GH v AB
[2019] WASCA 47
•8 MARCH 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: GH -v- AB [2019] WASCA 47
CORAM: MITCHELL JA
HEARD: 6 MARCH 2019
DELIVERED : 6 MARCH 2019
PUBLISHED : 8 MARCH 2019
FILE NO/S: CACV 30 of 2019
BETWEEN: GH
First Appellant
RS as guardian ad litem for JK
Second Appellant
AND
AB
First Respondent
DE
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: MASTER SANDERSON
Citation: AB -v- GH [2019] WASC 31
File Number : CIV 2158 of 2018
Catchwords:
Practice and procedure - Appeal against order for pre-action discovery and inspection of documents - Application for stay pending determination of the appeal
Legislation:
Rules of the Supreme Court 1971 (WA), O 26A r 4
Result:
Application for a stay pending the determination of the appeal dismissed
Interim stay granted
Category: B
Representation:
Counsel:
| First Appellant | : | Mr G D Cobby SC |
| Second Appellant | : | Mr G D Cobby SC |
| First Respondent | : | Mr M L Bennett |
| Second Respondent | : | Mr M L Bennett |
Solicitors:
| First Appellant | : | Lemonis & Tantiprasut Lawyers |
| Second Appellant | : | Lemonis & Tantiprasut Lawyers |
| First Respondent | : | Bennett + Co |
| Second Respondent | : | Bennett + Co |
Case(s) referred to in decision(s):
ABB Service Pty Ltd v Hetherington [2001] WASCA 417
Dye v Griffin Coal Mining Co (1998) 19 WAR 431
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Kelbush v Australia and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374
Morgan v Banning (1999) 20 WAR 474
Rossen v Airey [2012] WASCA 26
The New South Wales Solicitors Mutual Indemnity Fund v The Hancock Family Memorial Foundation Ltd [No 2] [2009] WASCA 146
The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40
Waller v Waller [2009] WASCA 61
Wilson v Metaxas [1989] WAR 285
MITCHELL JA:
At the conclusion of the hearing on 6 March 2019, I made orders to the effect that:
(1)An order made by the Master on 14 February 2019, requiring the appellants to give pre-trial discovery and inspection of certain documents to the respondents by 7 March 2019, be stayed until 4.00 pm on 15 March 2019.
(2)The appellants' application for a stay of the Master's order is otherwise dismissed.
These are my reasons for making those orders.
Background
The appellants[1] appeal against an order made by the Master on 14 February 2019. The order relevantly requires the appellants to give discovery and inspection of certain medical reports and notes concerning the second appellant within 21 days of the date of the order. The order therefore requires that the appellants give discovery and inspection by 7 March 2019.
[1] In these reasons, it is convenient to refer to JK, who brings this appeal by his guardian RS, as the second appellant.
The order was for pre-trial discovery purportedly made under O 26A r 4 of the Rules of the Supreme Court 1971 (WA), which relevantly provides:
(1)This rule applies if a person who may have a cause of action against a person whose description has been ascertained (the potential party) wants:
(a)to commence proceedings against the potential party …,
but the person, after reasonable enquiries, has not been able to obtain sufficient information to enable a decision to be made as to whether to commence or take the proceedings.
(2)If there are reasonable grounds for believing that the potential party had, has, or is likely to have had or to have, possession of documents that may assist in making the decision, the person may apply for an order under this rule.
(3)The application shall be supported by an affidavit and a copy of both shall be served on the potential party.
(4)On the application the Court may order the potential party to give discovery of all documents that are or have been in the potential party's possession and that may assist the applicant in making the decision.
Order 26A r 4 would relevantly apply if the respondents 'may have a cause of action against' and want 'to commence proceedings against' the appellants.
The respondents were directors of a company which is the trustee of a charitable trust that the appellants founded. The appellants are the sole shareholders of the trustee company. The respondents are the daughters of the second appellant. The first appellant is the wife of the second appellant.
