Kiernan v Cranston & Purcell
[2016] WASC 183
•17 JUNE 2016
KIERNAN -v- CRANSTON & PURCELL [2016] WASC 183
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASC 183 | |
| 17/06/2016 | |||
| Case No: | CIV:1385/2015 | 1 JUNE 2016 | |
| Coram: | MASTER SANDERSON | 1/06/16 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | LAURENCE JAMES KIERNAN SARAH ELIZABETH KIERNAN EVAN ALEXANDER GEORGE CRANSTON & ROBYN RUTH PURCELL as Executors of the Will of FRANCES ELIZABETH ANNE CRANSTON JOHN WINDSOR CRANSTON PERTH COLLEGE ANGLICAN GIRLS SCHOOL |
Catchwords: | Practice and procedure Application for medical examination and discovery in Family Provision Act 1972 (WA) proceedings Turns on own facts |
Legislation: | Family Provision Act 1972 (WA) Rules of the Supreme Court 1971 (WA) |
Case References: | Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- SARAH ELIZABETH KIERNAN
Plaintiffs
AND
EVAN ALEXANDER GEORGE CRANSTON & ROBYN RUTH PURCELL as Executors of the Will of FRANCES ELIZABETH ANNE CRANSTON
First Defendant
JOHN WINDSOR CRANSTON
Second Defendant
PERTH COLLEGE ANGLICAN GIRLS SCHOOL
Third Defendant
Catchwords:
Practice and procedure - Application for medical examination and discovery in Family Provision Act 1972 (WA) proceedings - Turns on own facts
Legislation:
Family Provision Act 1972 (WA)
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiffs : Ms W F Gillan
First Defendant : No appearance
Second Defendant : Mr R J Nash
Third Defendant : No appearance
Solicitors:
Plaintiffs : Kershaw Legal
First Defendant : No appearance
Second Defendant : Lawfield Legal Practice
Third Defendant : No appearance
Case(s) referred to in judgment(s):
Nil
1 MASTER SANDERSON: This is the plaintiffs' claim brought under the Family Provision Act 1972 (WA). The plaintiffs are respectively the son and daughter of the late Frances Elizabeth Anne Cranston. Neither was provided for in the will of the deceased. Both plaintiffs have filed affidavits setting out details of their relationship with the deceased and their respective financial positions. The second defendant has responded. The estate itself has a net value of some $5 million.
2 By letter to the Case Management Registrar of 29 February 2016 and further letter dated 4 May 2016, the second defendant foreshadowed seeking the following orders:
1. Pursuant to Order 28 Rule 1(2) of the Rules of the Supreme Court, the First Plaintiff shall submit himself for an examination in respect of the matters the subject of the observations and opinions expressed by Dr Malcolm George Roberts in his affidavit sworn 9 October 2015 in this Action by the following medical practitioners:
a. A review by a neuropsychologist being one of Dr Michael Hunt or Dr Mandy Vidovich or Professor Jonathon Foster; and
b. A review by a neurologist being one of Dr Sasson Gubbay or Associate Professor David Blacker or Dr Peter Silbert; and
c. A review by Dr Lawrence Terace.
and on such review the First Plaintiff shall bring with him and make available to the reviewing medical practitioner such existing MRI or CT scans as he has in his possession, custody or power.
2. The First Plaintiff and the Second Defendant be at liberty to apply on 7 days' notice for any further orders or directions required to give effect to order 1 above and to facilitate the examination of the First Plaintiff.
3. Within 21 days of the date of this Order, the First Plaintiff provide discovery on oath of all documents which are in his possession, custody or control falling within the following categories of documents:
a. All financial reports, financial statements, accounting records, and bank statements of Leprechaun Holdings Pty Ltd ('Leprechaun') in its own right and as trustee of the Families Trust ('Families Trust');
b. All financial reports, financial statements, accounting records, and bank statements of the Families Trust (other than those which fall into category (a) above);
c. All deeds and any other documents under which the Families Trust is constituted or the terms of it have been varied;
d. All documents including emails, letters, faxes, notes of conversations, reports, contracts, contractual documents, shares, convertible notes, options, loan agreements, and debts, relating to or concerning Leprechaun's, or the Families Trust's, interest in Gulf Manganese Corporation Ltd ('Gulf');
e. All documents relating to or concerning the Crawley Investments litigation in Supreme Court Action CIV 2713 of 2013, including without limitation, financial reports, financial statements, accounting records, and bank statements; and correspondence to and from the Plaintiffs solicitors in those proceedings, Lemonis Tantiprasut;
f. All bank statements, applications for finance, redraw requests and loan offer letters relating to the Westpac facilities secured over the property at 131 Stoner Road, Bramley;
g. All documents relating to or concerning the employment and appointment of Laurence James Kiernan as a director of Greenwich Equities and the termination of Laurence James Kiernan's employment with Greenwich Equities;
h. All documents relating to or concerning the appointment of Laurance James Kiernan ('James') as a director to Leprechaun, Crawley Investments Pty Ltd, Cavan Capital Pty Ltd, Austindo Holdings Pty Ltd, Bluewater Business Services Pty Ltd, Imperial Resources Ltd since September 2010, including without limitation all documents sent or received by James or signed by James for or on behalf of those companies during these periods, and financial reports, financial statements, accounting records, and bank statements of those companies since September 2010.
