Badcock v The State of South Australia - [2007] SADC 36

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
BADCOCK v THE STATE OF SOUTH AUSTRALIA & ORS
[2007] SADC 36
Judgment of His Honour Judge Chivell
17 April 2007
PROCEDURE
APPEAL AGAINST DECISION OF A MASTER – PLEADINGS
Failure of plaintiff to file Affidavit of Loss pursuant to DCR 46.05 despite repeated Directions to do so - failure not found to be due to wilful disobedience or contumacy - Application to dismiss action for want of prosecution and/or abuse of process refused by Master - consideration of whether inherent power of Court to stay irregular proceedings because plaintiff is “person under disability” within meaning of DCR 35.01. Mental health of plaintiff in issue in proceedings. Examination pursuant to 6 DCR 153, no mental illness diagnosed.
Held: plaintiff is not a “person under disability” - application for stay refused. Appeal dismissed.
District Court Rules 1991 r 2.09, r 3.04(e), r 5, r 97.01 and r 35.01; Limitation of Actions Act 1936 s 36, referred to.
O'Brien Lovrinov Crafter Pty Ltd v Corradini [1999] SASC 159; BQ & HM Doe Pty Ltd v National Australia Bank [1999] SASC 124; Dalle-Molle v Manos (2004) 88 SASR 193; Murphy v Doman (2003) 58 NSWLR 51; Gibbons v Wright (1954) 91 CLR 423 at 437-8; AJI Services Pty Ltd v Manufacturers' Mutual Insurance Ltd [2005] NSWSC 709; Morrison v Hanby Pty Ltd [2000] SASC 135; Masterman-Lister v Brutton & Co [2003] 3 All ER 162; Hutchinson v Gaitazis (1980) 25 SASR 30, applied.

BADCOCK v THE STATE OF SOUTH AUSTRALIA & ORS
[2007] SADC 36

This is an appeal from the decision of Master Norman of this Court on 19 July 2006 in which he refused the defendants’ applications to dismiss the plaintiff’s claim and made other orders. The Interlocutory Application dated 3 July 2006 referred to District Court Rules r 2.09, r 3.04(e) and r 67.01.
Rule 2.09 empowers the Court to strike out or dismiss the application or action
where any party does not proceed with the hearing of an action or application therein at the time fixed for such hearing.
The rule further states that the power may be exercised
in order to protect the integrity of case flow management system and to implement the Courts requirements that matters proceed at the time fixed for hearing notwithstanding that any injustice to the opposing party might have been avoided by an order for costs or some other order.
In BQ & HM Doe Pty Ltd v National Australia Bank [1999] SASC 124, Lander J at [75] held that the operation of this Rule is confined to the specific circumstances described therein, namely where a party does not proceed with a hearing at the time fixed. It has no application to a situation where general dilatoriness is alleged.
Rule 3.04(e) empowers the Court to strike out any “vexatious or frivolous step in a proceeding”. That has not been argued here. Nor has r 67.01. Having found that he was not satisfied that the plaintiff’s defaults, which I will detail later, were due to wilful disobedience or contumacy, the learned Master then went on to consider whether the action should be stayed because the plaintiff is a person under disability within the meaning of r 35.01. Even though that issue was not specifically raised in the Interlocutory Application referred to above, the issue was obviously raised with the plaintiff by the Master, and was the subject of submissions before him. The plaintiff dealt with the issue in his written submissions (see [7.3]). I am therefore satisfied that the plaintiff had sufficient notice of the issue and was not prevented from putting his case by any lack of notice (cf Badcock v Channel 7 Adelaide P/L & Ors [2006] SADC 7, a decision of Judge Clayton on 8 February 2006).
