Burnett v Browne (No 2)

Case [2021] FCA 373

FEDERAL COURT OF AUSTRALIA

Burnett v Browne (No 2) [2021] FCA 373

File number(s): TAD 25 of 2020
Judgment of: O'CALLAGHAN J
Date of judgment: 15 April 2021
Catchwords: BANKRUPTCY – practice and procedure – further application to appoint litigation representative – application dismissed
Legislation:

Evidence Act1995 (Cth) ss 76, 76(1), 79, 79(1)

Federal Court Rules 1979 (Cth) O 43, r 13(6)

Federal Court Rules 2011 (Cth) rr 9.63, 10.09
Cases cited:

AJI Services Pty Ltd v Manufacturers’ Mutual Insurance Ltd [2005] NSWSC 709

Burnett v Browne [2021] FCA 85

Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397

Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588

Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705

Owners of Strata Plan 58041 vTemelkovski [2014] FCCA 2962

Owners of Strata Plan No 23007 v Cross (2006) 153 FCR 398

Slaveski v State of Victoria (2009) 23 VR 160

Vishniakov v Lay (2019) 58 VR 375
Division: General Division
Registry: Tasmania
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 45
Date of hearing: 8-9 April 2021
Solicitor for the Applicant: Mr G Williams of Glyn Williams Legal
Counsel for the First and Second Respondents: Mr A Walker
Solicitor for First and Second Respondents: FitzGerald and Browne Lawyers
Solicitor for the Third Respondent: Mr M Rapley of Butler McIntyre & Butler

ORDERS

TAD 25 of 2020
BETWEEN:

GAIL LOUISE BURNETT

Applicant
AND:

ROLAND ALEXANDER BROWNE AND ANTHONY FAIRLEA FITZGERALD

First and Second Respondents

PAUL JOHN COOK

Third Respondent

ORDER MADE BY:

O'CALLAGHAN J

DATE OF ORDER:

15 APRIL 2021

THE COURT ORDERS THAT:

1.The applicant’s interlocutory application dated 9 April 2021 be dismissed.

2.The respondents’ costs of the application be taxed and paid out of the applicant’s bankrupt estate in accordance with s 109(1)(a) of the Bankruptcy Act 1966 (Cth).

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

O’CALLAGHAN J:

The application and the principles governing it

  1. This is a further application by the applicant in this proceeding, Ms Gail Burnett, for the appointment of a litigation representative pursuant to r 9.63 of the Federal Court Rules 2011 (Cth) (the Rules) on the basis that, under the Rules, she is a “mentally disabled person”, being “a person who, because of a mental disability or illness, is not capable of managing the person’s own affairs in a proceeding”.

  2. The relevant general principles applicable were not in dispute.  See Burnett v Browne [2021] FCA 85 at [15].

  3. At the hearing of this application, counsel for the first and second respondents (the creditors), Mr Andrew Walker, referred me to the decision of Derham AsJ in Vishniakov v Lay (2019) 58 VR 375, which, if I may say so with respect, contains a careful and detailed exposition of the relevant principles and their rationale, relevantly as follows (at 385-7 [30]):

    (a)There is a presumption that everybody of…

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Burnett v Browne (No 2) [2021] FCA 373
Case
[2021] FCA 373
Decision Date

CaseChat Overview and Summary

In Burnett v Browne (No 2), the applicant, Ms. Burnett, sought a further application to appoint a litigation representative in her bankruptcy proceeding. The application was dismissed by the court, which found that the evidence presented did not meet the necessary criteria to justify such an appointment. The primary legal issue was whether Ms. Burnett was capable of managing her own affairs in the proceeding, considering her mental state and ability to provide instructions and seek advice.

The court ruled that the affidavit of Dr. Reid was inadmissible, as it failed to articulate how his specialised knowledge applied to the facts of the case, did not explain the reasoning behind his opinions, and did not address whether Ms. Burnett was capable of managing her own affairs. The court emphasised the importance of psychiatric evidence demonstrating how a diagnosis or other matters compromise the applicant's ability to participate in the proceeding. Without such evidence, the application could not succeed.

