of Kathleen and Same from taking any steps to enforce or act on any of the Demands served by them and declarations that the Demands and Notices of Default and Demand were void and of no effect.
By orders made on 11 February 2020, I granted interlocutory injunctions in favour of Gary and 1964, restraining each of Kathleen and Same from taking any steps to enforce or act on any of the Demands, or from serving any further demand purportedly pursuant to the Personal Loan Agreement and the 1964 Loan Agreement, or otherwise seeking an order for sale or possession of the Hampton property.
Before the commencement of these proceedings, Gary issued proceedings in VCAT challenging the validity of the EPA and Kathleen’s capacity to confer such a power. In this proceeding, Gary and 1964 did not seek to separately litigate the matters the subject of the VCAT proceedings, but did not accept the validity of the EPA or that Same had, as purported attorney for Kathleen, properly exercised duties owed to her.
By orders made by VCAT on 24 June 2020, Suzanne Mary Lyttleton was appointed Administrator for Kathleen, with powers under the Guardianship and Administration Act 2019 (Vic). Thereafter, Ms Lyttleton as Administrator assumed conduct of the defence of these proceedings for Kathleen.
On 10 February 2021, VCAT declared the EPA to be invalid pursuant to s 116(1)(c) of the Powers of Attorney Act 2014. VCAT did so on the basis that Kathleen lacked the requisite decision-making capacity to execute the EPA.
Section 119 of the Powers of Attorney Act 2014 provides that:
If VCAT makes an order declaring that an enduring power of attorney is invalid under section 116(1)(c), the enduring power of attorney is void from its commencement.
On 11 February 2021, the plaintiffs discontinued this proceeding against Same.
Once VCAT had declared the EPA to be invalid, the plaintiffs and the Administrator reached an agreement to resolve this proceeding. They both seek orders that:
(a)there be a declaratory judgment pursuant to r 23.05 in favour of the plaintiffs to the effect that the Demands are void and of no effect (that is, the declaratory relief that had been sought by the claim);
(b)there be no order as to costs against the first defendant;
(c)the injunction made on 11 February 2020 be discharged;
(d)the proceeding otherwise be dismissed.
By summons filed on 10 May 2021, the administrator sought approval of the compromise of the proceeding as set out above pursuant to r 15.08 of the Supreme Court (General Civil Procedure) Rules 2015. That application was supported by an affidavit sworn by the Administrator which, among other things, attached the orders and decision of VCAT of February 2021, and a written confidential opinion of counsel which, for the reasons set out in the opinion, concluded that the compromise would appear to be in Kathleen’s best interests and to her benefit.
Before the Court approves the compromise of a claim to which a person under disability is a party, it must be satisfied that the compromise will benefit that person.[1]
[1]Mayer v Mayer [2015] VSC 2, [4]-[6] (Croft J).
On the basis of the material provided to me, I am satisfied that the proposed compromise will benefit Kathleen. Insofar as the claim turns on the validity of the Demands, the issue was effectively determined by the VCAT decision declaring the invalidity of the EPA. Were the plaintiffs to proceed to a trial or apply for summary judgment on that issue, Kathleen could not succeed. The declarations sought are only in respect of that aspect of the proceeding. The proceeding will be otherwise dismissed. Further, the compromise does not prevent Kathleen (or those acting for her under relevant authority) from issuing fresh demands in respect of the loans. The compromise brings to an end the need for Kathleen’s representatives to expend any of her funds defending the proceeding, from which she could obtain no positive benefit.
Further, I am satisfied that it is an appropriate exercise of my discretion to grant the declaratory relief sought.
In Director of Consumer Affairs Victoria v Mecon Insurance Pty Ltd [2016] VSC 42, Elliott J summarised the principles relevant to declaratory judgment in the following terms:
[22] The court’s jurisdiction to grant declaratory relief is not in issue. The exercise of the discretionary power is not possible or desirable to fetter. A proceeding is not open to objection on the ground that a merely declaratory judgment is sought. However, certain factors are relevant to the consideration of the appropriateness of declaratory relief in a particular circumstance:
(1) The declaratory relief “must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions”.
(2) The plaintiff or applicant must have a “real interest” in seeking the relief.
(3) There must be a “proper contradictor” in the sense of a person who has “a true interest to oppose the declaration sought”. In appropriate cases, this requirement may be fulfilled notwithstanding the declarations are sought by consent.
(4) Declaratory relief may not appropriate where the “declaration will produce no foreseeable consequences for the parties”.
The relief sought in this case is not hypothetical and relates to specific actions undertaken by the second defendant as purported attorney for the first defendant.
There is no question that in this proceeding the first defendant had a sufficient interest to oppose the relief sought, and in fact previously did so.
The absence of Kathleen’s opposition now to the proposed order does not mean there is any lack of a contradictor in a way that would interfere with the Court’s jurisdiction to award declaratory judgment.[2]
[2]IMF (Australia) Ltd v Sons of Gwalia Ltd (admin appointed) (2004) 211 ALR 231, [47] (French J).
The remaining question is whether there is any utility in the declarations, the VCAT orders having already rendered the 2019 EPA void from its commencement. As a consequence, the Demands, issued under a void authority, are themselves void. The plaintiffs submit that there is utility in making the declarations sought, both in bringing these proceedings to a conclusion and, more broadly, in conclusively removing any doubt as to the plaintiffs’ liability. They submit that, while the 2019 EPA has been declared void, in a practical sense, demands were raised, and proceedings instituted, which appear to burden their property assets and would need to be disclosed to potential financiers and counterparties in their property development business. They say that the declarations sought in this proceeding will serve to conclusively state the true legal position to those potential financiers and the world.
In this regard it is helpful to recall that a declaration may be appropriately characterised as a formal statement of the existence or non-existence of a legal state of affairs, which operates in law as a res judicata or an issue estoppel and as such is a final order.[3] I am satisfied that the making of the declarations sought will have the real effect of quelling the controversy between the parties to this proceeding, and in stating definitively that the Demands do not burden the plaintiffs’ property interests.
[3]See, for example, French J (as his Honour then was), writing extra-curially in “Declarations: Homer Simpson’s Remedy — Is there anything they cannot do?” [2007] Federal Judicial Scholarship 24, [4].
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