i. All documents regarding the transaction in February 2013 by which Leprechaun sold its shares in Asia Minerals Corporation Ltd ('AMC') to Gulf (Refer to Letter dated 12 March 2013 annexure K to the Affidavit of Stephen Donald Hicks dated 29 February 2016 ('Affidavit') and to the notice of general meeting on 30 August 2013 annexure L to the Affidavit ).
j. All documents concerning the takeover offer in February 2014 for AMC by Brighton Mining Group Ltd (Refer Letter of 4 February 2014 from Brighton to ASX enclosing Bidder's Statement - annexures M and M1 of the Affidavit).
4. Within 21 days of the date of this Order, the Second Plaintiff provide discovery on oath of all documents which are in her possession, custody or control falling within the following categories of documents:
a. All financial reports, financial statements, accounting records, and bank statements of Leprechaun in its own right and as trustee of the Families Trust;
b. All financial reports, financial statements, accounting records, and bank statements of the Families Trust (other than those which fall into category (a) above);
c. All deeds and any other documents under which the Families Trust is constituted;
d. All documents including emails, letters, faxes, notes of conversations, reports, contracts, contractual documents, shares, convertible notes, options, loan agreements, and debts, relating to or concerning Leprechaun's, or the Families Trust's, interest in Gulf;
e. All documents regarding the transaction in February 2013 by which Leprechaun sold its shares in AMC to Gulf (Refer to Letter dated 12 March 2013 annexure K to the Affidavit and to the notice of general meeting on 30 August 2013 annexure L to the Affidavit).
f. All documents concerning the takeover offer in February 2014 for AMC by Brighton Mining Group Ltd (Refer Letter of 4 February 2014 from Brighton to ASX enclosing Bidder's Statement - annexures M and M1 of the Affidavit).
5. The Second Defendant be granted leave pursuant to Order 67 Rule 11(d) of the Rules of the Supreme Court to inspect and take copies of the affidavit of Michael James Kiernan dated 29 October 2013 in the proceedings in Crawley Investments Pty Ltd v Elman & Ors, Supreme Court CIV 2713 of 2013.
6. The Plaintiffs pay the Second Defendant's costs of this application to be taxed. (original emphasis)
3 After hearing argument I dismissed the second defendant's application. I indicated I would publish reasons for that decision. These are those reasons.
4 When approaching interlocutory applications under the Family Provision Act regard must always be had to Practice Direction 9.2.2. The intent of that Practice Direction is evident from the first paragraph. It reads as follows:
1. This Practice Direction sets out procedures to ensure that applications pursuant to the Family Provision Act 1972 (WA) (the Act) proceed expeditiously and cost effectively.
5 The Practice Direction itself refers to the principle of proportionality set out in O 1 r 4B of the Rules of the Supreme Court 1971 (WA) (the Rules) and is designed to encourage practitioners not to incur unnecessary costs. Particular reference is made to discovery. Paragraphs 16 to 18 of the Practice Direction are in the following terms:
16. The Court does not usually order discovery in Family Provision Act applications.
17. If a particular need arises for discovery then any application must be supported by an affidavit that shows why discovery is necessary.
18. Any application for discovery of documents must indicate the legitimate forensic purpose to be served by the provision of discovery.
6 It is most unusual, perhaps even unprecedented, for an application to be made in a Family Provision Act matter requiring a party to submit himself to medical examination pursuant to O 28 r 1(2) of the Rules. That is not to say the rule is not available in a particular case. But it would have to be an exceptional case. Here, the second defendant's concerns arose out of the first-named plaintiff's founding affidavit sworn 10 February 2015. Paragraphs 23 - 25 of that affidavit are in the following terms:
23. In or about November 2010 I became very ill with a blood infection which caused pneumonia. I was admitted to Margaret River Hospital, taken by ambulance to Bunbury Hospital and was then flown by the Royal Flying Doctor Service to Royal Perth Hospital. I was in an induced coma for 10 days during which time my mother sat with me every night when my father was not there.
24. When I came out of the intensive care unit at Royal Perth I was transferred by ambulance to St John of God Hospital for my initial recovery period. My mother visited me there on several occasions.
