Litopoulos v Indiana Holdings Pty Ltd

[2021] WASCA 88

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   THE COURT OF APPEAL (WA)

CITATION:   LITOPOULOS -v- INDIANA HOLDINGS PTY LTD [2021] WASCA 88

CORAM:   MITCHELL JA

VAUGHAN JA

HEARD:   12 MAY 2021

DELIVERED          :   27 MAY 2021

FILE NO/S:   CACV 20 of 2021

BETWEEN:   VICKI LITOPOULOS

Appellant

AND

INDIANA HOLDINGS PTY LTD (ACN 009 108 294)

First Respondent

SOUNION PTY LTD (ACN 008 995 784)

Second Respondent

PAVLOS LITOPOULOS

Third Respondent

ELEFTHERIA ELLIE PAPANDREOU

Fourth Respondent

ON APPEAL FROM:

Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA

Coram:   MASTER SANDERSON

Citation: LITOPOULOS -v- INDIANA HOLDINGS PTY LTD [2020] WASC 408

File Number            :   CIV 2138 of 2019

Catchwords:

Wills and trusts - Whether residuary beneficiary under the most recent will of a living person has standing to invoke the court's equitable jurisdiction to set aside the assignment of a debt by the testator on grounds of incapacity, undue influence or unconscionable conduct

Appeal and new trial - Practice and procedure - Leave to appeal from interlocutory decision refusing leave to amend originating summons in primary proceedings - Whether there is any substantial injustice in leaving the primary orders undisturbed - Whether impugned orders prejudice any capacity of the appellant to bring representative proceedings on behalf of a discretionary trust of which she seeks to be restored as beneficiary - Whether impugned orders prejudice any capacity of the appellant to bring representative proceedings on behalf of her father as next friend or litigation guardian

Legislation:

Guardianship and Administration Act 1990 (WA), s 43
Rules of the Supreme Court 1971 (WA), O 70 r 1, r 3
Supreme Court Act 1935 (WA), s 16(1)(f)

Result:

Leave to appeal refused
Appeal dismissed

Category:    B

Representation:

Counsel:

Appellant	:	N D C Dillon
First Respondent	:	M Curwood SC
Second Respondent	:	M Curwood SC
Third Respondent	:	M Curwood SC
Fourth Respondent	:	M Curwood SC

Solicitors:

Appellant	:	Hammond Legal
First Respondent	:	Effective Legal
Second Respondent	:	Effective Legal
Third Respondent	:	Effective Legal
Fourth Respondent	:	Effective Legal

Case(s) referred to in decision(s):

A v City of Swan [No 4] [2009] WASC 155

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564

Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109

Arvind Pty Ltd v Lamers [2020] WASCA 47

Barnes v Addy (1874) LR 9 Ch App 244

Chahwan v Euphoric Pty Ltd [2009] NSWSC 805

Commissioner of Stamp Duties (Q) v Livingston (1964) 112 CLR 12

Croome v Tasmania (1997) 191 CLR 119

Ewart v Abrahams (Unreported, Court of Appeal of British Columbia, Library No CA006742, 20 January 1988)

Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421

Frigger v Reid [2017] WASC 138

Gouriet v Union of Post Office Workers [1978] AC 435

Hordern-Richmond Ltd v Duncan [1947] 1 KB 545

JN Taylor Holdings Pty Ltd (in liq) v Bond (1993) 59 SASR 432

Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374

Kirby v Grolmus [2016] ONSC 7426

Klewer v Official Trustee in Bankruptcy [No 2] [2008] FCA 1788

NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107

Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306

The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40

Wilson v Metaxas [1989] WAR 285

JUDGMENT OF THE COURT:

1. We are considering the appellant's application for leave to appeal against orders made by the master dismissing her application for leave to amend her originating summons in the primary proceedings.  For the following reasons, leave to appeal should be refused.

Background

1. The appellant (Vicki Litopoulos) and the third and fourth respondents (Pavlos Litopoulos and Ms Papandreou) are the three children of Kimon Litopoulos. 

2. Kimon Litopoulos and his former wife established two family trusts:

   (1)the K Litopoulos Family Trust (KLFT), of which the first respondent (Indiana Holdings) is trustee; and

   (2)the Litopoulos Family Trust (LFT), of which the second respondent (Sounion) is trustee.

   Pavlos Litopoulos and Ms Papandreou are directors of Indiana Holdings and Sounion.

3. In the primary proceedings, which were commenced by originating summons, Vicki Litopoulos sought:

   (1)a review of a decision of Indiana Holdings to remove her as a general beneficiary and capital beneficiary of the KLFT;

   (2)a review of a decision of Sounion to transfer assets of the LFT to the KLFT; and

   (3)the appointment of substitute trustees of the KLFT and the LFT.