The court found that the evidence provided did not establish that Ms. Burnett was currently incapable of managing her own affairs in the proceeding. It noted that a lack of insight or fixation on the litigation did not necessarily equate to an inability to manage affairs. The court also highlighted the importance of detailed psychiatric evidence, as seen in previous cases like Slaveski v State of Victoria and Owners of Strata Plan 58041 v Temelkovski.

In conclusion, the court dismissed the applicant's interlocutory application and ordered that the respondents' costs be taxed and paid out of the applicant's bankrupt estate. The ruling underscores the stringent requirements for appointing a litigation representative in bankruptcy proceedings and the necessity for comprehensive and relevant evidence to support such an application.

Orders

Orders of the court

1. The applicant’s interlocutory application dated 9 April 2021 be dismissed.

2. The respondents’ costs of the application be taxed and paid out of the applicant’s bankrupt estate in accordance with s 109(1)(a) of the Bankruptcy Act 1966 (Cth).

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

I heard submissions on this objection on the first morning of the hearing, and ruled, before proceeding further with the hearing of the application (see Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 at 599 [19] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ)), that Dr Reid’s affidavit was inadmissible, in substance because:(1)Dr Reid had not made explicit how his field of specialised knowledge applied to the facts which he either asserted or assumed, and, in those circumstances, it was not possible for the court to make a judgment as to whether the prerequisites of s 79 of the Evidence Act1995 (Cth) (Evidence Act) were satisfied. (2)Dr Reid had not stated or explained the grounds or reasoning that led to his opinions. (3)Dr Reid had not been asked, and certainly had not purported to opine, about a critical question, namely, whether the applicant was capable of managing her own affairs in this proceeding. I said that I would give more detailed reasons for that ruling in my reasons for judgment on the application, which I now do. Section 76 of the Evidence Act is headed “The opinion rule”. Sub-section 76(1) provides that “Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed”. Sub-section 79(1) of the Evidence Act provides that “If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge”. As the High Court explained in Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 at 602-5 [31]-[42] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ):Section 76(1) expresses the opinion rule in a way which assumes that evidence of an opinion is tendered ‘to prove the existence of a fact’. That manner of casting the rule does not, as might be supposed, elide whatever distinction can be drawn between ‘opinion’ and ‘fact’ or invoke the very difficult distinction which sometimes is drawn between questions of law and questions of fact. It does not confine an expert witness to expressing opinions about matters of ‘fact’. Rather, the opinion rule is expressed as it is in order to direct attention to why the party tendering the evidence says it is relevant. More particularly, it directs attention to the finding which the tendering party will ask the tribunal of fact to make. In considering the operation of s 79(1) it is thus necessary to identify why the evidence is relevant: why it is ‘evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding’. That requires identification of the fact in issue that the party tendering the evidence asserts the opinion proves or assists in proving.To be admissible under s 79(1) the evidence that is tendered must satisfy two criteria. The first is that the witness who gives the evidence ‘has specialised knowledge based on the person’s training, study or experience’; the second is that the opinion expressed in evidence by the witness ‘is wholly or substantially based on that knowledge’ ……It should be unnecessary, but it is nonetheless important, to emphasise that what was said by Gleeson CJ in HG [(1999) 197 CLR 414 at 427 [39]] (and later by Heydon JA in the Court of Appeal in Makita (Australia) Pty Ltd v Sprowles [(2001) 52 NSWLR 705 at 743-4 [85]]) is to be read with one basic proposition at the forefront of consideration. The admissibility of opinion evidence is to be determined by application of the requirements of the Evidence Act rather than by any attempt to parse and analyse particular statements in decided cases divorced from the context in which those statements were made. Accepting that to be so, it remains useful to record that it is ordinarily the case, as Heydon JA said in Makita, that ‘the expert’s evidence must explain how the field of “specialised knowledge” in which the witness is expert by reason of “training, study or experience”, and on which the opinion is “wholly or substantially based”, applies to the facts assumed or observed so as to produce the opinion propounded’. The way in which s 79(1) is drafted necessarily makes the description of these requirements very long. But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying ‘specialised knowledge’ based on his or her ‘training, study or experience’, being an opinion ‘wholly or substantially based’ on that ‘specialised knowledge’, will require little explicit articulation or amplification once the witness has described his or her qualifications and experience, and has identified the subject matter about which the opinion is proffered.…A failure to demonstrate that an opinion expressed by a witness is based on the witness’s specialised knowledge based on training, study or experience is a matter that goes to the admissibility of the evidence, not its weight. To observe, as the Court of Appeal did, that what Dr Basden said about the volume of respirable dust to which Mr Hawchar was exposed over time was ‘an estimate’ that was ‘contestable and inexact’ no doubt did direct attention to its worth and its weight. But more importantly, it directed attention to what exactly Dr Basden was saying in his evidence and to whether any numerical or quantitative assessment he proffered was admissible. And if, as the Court of Appeal observed, his opinion on that matter lacked reasoning, the absence of reasoning pointed (in this case, inexorably) to the lack of any sufficient connection between a numerical or quantitative assessment or estimate and relevant specialised knowledge.(Footnotes omitted.)

