Kukuy v Holden

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2023 0026

JULIA KUKUY	Applicant
v
TIMOTHY MARK SHUTTLEWORTH HOLDEN (IN HIS CAPACITY AS LIQUIDATOR OF JAY INVEST PROPERTY PTY LTD (IN LIQUIDATION) ACN 609 003 296)	First Respondent
JAY INVEST PROPERTY PTY LTD (IN LIQUIDATION) ACN 609 003 296	Second Respondent

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JUDGES:	NIALL JA
WHERE HELD:	Melbourne
DATE OF HEARING:	20 November 2023
DATE OF JUDGMENT:	19 December 2023
MEDIUM NEUTRAL CITATION:	[2023] VSCA 331
JUDGMENT APPEALED FROM:	[2023] VSC 54 (Elliot J)

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PRACTICE AND PROCEDURE – Appointment of litigation guardian – Whether applicant has capacity to conduct application for leave to appeal – Where guardianship application in Victorian Civil and Administrative Tribunal has not progressed – Where applicant has benefit of stay of judge’s orders – Steps must be taken to progress application for leave to appeal for hearing – Applicant directed to file updated medical material.

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Counsel
Applicant:		No appearance
Respondents:		Ms CG Rome-Sievers with Mr L Freckelton
Amicus Curiae		Mr JP Wheelahan
Solicitors
Applicant:	—
Respondents:	Baker Jones
Amicus Curiae	—

NIALL JA:

For the reasons that follow, I will direct the applicant, Julia Kukuy (‘Ms Kukuy’) to file and serve any updated medical reports in relation to her capacity to conduct the proceeding in this Court.
In what follows I have had regard to the Court file, which includes correspondence from Ms Kukuy. The correspondence has not been formally tendered, but for present purposes I have had regard to it. I have requested the registrar to forward correspondence to the respondents in the event that it had not been sent to them by Ms Kukuy.

Background

On 28 October 2015, Jay Invest Property Pty Ltd (‘Jay Invest’) was incorporated. Ms Kukuy was its sole director, secretary and shareholder.
On 29 October 2015, the Jay Property Trust Deed was executed by Ms Kukuy on behalf of Jay Invest and by Bella Kukuy (Ms Kukuy’s mother) as settlor of the Jay Property Trust (‘the Trust’; ‘the Trust Deed’). Jay Invest was appointed as trustee. According to the second schedule of the Trust Deed, the primary beneficiaries of the Trust are Ms Kukuy and Zarah Feldman (Ms Kukuy’s daughter, who is a minor) and any children and future children thereof. Bella Kukuy is listed as both the settlor and appointor of the Trust in the second schedule to the Trust Deed.
On 13 January 2016, Jay Invest became the registered proprietor of a unit in Brighton, Victoria (‘the Brighton Property’). The Brighton Property is held by Jay Invest on trust.
On 18 January 2018, shortly after the Australian Securities and Investments Commission (‘ASIC’) commenced a strike-off application against Jay Invest, Bella Kukuy (as appointor) purportedly removed Jay Invest as trustee for the Trust and appointed Ms Kukuy as the new trustee. Pursuant to a Deed of Appointment and Removal, Ms Kukuy would become trustee and agreed to take steps to have the title in the Brighton Property transferred into her name. That has not occurred and the Brighton Property remains in the name of Jay Invest. In the meantime, Jay Invest continued to incur costs associated with the Brighton Property, including municipal rates and body corporate fees.
Jay Invest was subsequently deregistered by ASIC. On the application of the body corporate of the Brighton Property, on 6 September 2019, Gardiner AsJ reinstated Jay Invest and wound it up on the just and equitable ground, and Timothy Holden was appointed as liquidator.