25. The trauma, coma and the medication I was given during my illness caused brain injury and my character changed. I was prone to erratic behaviour and was subsequently diagnosed with frontal lobe syndrome.
7 In further support of the first-named plaintiff's application an affidavit of Malcolm George Roberts sworn 9 October 2015 has been filed. Dr Roberts is a consultant psychiatrist. He annexes to his affidavit a copy of a report he prepared of 3 September 2015. That report under the heading 'Summary' reads as follows:
Mr Laurence James Kiernan has a Frontal Lobe Syndrome arising from permanent brain injury secondary to suffering from severe Pneumonia. He also has a secondary Major Depressive Disorder, severe, without psychotic features. Mr Kiernan has been medically incapable of any type of employment and not just employment for which he has been trained and has had experience with, ever since his brain injury in October 2011.
There is no prospect whatsoever for Mr Kiernan to recover from his brain injury and to be fit to return to work for the rest of his life.
8 It is the second defendant's position that the business activities of the first-named plaintiff are inconsistent with Dr Roberts' conclusion. The second defendant therefore seeks to have the first-named plaintiff examined by other medical practitioners.
9 It is important to bear in mind in a case such as this it is for the plaintiffs to make out their case. To succeed at trial it is not necessary for the first-named plaintiff to establish that he does in fact suffer from a specific injury or complaint which will prevent him working. A limitation on his cognitive function may well be a relevant consideration in looking at all the circumstances and determining whether adequate provision has been made by the deceased. But this is not a case like a personal injuries claim where it is for the plaintiff to establish on the balance of probabilities he has a particular medical condition; and where as a consequence of that condition damages flow. At trial it will be open to the second defendant to call into question the first-named plaintiff's claim of lack of capacity and to put to Dr Roberts any matters which may cast doubt on his conclusion. If evidence is put to Dr Roberts which shows the first-named plaintiff has been conducting business dealings of some complexity over a period of time then that will cast doubt on the plaintiffs' claim overall and it may well fail. But no additional medical evidence is necessary to advance the defendants' case.
10 It is the second defendant's position the first-named plaintiff has over a significant period since his alleged injury in November 2010 been conducting complex financial transactions. In support of his application the second defendant relied on an affidavit of Stephen Donald Hicks sworn 29 February 2016. The affidavit itself is quite short. However, the annexures are voluminous and the affidavit itself is over 500 pages in length. In his written submissions counsel for the second defendant set out the first-named plaintiff's position derived from his affidavits filed in support of his application and the evidence the second defendant's solicitors had been able to find on the public record in relation to the first-named plaintiff's business dealings. The submission was made with admirable clarity and I can do no better than repeat counsel's position:
14. The relevant evidence of the First Plaintiff led in support of his application for further provision under the Family Provision Act 1975 is as follows:
a. by his affidavit of 10 February 2015, the First Plaintiff deposed that his asset, liability and income position was as follows:
i. With his wife, he jointly owned property at 131 Stoner St, Margaret River ('Stoner St') worth $1,500,000;
ii. He owned a Porsche Cayenne 2010 worth $90,000;
iii. He owned Furniture and personal assets worth $50,000;
iv. That there was a mortgage over Stoner St securing an overdraft facility of $1,300,000 and there were credit card liabilities of $7,710.19;
v. That his nett [sic] financial position is $332,289 and that his most recently filed tax return showed he had an income of $26,654 for the year ending 30 June 2013;
vi. In addition to the above, he was also a director and 50% shareholder in Crawley Investments which was the Plaintiff in Supreme Court Action CIV 2713 of 2013 ('the Crawley Action') which he stated had no assets and was a security for costs order of $67,500 and a costs order for $3,500.
b. by his affidavit of 30 July 2015 he further deposed that:
i. since his affidavit of 10 February 2015 the Crawley Action had been dismissed by consent; and
ii. Crawley Investments had no assets of value; and
iii. That he owned 6,000,000 shares in a company called Imperial Resources Pty Ltd which has no assets other than related party receivables which are of no value
c. The evidence concerning his work capacity as a consequence of suffering a brain injury, being:
i. Dr Roberts' report dated 3 September 2015 to the effect that the First Plaintiff has been medically incapable of any type of employment ever since his brain injury in October 2011; and
ii. The First Plaintiff's evidence in his affidavit of 10 February 2015 that as a consequence of frontal lobe syndrome and depression he has been unable to work full time.