The Appeal
The appeal is brought pursuant to s 43(2) of the District Court Act. The section provides that the appeal may be prosecuted “in accordance with the rules of the appellate court”. The relevant rule is r 97.01 which states:
… an appeal pursuant to section 43(2) of the Act against an interlocutory judgment of a Master shall be by way of rehearing and, in matters involving the exercise of a discretion, the Judge may exercise his own discretion without regard to the manner in which it was exercised in the decision, order or direction appealed against.
In O’Brien Lovrinov Crafter Pty Ltd v Corradini [1999] SASC 159, Martin J said at [20]:
The rule does not require the District Court Judge to ignore the manner in which the Master exercised the discretion.”
However, his Honour went on to say at [31] that he would have allowed the appeal “even if it could not be strictly said that he (the Master) erred”.
Background
The learned Master has set out in some detail the relevant history of these proceedings and I will not repeat it all here, except to the following extent:
·    The plaintiff has not had legal representation in this action at any stage;
·    The action was commenced on 2 May 2003;
·    As amended on 16 September 2004, the Statement of Claim runs to 247 paragraphs;
·    The proceedings relate to a number of statements made by the second defendant, Mr Gilmore, in his capacity as Commissioner for Consumer and Business Affairs;
·    The plaintiff alleges that the statements were defamatory, misleading and unauthorised by legislation, and that they caused the collapse and failure of his business.
A reading of the Statement of Claim shows that it is a discursive, rambling and unstructured document, and it is by no means easy to distil the essence of the plaintiff’s cause of action beyond defamation if indeed it goes further than that.
It is also difficult to discern the heads of damage claimed. The Statement of Claim refers to various companies and trusts without specifying clearly and precisely how each different legal entity fitted into the plaintiff’s business, and which entity sustained any particular loss. There are general pleadings about the failure of various entities, the appointment of administrators and/or receivers, vague allegations of economic and non-economic loss, damage to reputation, and “diminished self-esteem, stress, post-traumatic stress and depression”. References to economic loss include loss of earning capacity, loss of “Family Trust capital gains free asset equity” and the “loss of trust income, past, present and future”, loss of “capital gains free real estate income and equity” and other such vague and non-specific items.
It does not take much analysis to see that the legal issues associated with these claims are extremely complex. Apart from whether the plaintiff has standing to sue for losses suffered by the various entities involved, the defendants have called in aid the protection they have under s 91B of the Fair Trading Act 1987. Further, they argue that any claim for personal injury is statute-barred. Section 36 of the Limitation of Actions Act 1936 provides:
(1)All actions in which the damages claimed consist of or include damages in respect of personal injuries to any person, shall be commenced within three years next after the cause of action accrued but not after.
(1a) …
(2)personal injuries include any disease and any impairment of a person’s physical or mental condition.
(my underlining)
As it presently stands, the plaintiff’s pleadings do not address, in any effective way, either of these issues. When I raised the last point with the plaintiff during the hearing of the appeal, he merely avoided the issue and argued in a circuitous manner. I have no confidence that he will be able to address any of the technical issues which will arise as the litigation progresses.
Returning to the history of the matter, the plaintiff was first ordered to file an Affidavit of Loss on 23 June 2005. He was given five weeks to do so. He was reminded of the order on 14 July and 1 August 2005. He acknowledged non-compliance on 25 August 2005 in an affidavit. The defendants sought to have the action dismissed by application on that date, but the 23 June order was repeated on 25 August and 13 October 2005. The plaintiff repeatedly filed argumentative affidavits but failed to comply with the orders to file.
On 22 December 2005, Master Norman made another order to file the Affidavit of Loss by 15 January 2006, but again the plaintiff failed to comply and mounted spurious arguments as to why he should not do so. A further oral application to have the action dismissed was refused by the Master on 10 April 2006 and the order to file the Affidavit of Loss was repeated, and a further five weeks was allowed. On 30 May 2006, another order was made, and the plaintiff was given until 20 June. He failed to appear on 22 June, and an Affidavit of Loss was eventually handed up on 6 July 2006 at the adjourned hearing. It is incomplete and fails to give details of, for example, special damages. The Master details other shortcomings in his Reasons, at [25] to [31].