The appellants are jointly identified as the Appointor under the Trust Deed. Under cl 13(a) of the Trust Deed, the Appointor has the power to remove the trustee, appoint any additional trustee or trustees and appoint a new trustee or trustees. Under cl 13(d) of the Trust Deed, a person who is entitled to act as Appointor may nominate by deed any person to be his or her successor as Appointor from an event specified in the deed of appointment.
On 26 August 2012, the appellants executed a Deed of Appointment of Successor Guardian and Appointor (Succession Deed). I understand it to be uncontroversial between the parties that the effect of the Succession Deed is that the respondents would jointly succeed the second appellant to the office of joint Appointor of the trust if he were in a state of being without 'legal capacity' within the meaning of the Guardianship and Administration Act 1990 (WA).
By a purported special resolution passed by the appellants, the respondents were removed as directors of the trustee company with effect from 1 June 2018.
The respondents are concerned that the second appellant is suffering from dementia and, as a result of the symptoms of that disease, lacks legal capacity. They wish to bring a proceeding which has two aspects.
First, the respondents wish to claim that the second appellant lacked the capacity to pass the resolution removing them as directors of the trustee company. They wish to contend that, as the second appellant's vote was necessary for the passing of a special resolution, the resolution purporting to remove them as directors of the trustee company was invalid.
Secondly, the respondents wish to claim that they have succeeded to the second appellant's position as joint Appointor of the trust under the terms of the Trust Deed and the Succession Deed. This is on the basis that the second appellant lacks the capacity referred to in [8] above.
The respondents sought an order for pre-action discovery and inspection of medical reports and notes in the possession, custody or power of the appellants which relate to or record the legal capacity and mental health of the second appellant. On 14 February 2019, the Master made that order, against which the appellants now seek leave to appeal. Leave to appeal is required as the Master's order was interlocutory.
On 1 March 2019, the appellants filed an application in the appeal, relevantly seeking a stay of the order for pre-action discovery until the determination of the appeal. That application was listed to be heard before me on the day before the Master's orders required discovery and inspection to be given.
Application for a stay
Both parties accept that the principles to be applied in considering whether to make a suspension order are those set out in Eastland Technology Australia Pty Ltd v Whisson:[2]
•The successful litigant at first instance will ordinarily be entitled to enforce the judgment pending the determination of any appeal.
•It is for the applicant for a stay to move the court to a favourable exercise of its discretion.
•It will not do so unless special circumstances are shown justifying the departure from the ordinary rule.
•The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation, or where refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. It is often put shortly that it will first and foremost be necessary to establish that without the grant of a stay, the right of appeal, whether upon the grant of leave or special leave or not, will be rendered nugatory.
•If that can be demonstrated, the stay will generally still be refused unless it can be established that the appeal process, whether upon the grant of leave or special leave or not, has ultimately reasonable prospects of success so as to result in the grant of relief to the appellant.
•If that hurdle can be overcome, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant; where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted.
[2] Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 [9].
At the hearing of the application, I was satisfied that the appeal would be rendered nugatory if a stay were not granted. The subject matter of the appeal would be destroyed if discovery and inspection were required to be given before the appeal was determined. There is no point in pursuing an appeal against an order requiring the discovery and inspection of documents which have already been discovered and inspected.
I was also satisfied that, if the appeal had reasonable prospects of success, the balance of convenience would favour the appellants. The confidentiality which they wish to maintain in the second appellant's medical records would be destroyed, and their right of appeal rendered futile, if a stay were not granted. The respondents contend that there is no inconvenience or prejudice in disclosing the second appellant's medical records to the respondents, who are his children. However, the decision to keep the second appellant's medical records confidential, even from his children, is prima facie one for him (if he retains legal capacity) or those responsible for the management of his affairs (if he lacks that capacity) to make. The loss of confidentiality of the second appellant's personal medical records sought to be maintained by the appeal cannot be treated as being of no moment. Further, there is no evidence before me of particular prejudice which would be caused to the respondents if a stay were granted.