16. In support of the application for orders for discovery, the Second Defendant has adduced evidence of the following matters:
a. That on 2 April 2015 the First Plaintiff was appointed as the sole director of Leprechaun Holdings Pty Ltd ('Leprechaun') (which is apparently the trustee of the Families Trust and is said to hold no assets in its own right);
b. As at 3 June 2015, Leprechaun held 33.8% of the issued capital in Gulf Manganese Corporation ('Gulf');
c. Gulf was working to develop a ferromanganese smelting and sales business to produce high carbon ferromanganese in West Timor which project ('Project') is to be owned and operated by Gulf's subsidiary 'PT Gulf Mangan Grup' [sic];
d. The Net Present Value of the Project was estimated as at 30 June 2015 to be $US160.6 Million;
e. On 29 May 2015 Leprechaun converted 7,500,000 convertible notes in Gulf with a face value of 3c each (apparently to dear a debt owing by Gulf to Leprechaun of $225,000);
f. Leprechaun had paid on behalf of Gulf operating expenses of $28,804 in 2014/15 and $138,126 in 2013/14;
g. According to an ASX announcement by Gulf on 12 March 2013, Gulf acquired shares in Indonesian based Asia Minerals Corporation Ltd from Leprechaun, which Gulf described as a company controlled by 'corporate adviser James Kiernan';
h. The First Plaintiff ceased to be a director of Leprechaun on 1 September 2015 (which change was notified to ASIC on 28 January 2016);
i. Bluewater Business Services Pty Ltd ('Bluewater'), a company related to Leprechaun had provided consultancy services to Gulf in 2015 for $150,000 and in 2014, in the sum of $150,000;
j. As at 30 June 2014, Gulf owed 'Mr James Kiernan' $125,000, whereas as at 2015 that liability no longer existed;
k. The First Plaintiff was, according to ASICs records, appointed as the sole director and company secretary of Crawley Investments Pty Ltd on 14 November 2012 and remained as such as at 28 May 2015 (meaning he was the sole director of the company throughout the period of the Crawley Action during which time solicitors and senior counsel were engaged by the company);
l. The First Plaintiff was, according to ASIC's records, appointed as a director of Austindo Holdings Pty Ltd on 2 April 2015, the sole shareholder of which is Leprechaun;
m. The First Plaintiff was, according to ASICs records, appointed as a director of Bluewater Business Services Pty Ltd Holdings Pty Ltd on 2 April 2015, the sole shareholder of which is Austindo Holdings Pty Ltd. The name of the company changed to Bluewater Fiontair Pty Ltd with the First Plaintiff resigning as director and Elizabeth Rachel Kiernan (the wife of the First Plaintiff) being appointed on 20 January 2016;
n. The First Plaintiff was, according to ASIC's records, appointed as the sole director of Imperial Resources Pty Ltd on 2 April 2015, whose major shareholders are the First Plaintiff and Crawley Investments Pty Ltd;
o. In about February 2014, the First Plaintiff provided strategic advice in relation to the proposed takeover by Brighton Mining Group ('Brighton') of Asia Minerals Corporation Ltd for which he was to receive an agreed strategic advice fee of 50,000,000 shares in BTN and 50,000,000 options;
p. The First Plaintiff was party to a loan agreement with Brighton under which he agreed to provide a loan for $150,000 which was owed by Brighton to him. He also agreed that the loan would be satisfied by the issue of 15,000,000 BTN and 15,000,000 BTN options to him;
q. The First Plaintiff was also identified as the contact for any person who had any enquiries about Asia Mining Corporation and his address was given 'Mr Laurence James Kiernan of Greenwich Equities Pty Ltd';
r. The First Plaintiff has been the sole director, secretary and sole shareholder of Cavan Capital Pty Ltd since 18 December 2014. (footnotes omitted)
12 In my view, even given the nature of the material available to the second defendant, discovery was not the appropriate course to take. At the risk of being repetitious it is worth saying again it is for the first-named plaintiff to make out his case; the second defendant does not have to establish a case of his own. If the matters put to the first-named plaintiff are sufficient to call into question the veracity of the claims made then the action may fail. That does not mean there would be judgment for the second defendant. It simply means the application for provision would be dismissed.
13 In this case it is my view the second defendant would have been well advised to have marshalled all the material in Mr Hicks' affidavit and put it to the first-named plaintiff's solicitors with a request for an explanation as to the apparent disparity between the first-named plaintiff's alleged incapacity and his business dealings. If no satisfactory response was received then the second defendant's solicitors would have been within their rights to advise the first-named plaintiff's solicitors the first-named plaintiff would be cross-examined about all of his business dealings. In my view it would have been a legitimate forensic exercise to cross-examine the first-named plaintiff in detail about these matters. But to order discovery - and extensive discovery - would not be in the interest of justice and is not necessary for the proper resolution of the plaintiffs' claim.
14 Accordingly I dismissed the application for discovery. I will hear the parties as to costs.
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