Frilay v Walsh
[2016] VSC 368
•27 June 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S CI 2016 00191
| VINCENT GERARD FRILAY (by NOEL GREGORY THOMAS as his administrator appointed under section 43 of the Guardianship and Administration Act 1986) | Plaintiff |
| v | |
| JILLIAN JOY WALSH | First Defendant |
| ALLAN FREDERICK WALSH | Second Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 10 June 2016 |
DATE OF RULING: | 27 June 2016 |
CASE MAY BE CITED AS: | Frilay v Walsh |
MEDIUM NEUTRAL CITATION: | [2016] VSC 368 |
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PRACTICE AND PROCEDURE – Application for a separate trial of a question – Supreme Court (General Civil Procedure) Rules 2015, r 47.04.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R H Miller | Mason Black Lawyers |
| For the First Defendant | Mr L Magowan | Schembri & Co Lawyers |
| For the Second Defendant | Lander & Rogers |
HER HONOUR:
The plaintiff is aged 70 and has dementia. He is a resident in a high care aged facility. On 5 August 2015, Noel Gregory Thomas was appointed his administrator by order made the Victorian Civil Administration Tribunal. This proceeding is brought by the plaintiff’s administrator against the first defendant (‘the defendant’).
On 2 June 2016, pursuant to r 25.04 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’), the plaintiff discontinued his proceeding against the second defendant and filed a notice of discontinuance with the Prothonotary.
The defendant is the daughter of the plaintiff’s domestic partner. From 19 September 2013 until 5 August 2015, she was the attorney under power for the plaintiff pursuant to an Enduring Power of Attorney (Financial). The plaintiff’s domestic partner was his attorney under power from 2 October 2008 until 19 September 2013. He alleges that the defendant procured the revocation of her mother’s power of attorney and then appointed herself as his attorney.
The plaintiff claims that the defendant has misappropriated or stolen substantial funds exceeding $1 million from him between May and September 2013, and after her appointment as attorney, between 19 September 2013 and 12 August 2015, has failed to account to him in respect of the sale of two of his properties and for rental moneys due to him.
The plaintiff also claims that his will dated 19 September 2013 (‘the 2013 will’) was executed by him when he lacked testamentary capacity. The defendant is the sole beneficiary of the plaintiff’s estate pursuant to the 2013 will. The 2013 will purported to revoke his penultimate will made in 2008 (‘the 2008 will’) under which the defendant receives half of his residuary estate.
The plaintiff claims that the defendant has acted unconscionably or dishonestly, has taken advantage of him for her own benefit and has acted in breach of her fiduciary duties to him. He seeks an account of all transactions made by the defendant in respect of his misappropriated assets, alternatively, damages and orders for repayment of any amounts found to be owing to him. He also seeks a declaration that he lacked testamentary capacity when he executed the 2013 will.
The defendant originally filed an unresponsive defence to the plaintiff’s claims. Orders were subsequently made for her to file an amended defence. In her amended defence, the defendant disputes that the plaintiff lacked capacity in 2013 or that she procured the revocation of her mother’s power of attorney or the revocation of the plaintiff’s penultimate will made in 2008. She denies the allegations of theft or misappropriation of the plaintiff’s assets.
Pursuant to r 47.04 of the Rules, the defendant seeks a separate trial of the following questions:
(a) did the plaintiff had testamentary capacity when he gave instructions for and executed his will dated 19 September 2013;
(b) is the 19 September 2013 will otherwise void and of no effect?
In support of the application for a separate trial, the defendant submits that the plaintiff’s case in respect of the 2013 will is weak and not supported by his general practitioner or the solicitor who prepared the will. She says that as she is the sole beneficiary under the 2013 will, alternatively, entitled to half of the plaintiff’s estate under the 2008 will, in the event that it is determined that any amount is found to be owing to the plaintiff, the only issue is whether that amount should be deducted or set off from her entitlements under the 2013 will, alternatively, the 2008 will. Accordingly, the issues involved with separate questions are discrete and easily separated from the remaining issues of the defendant’s alleged misappropriation of the plaintiff’s funds and her failure to account for the plaintiff’s funds. Further, in such circumstances, there is no utility in pursuing the remaining issues in the proceeding.