In summary, the plaintiff has disobeyed a total of five successive orders to file an Affidavit of Loss, and remains in default even now. The Master concluded at [35] that he doubted that the plaintiff could do any better even if given a further opportunity.
The Master concluded that the reasons for the plaintiff’s default were as follows:
It is necessary, therefore, to determine what orders I should make in consequence. From my observations of the plaintiff and from the affidavit material filed by him I do not have the impression that his conduct amounts to wilful disobedience and contumacy. He does appear to be suffering, at least from a lay perspective, from stress and depression. He gives the impression of wanting to comply with court requirements and orders, but that he is simply finding it too difficult to do so.
On that basis, the Master declined to strike out the action pursuant to r 3.04.
He then proceeded to consider the provisions of r 35.01. That provides:
A person under disability shall commence proceedings by his next friend and shall defend proceedings by his guardian ad litem.
A “person under disability” is defined in DCR5 as:
… any person, who by reason of physical weakness or intellectual or mental impairment or other condition, whether temporary or permanent, is unable to give instructions to take, defend or compromise proceedings.
The learned Master considered that the plaintiff “comes close to being within Rule 5”. He referred to Murphy v Doman (2003) 58 NSWLR 51. In that case a self-represented plaintiff remained in default of an order to file written submissions for a time similar to that involved here. The relevant test, whether the plaintiff was an “incompetent person” was whether he was “incapable of managing his affairs”. Handley JA relied upon Gibbons v Wright (1954) 91 CLR 423 at 437 - 438, in which the High Court referred to “the capacity to understand the nature of the transaction when it is explained”. Handley JA said at [35]:
The cases do not consider the level of mental capacity required to be a “competent” litigant in person, but it cannot be less than that required to instruct a solicitor. It should be greater because a litigant in person has to manage court proceedings in an unfamiliar and stressful situation.
In Dalle-Molle v Manos (2004) 88 SASR 193, Debelle J observed at [23] that the question of whether a litigant has the capacity to understand the issues in legal proceedings so that he may conduct them appropriately is “issue-specific” and “relates to the facts and subject-matter of the particular case”.
In AJI Services Pty Ltd v Manufacturers’ Mutual Insurance Ltd [2005] NSWSC 709, Bell J of the Supreme Court of NSW was dealing with the case of a plaintiff company represented by a person who had “major depression and had severe cognitive impairment”. In that case his Honour stayed the proceedings until a “tutor” was appointed. His Honour declined to permanently stay the proceedings, as he was not convinced that the person would never recover.
In Dalle-Molle v Manos (supra), Debelle J said at [26]:
The level of understanding of legal proceedings must, I think, be greater than the mental competence to understand in broad terms what is involved in the decision to prosecute, defend or compromise those proceedings. The person must be able to understand the nature of the litigation, its purpose, its possible outcomes, and the risks in costs which of course is but one of the possible outcomes. In this respect, it is helpful to note the tests adopted in cases concerning the consent to or refusal of medical treatment such as Re C [1994] 1 WLR 290, Re K, Re F [1988] Ch 310 at 315-6. Although those cases deal with a different kind of issue, they provide further examples of how it is necessary to determine the nature and the extent of the explanation and understanding required. They also demonstrate that the test of mental capacity is issue-specific.
His Honour went on to point out in [27] that this question does not turn on whether or not the person has the requisite mental capacity to make other legally effective decisions, or whether, on the other hand, the person is vulnerable to exploitation or at risk of making rash or irresponsible decisions. All those issues are relevant to the decision specifically to be made in each case.