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

In reply, Mr Williams submitted that: I do make the point that, in terms of giving instructions or understanding issues that may arise, your Honour, it’s not about non-acceptance of advice; it’s about the capacity to alter fixed views. It’s about the capacity to have insight and reflect and make decisions. If someone, as I submit has been deposed in the family evidence and, indeed, in answers to questions, has developed an obsession, and as Ms Burnett said, it’s going to keep going, then that actually does meet the test …Consideration In my view, this application to appoint a litigation representative must be refused. In an application such as this, the issue of whether an applicant is currently capable of managing their own affairs in a particular proceeding is not to be equated with their ability to make prudent decisions. See AJI Services Pty Ltd v Manufacturers’ Mutual Insurance Ltd [2005] NSWSC 709 at [57] (Bell J). Nor does it follow, merely because an applicant lacks insight to reflect, or is fixated or obsessed with the litigation, that they are, without more, incapable of managing their own affairs in the proceeding. In relation to taking advice, for example, it is not unheard of for clients to refuse to take advice, even in circumstances where, objectively speaking, their interests would best be served if they did. Where psychiatric evidence is relied upon, or where a diagnosis or other matters are relied upon by people close to the applicant (here, her children), the evidence must demonstrate why it is that the diagnosis or those matters compromise the applicant’s ability to provide instructions, to seek advice and to participate, if necessary, in a hearing. A good example of the sort of psychiatric evidence that will pass muster is the detailed reports of Drs Sullivan and Farnbach tendered in evidence in Slaveski v State of Victoria (2009) 23 VR 160 at 177 [6]ff (Kyrou J). And in Owners of Strata Plan 58041 vTemelkovski [2014] FCCA 2962 (Judge Manousaridis), the evidence of Ms Temelkovski’s daughter was critical, explaining as it did that Ms Temelkovski:(1)did not understand when she was served with the creditor’s petition the nature and possible consequences of the proceedings that had been initiated against her, including because she could not “differentiate between insignificant documents such as shopping catalogues and important letters” (at [77]); and(2)did not have the ability to instruct any advisor with sufficient clarity to enable the advisor to understand the situation and to advise her appropriately, including because, according to her daughter, Ms Temelkovski “was no longer capable of actually understanding the importance of information, or of retaining information” (at [78]). In this case, however, essentially for the reasons given by Mr Walker, the evidence falls a long way short of that required to make an order the effect of which is to deprive a person of their fundamental civil rights under the common law, being the right to sue or defend in their own name, and to compromise litigation without the approval of the court.Disposition