The defendant submits that the determination of the separate questions could be concluded in 2–3 days whereas a trial of the entire proceeding would take 10 days. She also submits that the determination of the separate questions are likely lead to a resolution of the proceeding.
In reply submissions, the defendant submits an alternative position as a result of the plaintiff’s submission that any application concerning his testamentary capacity at the time of the 2013 will was premature and hypothetical because he is still alive. The defendant therefore submits that those paragraphs of the statement of claim that deal with the issue of the validity of the 2013 will be struck out. The defendant attached a copy of a proposed amended summons to the reply submissions dated 22 June 2016 but it remains unclear whether the amended summons has been filed or served on the plaintiff.
The discretion to make an order under r 47.04 of the Rules must be exercised with great caution and should only be made in a clear case. It is only appropriate to order the trial of preliminary questions where the determination of the question will likely end the litigation or substantially narrow the issues in dispute or where there is a clear demarcation between the issue and all other issues in the proceeding. Where facts need to be determined or proved, it is inappropriate to make an order. Where there is significant contested factual issues at a hearing of the separate questions or significant overlap between the evidence at the hearing of the separate questions and at trial, an order for a separate hearing would ordinarily not be made.[1]
[1]Idaport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215; Tepko Pty Ltd v Water Board (2001) 206 CLR 170; David Jones Ltd v Perpetual Limited [2008] VSC 61; Wells Fargo Bank Northwest National Association v Victoria Aircraft Leasing (No 2) [2004] VSC 341; Vale v Daumeke [2015] VSC 342.
In my view, the issues raised in the proceeding are complex with significant overlapping of the issues. They concern not only the plaintiff’s testamentary capacity and whether the will was procured or executed in suspicious circumstances but allegations of substantial misappropriations of the plaintiff’s money from his bank accounts and other sources. These issues require a detailed forensic accounting exercise involving hundreds of transactions, evidence of the circumstances in which the transactions occurred and of the capacity of the plaintiff at the relevant times of all the allegations. There are also issues of whether the defendant is accountable for the use of the funds or her alleged abuse of her powers under the power of attorney conferred upon her by the plaintiff. The issues concerning the 2013 will raise issues concerning the validity of the 2008 will and whether the defendant should repay any amount found to be owing by her to the plaintiff from her own assets or from any possible entitlement under the 2008 will.
There is a substantial disagreement as to both fact and law between the parties which makes a determination of the separate questions inherently difficult. Further, the allegations made against the defendant will involve findings as to her credit and reliability as a witness, and possibly other witnesses called by her. Even if there were a determination of the separate questions, the substantive proceeding will necessitate calling the same witnesses for both hearings.
The defendant’s submissions rely on the premise that the 2013 will or the 2008 will must be the only wills of the plaintiff that are relevant and that under both these wills she will receive significant benefits from the estate of the plaintiff. This premise cannot be correct where the plaintiff remains alive and there remains the possibility that an application for a statutory will may be made to the Court on his behalf, pursuant to s 21 of the Wills Act 1997.
In my view, because the decisions on the issues raised by the separate questions cannot be made in isolation of the remaining issues in the proceeding, there is controversy over the facts and the credibility of witnesses and there is no clear demarcation of the issues raised by the separate questions and the evidence in respect of those issues, the defendant’s application should be refused.
Accordingly, the defendant’s summons filed 14 June 2016 is dismissed. Subject to further submissions as to the costs of the application, my preliminary view is that the defendant should pay the plaintiff’s costs of and incidental to the application.
On or before 22 July 2016, the parties are to forward minutes of proposed orders for the further interlocutory directions to be made in the proceeding.
In the event that these directions cannot be made by agreement, the proceeding will be listed for further directions on 22 July 2016.
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