However, I was not satisfied that the appellants' proposed grounds of appeal had any reasonable prospect of success so as to result in the grant of relief to the appellants. I turn to explain why that was so.
Alleged error in finding the jurisdictional requirement to be satisfied
Initially, senior counsel for the appellants indicated that only one ground of appeal would be advanced in the appeal. That ground was that the Master erred in concluding that the jurisdictional requirement under O 26A r 4 had been met and an order for pre-action discovery can be made where the potential party is, at best, merely a necessary party in the proposed proceedings.
This proposed ground relates to the following passage of the Master's reasons:[3]
As I understand the submissions made on behalf of the [appellants] it was contended any cause of action which might be commenced would be commenced against the company and not against the [second appellant]. With respect that seems to me to be too narrow a view. If proceedings were to be issued it is logical that the company would be the first defendant - after all it is the company which is affected by the standing of its directors. But, there is no doubt the legal rights of the [first and second appellants] would be affected by any such proceedings. They would necessarily be part of any action. Their legal rights would be affected by a dete1mination. In my view, it would be far too narrow a reading of O 26A r 4 of the Rules to say that because the potential defendant (in this case the [second appellant]) was not principally concerned in the action, but was only collaterally involved, pre-action discovery could not be ordered. In my view, because the [second appellant] is a necessary party he would be directly involved. But even if that conclusion is incorrect and if his involvement is collateral I would still be of the view the jurisdictional requirements of the order had been satisfied.
[3] AB v GH [2019] WASC 31 (Primary decision) [13].
The appellants' proposed argument in relation to this ground involved the following steps:
(1)Order 26A r 4 would only apply if the respondents may have 'a cause of action against' the appellants within the meaning of r 4(1).
(2)In the passage quoted at [20] above, the Master proceeded on the basis that the respondents may have 'a cause of action against' the appellants if the appellants were necessary parties to the proposed proceedings;
(3)That approach involved misconstruing the rule, under which (on the appellants' construction) a person may 'have a cause of action against' a potential party only if facts entitling the person to curial relief against the potential party may be established.
I was satisfied, at this preliminary stage, that each of these steps is reasonably arguable. The question raised by the ground is a question of construction of the rule, and in particular what it means to have a 'cause of action against' a person. It seemed to me to be reasonably arguable that this requires more than that the person is a necessary party to the proposed proceedings. The point does not appear to have been directly addressed by any of the authorities to which I was referred or of which I am aware. It also seemed to me to be reasonably arguable that, in the passage quoted at [20] above, the Master regarded it to be sufficient to show that the appellants were necessary parties to the proposed proceedings, which may directly affect their legal rights, irrespective of whether or not any relief was sought against them.
The difficulty facing the appellants in relation to this ground is in establishing that any such error by the Master in construing the rule was material in the circumstances of this case. That difficulty arises because at least the cause of action claiming succession to the second appellant's office as a joint Appointor of the trust necessarily involves claiming curial relief primarily against the second appellant. It is the second appellant who currently purports to hold that office and disputes the respondents' claim to have succeeded to the office based on his mental state. Any requirement for the possible existence of facts which would entitle the respondents to curial relief against the second appellant would clearly be satisfied. That is, even if the appellants' construction of the rule is correct, what the Master referred to as the 'jurisdictional question' was necessarily answered in the respondents' favour in relation to the proposed claim against the second appellant.
The same might not be said of the first appellant. However, if the second appellant were properly required to give pre-action discovery and inspection of his personal medical records, there could be no substantial injustice to the first appellant in leaving the order operating against her in relation to the same documents. If the order was properly made against the second appellant, there would be no arguable basis for granting the first appellant leave to appeal.[4] Leave to appeal is generally not granted unless a substantial injustice would be done if it remains undisturbed.[5] There is no arguable basis in the present case for departing from that general approach in this case.