Proceeding in the Trial Division

On 9 November 2020, a proceeding was commenced by Mr Holden in the Trial Division seeking orders appointing him as receiver of the trust assets, with a view to calling in the trust assets and paying the liabilities of Jay Invest included in its role as trustee.
On 3 March 2023, Elliott J made the orders sought by Mr Holden and appointed him as receiver and manager of the assets and undertakings of the Trust, including the proceeds of any such property. In his reasons for making those orders given on 28 February 2023,[1] the judge set out a lamentable history of delay and the incurring of costs that has seen modest liabilities significantly extended by liquidators’ fees and disbursements, including legal costs.[2]
[1]Holden v Kukuy (No 2); Re Jay Invest Property Pty Ltd (in liq) [2023] VSC 54.
[2]Ibid [21]–[37].
In his reasons, the judge identified as central to the application the validity of Ms Kukuy’s appointment. In the result, the judge held that Ms Kukuy was not validly appointed as trustee because cl 84 of the Trust Deed precluded the settlor (Bella Kukuy) from being the appointor, and therefore she had no power to replace the trustee and appoint Ms Kukuy as trustee.[3] In reaching that conclusion, the judge noted that Bella Kukuy was identified as the ‘First Appointor’ in item 9 to the schedule but held that this was inconsistent with cl 84, which should prevail over the schedule.
[3]Ibid [44]–[45].
The judge was not referred to cl 19 of the Trust Deed, which provided that the Schedules (including the Second Schedule):
are to be interpreted and construed for all intents and purposes as if they formed part of this Deed and should there be an inconsistency between a provision of this Deed and the Second Schedule, the latter shall prevail to the extent of the inconsistency or difference.
The judge then determined that Jay Invest acts in its capacity as trustee of the Trust.
I note that the judge recorded, but did not determine, alternative submissions made by Mr Holden to the effect that even if Ms Kukuy had been validly appointed, nevertheless Jay Invest had a right of indemnity and proprietary interest in the assets of the Trust. The judge noted that there were conflicting authorities on whether the right of indemnity and supporting lien entitles a former trustee to retain possession of trust property as against a new trustee.
Ms Kukuy applied for leave to appeal. On 8 March 2023, this Court granted a stay of the 3 March 2023 orders until 14 April 2023, or pending the hearing and determination of an application for leave to appeal filed within that time. On 14 April 2023, Ms Kukuy filed her application for leave to appeal.
Pursuant to a reference from the registrar, pro bono counsel have prepared a written case in support of leave to appeal. Counsel submit that the judge erred in concluding that Ms Kukuy was not validly appointed as trustee. Essentially, it is argued that the judge erred in applying cl 84 of the Trust Deed, rather than item 9 of the schedule to the Trust Deed, and in doing so, failed to apply cl 19.
The respondents have also filed their written case. The respondents concede error on the part of the judge but say that, whether or not Ms Kukuy was trustee, the orders made by the judge were correct. In other words, the respondents contend that the error was either not material or, if it was, the same orders should be made in any event.
It is apparent from the history of the matter in the Trial Division that Ms Kukuy has herself raised questions about her ability to represent herself in the proceedings. For example, on 15 April 2021, Ms Kukuy sent an email to the Court that she was ‘completely home bound and isolate, medically debilitated with both physical and mental health conditions… incapacitated and unable to coherently communicate or represent [her]self at all’. The same email attached a medical certificate stating that Ms Kukuy is ‘unfit for to appear in the court and defend herself from 15 Apr 2021 to 17 Apr 2021 (inclusive)’ and ‘is experiencing a severe physical and mental condition and will be totally incapacitated to function properly and is unable to appear in court or assist in her defence’.
On 5 April 2022, VCAT ordered that Bella Kukuy be appointed as administrator for Ms Kukuy, with power to make decisions on all financial matters.
On 12 May 2022, VCAT ordered that Leon Kukuy (Ms Kukuy’s father) be appointed as guardian and administrator for Ms Kukuy, in the place of Bella Kukuy.
On 24 November 2022, on an application by Ms Kukuy and supported by her father, the previous guardian and administration order made by VCAT was revoked and Leon was appointed Ms Kukuy’s ‘supportive guardian and administrator’ pursuant to s 87 of the Guardianship and Administration Act 2019. Ms Kukuy’s ability to act for herself was reinstated.
The trial before the judge was held on 13 and 14 December 2022. As already noted, Ms Kukuy appeared for herself.
On 12 May 2023, pro bono counsel, who had drafted the written case, emailed the Court advising that they did not hold instructions to continue to represent Ms Kukuy.
On 22 May 2023, Ms Kukuy emailed the Court attaching a medical disability certificate of Dr Lebedev. The certificate stated that Ms Kukuy was ‘unfit to attend court or participate in legal matters from 16 May to 30 June’; did ‘not have decision making capacity’; required and was ‘recommended to have a guardian/administrator’; and ‘more detailed assessments [were] forthcoming’.
It was intended to list the application for leave to appeal on 1 August 2023.
On 27 June 2023, pro bono counsel advised the Court by email that Ms Kukuy had an appointment with a forensic psychiatrist on 29 June and will be able to provide a further report as to capacity before 1 August; Ms Kukuy was trying to obtain the assistance of the Public Advocate’s Office; and Leon was not presently in a position to take on the role of her litigation guardian.
The matter was listed in this Court for directions on 1 August 2023. On 21 July 2023, in anticipation of the directions hearing, Ms Kukuy emailed the Court advising that she would be making an application to VCAT to appoint an administrator to manage her financial and legal affairs; she had a medical certificate stating that she was unfit to attend court from 1 July to 30 August; she cannot be a self-represented person in any legal proceeding; she does not have decision making capacity; and it was recommended that she have a guardian or administrator appointed.
On 1 August 2023, the mention was adjourned until 5 September 2023 to allow the application to VCAT to proceed. A copy of the order was sent to the Public Advocate.
The registry made attempts to refer the matter to solicitors to act on a pro bono basis, bearing in mind that where a litigation guardian is appointed the litigation guardian must be represented by a solicitor.[4] On 17 August 2023, the registry was advised by Justice Connect that no firm was willing to take on the matter.
[4]Supreme Court (General Civil Procedure) Rules 2015, r 15.02(3).
On 22 August 2023, VCAT adjourned Ms Kukuy’s application for a guardian to enable her to provide evidence in support of the application. In the order adjourning the application, it is noted that Ms Kukuy had provided no evidence to VCAT in support of her application. The VCAT proceeding was listed for 3 November 2023 but was again adjourned at the request of Ms Kukuy.
The mention in this Court was adjourned to 20 November 2023.
On 17 November 2023, Leon advised the Court that he was unable to appear at the mention on 20 November 2023 due to ill health and that Ms Kukuy objected to attending.
The mention proceeded on 20 November 2023. Ms Kukuy did not attend. The respondents were represented by counsel. Pro bono counsel appeared as amicus and submitted that he was unable to make submissions on behalf of Ms Kukuy.
At the mention on 20 November 2023, the respondents submitted that the Court was in a difficult position given the application to VCAT to appoint a guardian had stalled, but in the meantime, the applicant has the benefit of a stay and that costs and expenses are continuing to accrue. The respondents submitted that the options available to the Court included:
(a)making an order requiring the applicant to obtain updated medical evidence regarding her capacity;
(b)alternatively, exercise its power under s 65M of the Civil Procedure Act2010 to appoint an appropriate medical expert to opine on the applicant’s capacity; and, subject to the view it then forms on capacity,
(c)in either event, if such evidence establishes she is under a relevant disability, take steps of its own motion to identify and appoint an appropriate litigation guardian to enable the applicant’s application for leave to appeal and appeal to be heard and determined without further protracted delay.