Unlike those cases, there is no medical evidence here of the plaintiff’s psychiatric condition. As I observed earlier, psychiatric illness is pleaded in the Statement of Claim. The plaintiff also referred to his “random mental health condition” in the Affidavit of Loss (see [18]). In my view, it is not incumbent upon the defendants to prove the nature or extent of the plaintiff’s disability. This is particularly so since it has been held that there is no inherent power to order that the plaintiff submit to a psychiatric examination to ascertain if he is a person under disability or not. In Morrison v Hanby Pty Ltd [2000] SASC 135, Lander J said in [11] that such power would only exist if the plaintiff’s condition was a fact in issue, and in the circumstances of that case ordered the examination. As I read his Honour’s reasons, he concluded that there was no power to order the plaintiff to submit to an examination purely to determine if he had the capacity to instruct his solicitors.
The issue has been raised by the plaintiff’s own pleadings. The Master, who has dealt extensively and with seemingly endless patience with the plaintiff, observed at [32]:
He does appear to be suffering, at least from a lay perspective, from stress and depression.
My own observations of the plaintiff in Court confirmed this view. He seemed unable to grasp the simplest of reasoning (for example, the Limitation of Actions Act point) and took seemingly illogical, indeed irrational positions (for example, cross-appealing the Master’s order directing the Registry to accept his non-compliant Affidavit of Loss).
In Masterman-Lister v Brutton & Co [2003] 3 All ER 162 at [65], cited by Debelle J in Dalle-Molle v Manos (supra), Chadwick LJ said:
The pursuit and defence of legal proceedings are juristic acts which can only be done by persons having the necessary mental capacity; and the court is concerned not only to protect its own process but to provide protection to both parties to litigation which comes before it. 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.
The defendants are entitled to the same expectations as any other litigants before the court (see Crown Proceedings Act (1992), s 5(1)(a) and (b)).
6 DCR 153 provides:
A party whose medical condition is in issue in an action must, at the request of another party to the action, submit to a medical examination, at the cost of the party making the request, by a medical expert nominated by that party.
(The District Court Civil Rules 2006) commenced on 4 September 2006, three days before the hearing. The previous rule DCR61 was in substantially similar terms.)
As I have already stated, the plaintiff’s mental health is clearly in issue in these proceedings. Mr Keane, counsel for the defendants, requested that the plaintiff submit to a psychiatric examination and the plaintiff consented to do so. The hearing was adjourned for that purpose.
When the matter resumed on 16 November 2006, the defendants did not have the report. I was subsequently provided with a report of Dr Cosoff, dated 18 October 2006. Dr Cosoff summarised her findings as follows:
At present Mr Badcock does not have features of a current psychiatric disorder. The history suggests that he may have experienced an adjustment disorder with repressed mood during the year 2002 and early in 2003, but it is difficult to make an accurate diagnosis retrospectively.
Dr Cosoff made a number of other conclusions relevant to the issues in the proceedings, but for the purposes of the present application, that is sufficient.
Having regard to the opinion of Dr Cosoff, I find that there are no grounds for staying the action until a next friend is appointed pursuant to r 35.01 (see Hutchinson v Gaitazis (1980) 25 SASR 30).
That leaves the learned Master’s order declining to strike out the action pursuant to r 3.04. I must say that from any dealings with Mr Badcock I agree with the learned Master’s observation that Mr Badcock’s conduct does not amount to wilful disobedience and contumacy. In the absence of mental incapacity, the only other explanation for the plaintiff’s apparent inability to grasp the concepts necessary to conduct complex litigation is a stubborn refusal to acknowledge his own limitations. That falls short of contumacy, or wilful disobedience, thought not far short.
In all those circumstances, I am not persuaded to make orders which are different from those appealed from.
Clearly, a number of issues remain to be resolved before the matter proceeds to trial. They were discussed during argument (see transcript 7 September 2006, p46 and following). I note that there is a Notice for Specific Directions filed by the plaintiff on the file, which will take the matter back to the learned Master for further consideration. No doubt these issues will be further considered then.
The formal orders are:
1. Appeal dismissed.
2.Plaintiff to have his costs of the appeal to be taxed in default of agreement.