[4] See The New South Wales Solicitors Mutual Indemnity Fund v The Hancock Family Memorial Foundation Ltd [No 2] [2009] WASCA 146 [27], [79].
[5] Waller v Waller [2009] WASCA 61[9] ‑ [10], [121]; The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40, 54 ‑ 57; Wilson v Metaxas [1989] WAR 285, 294.
Alleged error in finding of a cause of action as to succession of Appointor
Faced with the above difficulties, during the course of the hearing senior counsel for the appellants formulated the following proposed additional ground of appeal:
The learned master erred in law in failing to give reasons dealing with the issue of whether the respondents may have a cause of action for declaratory relief in respect to the [Succession Deed].
The learned master should have held any such cause of action involved the determination of a hypothetical question and should have refused the application on that ground.
Adequacy of reasons
There is no merit in the first paragraph of this proposed ground of appeal, which asserts that the Master failed to give adequate reasons for concluding that the respondents may have the cause of action referred to at [12] above.
The Master referred to the Succession Deed.[6] He referred to the respondents' observations on the general cognitive deterioration of their father, and found that all of the features of dementia and its associated difficulties appeared to the respondents to be present.[7] The Master noted that a guardian ad litem had to be appointed because medical evidence suggested the second appellant was not in a position to provide instructions to solicitors or counsel.[8] The Master referred to the evidence of the second respondent that the respondents were concerned the second appellant may not have legal capacity.[9] The Master noted that, if that was so, the respondents have succeeded the second appellant as joint Appointor under the Trust Deed.[10] The Master noted that the appellants did not file any affidavits in opposition to the application.[11] The Master said that if the second appellant lacked mental capacity that would affect his role as Appointor of the trust.[12] The Master said that he was satisfied that the respondents had a potential cause of action against persons whose description had been ascertained.[13]
[6] Primary decision [5].
[7] Primary decision [8].
[8] Primary decision [9].
[9] Primary decision [11].
[10] Primary decision [11].
[11] Primary decision [12].
[12] Primary decision [12].
[13] Primary decision [14].
As the appellants did not file any evidence in opposition to the application, there was no factual dispute for the Master to address or resolve. The Master's reasons disclose a cogent legal and factual basis for his conclusion that the respondents may have a cause of action against the second appellant of the kind referred to at [12] above. Nothing in the proposed ground or submissions in support of that ground provide any basis for doubting the adequacy of the Master's reasons in that regard.
Hypothetical question
The second aspect of the proposed ground contends that the proposed cause of action is not more than hypothetical. That aspect of the ground raises an issue as to what is involved in concluding that a person 'may' have a cause of action against a potential defendant.
The principles governing the application of this aspect of the rule are well established. I summarised the principles in my reasons in Kelbush v Australia and New Zealand Banking Group Ltd,[14] with which the other members of the court agreed. I repeat that summary below for ease of reference.
[14] Kelbush v Australia and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374 [66] - [71].
Order 26A r 4(1) identifies, as a condition for the application of the rule, a requirement that the appellant 'may have a cause of action against' the respondent. This may be referred to as the jurisdictional question, which must be answered affirmatively before the court's discretion to order pre-action discovery under the rule is enlivened.
In Waller,[15] Le Miere J, with whom Martin CJ agreed, formulated the following test:
O 26A r 4(1) should … be interpreted to require an objective test. The court must form an opinion as to whether there is sufficient evidence before it that the applicant may have a cause of action against the potential party. The court must make its own evaluation of the circumstances which ground the applicant's belief that he may have a cause of action against the potential party. The test is objective in the sense that it is not sufficient that the applicant believes that he may have a cause of action against a potential party; the court might determine this belief to be unfounded. It is not necessary that the applicant have a prima facie case. However, there must be material to establish that the applicant may have a cause of action against the potential party. There must be some tangible backing, or objective foundation, that takes the existence of the cause of action beyond a mere allegation, suspicion or assertion. (citation omitted)
[15] Waller [75].