Conclusion

A question has arisen as to whether Ms Kukuy has the capacity to conduct her application for leave to appeal. Ms Kukuy has in the past indicated that she lacks the capacity to conduct the application and she has provided some medical evidence to that effect.
It appears that at present Ms Kukuy’s father has been appointed as a supportive guardian to assist her. An application for a guardianship order remains on foot in VCAT.
Although in August 2023 I took the view that it was appropriate to allow the guardianship application in VCAT to be determined before considering whether or not a litigation guardian is necessary in this Court, it now appears that the application has not progressed. In circumstances in which the applicant has the benefit of the stay of the judge’s orders, the application for leave to appeal can no longer languish and steps need to be taken to have it progressed for hearing.
I am conscious that in ensuring that the application for leave to appeal is brought to a conclusion, the Court must be careful to ensure that if the applicant lacks the capacity to prosecute the application, her interests are adequately protected. As the principles that apply to the appointment of a litigation guardian reflect, the Court has an inherent jurisdiction of the Crown as parens patriae to care for those who are unable to care for themselves.[5] Balancing the various interests involved will not necessarily be straightforward, but it is important that, to the extent possible, the Court act on up to date material.
[5]Vishniakov v Lay (2019) 58 VR 375, 384 [24] (Derham AsJ); [2019] VSC 403; Pickett v Amin [2023] VSC 715 (Harris J).
Before determining whether a litigation guardian should be appointed, I propose to give Ms Kukuy the opportunity to provide the Court with any updated medical material in relation to her capacity. Ms Kukuy may also file a submission on the question of whether a litigation guardian should be appointed. If material is received, it will be taken into account in considering whether to require the appointment of a litigation guardian. If no further material is provided, the Court will consider whether it should require a litigation guardian to be appointed on the basis of the material that has been provided to the Court.

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[2023] VSCA 331

19 December 2023