Martin CJ identified the purposes of the rule as being to enable a prospective litigant to obtain discovery of documents that may assist in making a decision as to whether to commence proceedings. He explained that it would entirely defeat the purpose of the rule to require an applicant to demonstrate the present existence of a cause of action as a condition to the exercise of the court's jurisdiction.[16] The Chief Justice observed:[17]
It would therefore be wrong in principle to approach the rule with an undue focus or emphasis upon the demonstration of the prospective cause of action. Thus, the jurisdictional question is whether there might be a cause of action which could be demonstrated by the provision of the documents sought. However, something more than mere assertion, conjecture or suspicion is required to enable the court to conclude that there might be such a cause of action.
[16] Waller [2], [4].
[17] Waller [4].
So an applicant under O 26A r 4 must demonstrate more than mere assertion, conjecture or suspicion, but does not have to positively establish the existence of a cause of action. What the applicant must produce is evidence showing that he, she or it may have a cause of action.
The phrase 'cause of action', as it appears in r 4, should be understood in its ordinary sense of the facts or combination of facts which gives the right to sue.[18] An applicant under r 4 does not need to prove those facts, but there must be evidence indicating (beyond mere assertion, conjecture or suspicion) that all facts necessary to give rise to a right to curial relief may be able to be established.
[18] Dye v Griffin Coal Mining Co (1998) 19 WAR 431, 434; Morgan v Banning (1999) 20 WAR 474, 484, 487; ABB Service Pty Ltd v Hetherington [2001] WASCA 417 [9](iii); Rossen v Airey [2012] WASCA 26[30].
In this case, the evidence of the respondents' observations of their father, combined with the need to appoint a guardian ad litem, provided evidence indicating (beyond mere assertion, conjecture or suspicion) that the second appellant may lack legal capacity. That evidence existed in a context where it seems uncontroversial that the Trust Deed and the Succession Deed provide for the respondents to succeed the second appellant as joint Appointor in the event that he is incapacitated as defined in the Succession Deed. That was sufficient to establish that the respondents may have a cause of action against the second appellant on the basis that they may have succeeded him as joint Appointer.
Senior counsel for the appellants points to written submissions advanced before the Master.[19] The effect of those submissions was that the relief proposed to be sought by the respondents was of no utility, because if they succeeded they could only exercise the power of Appointor jointly with the first appellant. There is no merit in those submissions, which are addressed to the manner in which the power of Appointer might be exercised if the respondents' proposed cause of action is established. Those submissions do not deny the existence of a dispute as to whether the respondents have succeeded the second appellant to the office of Appointor. The resolution of that dispute would be a matter of significance to the respondents, and would give them an effective veto over the exercise of the Appointer's power in a manner which they regard as inappropriate. The significance of the respondents' status as Appointor, jointly with the first appellant, is not denied by the prospect that the respondents and first appellant might disagree as to whether, and the manner in which, the Appointor's powers are to be exercised.
[19] Defendants' Submissions in opposition to application for pre-action discovery dated 11 December 2018, par 53 - 59.
For these reasons, nothing in this proposed ground provides any basis for impugning the Master's conclusion that the jurisdictional question was to be answered in the affirmative.
Disposition
For the above reasons, in my view there is no reasonable prospect of leave to appeal being granted, the appeal being allowed and the order for pre-action discovery and inspection being set aside. I therefore concluded that a stay pending determination of the appeal was not warranted, and that the appellants' application for a stay should be dismissed.
Conscious of the fact that this decision of a single judge effectively resolves the appeal, as the refusal of a stay renders it nugatory, I granted a short stay of the pre-action discovery and inspection order to a date 7 days after the publication of these reasons was anticipated. That was to enable the appellants to consider whether they wished to seek a review of this decision in light of these reasons. The respondents did not oppose the grant of a short stay for that purpose.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
ET
Associate to the Honourable Justice Mitchell8 MARCH 2019
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