4. Subsequently, Vicki Litopoulos sought leave to amend her originating summons to seek a declaration relating to a debt of $653,331.00 (the debt) that was owed by the KLFT to Kimon Litopoulos.  The proposed amended summons sought in effect:

   (1)an order declaring the purported assignment of the debt by Kimon Litopoulos to Pavlos Litopoulos and Ms Papandreou on 7 July 2017 to be void; and 

   (2) an order that the trustees of the KLFT amend the financial records of the KLFT to record the liability as repayable by the trust to Kimon Litopoulos. 

5. Vicki Litopoulos contends that the assignment of the debt should be set aside on the basis that Kimon Litopoulos lacked capacity to make the assignment or, alternatively, that the assignment was procured by unconscionable dealing or undue influence.

6. Vicki Litopoulos also contends that she has standing to seek to engage the court's equitable jurisdiction to set aside the assignment of the debt on three bases:

   (1)On 21 May 2009, Kimon Litopoulos made a will (which it is said he now lacks the capacity to revoke or alter due to the effects of dementia) which appointed his three children as executors, and bequeathed his property to them in equal shares (Will). 

   (2)Her claim in the primary proceedings to be restored as a beneficiary of the KLFT.

   (3)That she should be appointed as Kimon Litopoulos' litigation guardian or next friend for the purpose of bringing the proceedings on his behalf.

7. In refusing leave to amend the originating summons, the master adopted the following submission of the respondents:[1]

   Vicki has no interest in the subject matter of the gift/assignment of [Kimon's] loan account.  The loan account is a liability of the KLFT not an asset.  To the extent that Vicki is a beneficiary under [Kimon's] will, that does not confer any right or interest in his property to her.  A beneficiary under a will of a person still living derives, while the testator remains alive, no legal or equitable right or title from the will.  All the beneficiary has is the prospect of acquiring a right or title if the testator dies in the lifetime of the prospective beneficiary without revoking or altering the will.  That is to be distinguished from the case of a person who has a contingent interest under the will of a deceased testator.

   [1] Primary decision [6].

8. The master said that he was satisfied that there was no justiciable issue raised by the proposed amendment, observing:[2]

   The arguments put by the [respondents] are unanswerable.  At present the [appellant] has no interest at all under the will and it is not open to her to contest a matter essentially on the basis she does have such an interest.  To allow that to happen would be to raise a hypothetical matter and that is not an appropriate use of the declaration procedure.

   [2] Primary decision [8].

9. The appellant now appeals against the order refusing leave to amend the originating summons on four grounds, which are in substance that:

   (1)The master erred in finding that Vicki Litopoulos had no interest under the Will of Kimon Litopoulos to seek the declaratory relief claimed.

   (2)The master erred by not considering and determining whether Vicki Litopoulos had standing to seek declarations on the bases referred to at [7] (2) and (3) above.

   (3)The master erred by failing to give reasons for rejecting the claim for standing on the bases referred to at [7] (2) and (3) above.

   (4)The master's decision to refuse the amendment application was unreasonable and plainly unjust.

Requirement for leave to appeal

1. The order dismissing the application to amend the originating summons is clearly interlocutory in nature. Vicki Litopoulos requires leave to appeal against that order, pursuant to s 60(1)(f) of the Supreme Court Act 1935 (WA).

2. The principles governing the grant of leave to appeal from an interlocutory decision are well established.  The object of the requirement for leave is to reduce appeals from interlocutory orders as much as possible.  Generally, leave should not be granted unless the decision below is plainly wrong or is attended by sufficient doubt to justify the grant of leave and a substantial injustice would be done if it remained undisturbed.[3]  That said, the discretion is broad and these considerations are not applied as if they were rigid or exhaustive criteria.  The ultimate touchstone is whether leave to appeal is in the interests of justice.[4]

   [3] Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374 [80] - [81]; Wilson v Metaxas [1989] WAR 285, 294.

   [4] The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40, 57.

3. In Arvind Pty Ltd v Lamers,[5] we cited cases referring to the general need:

   (1)for a party to demonstrate that the effect of the order will go beyond mere inconvenience and procedural disadvantage to establish 'substantial injustice'; and

   (2)to keep a tight rein on interlocutory appeals against the exercise of discretion on a point of practice and procedure.

   [5] Arvind Pty Ltd v Lamers [2020] WASCA 47 [16] - [17]. See also the summary of general principles in NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107 [117] - [118].

Disposition of application for leave to appeal

1. The first basis on which Vicki Litopoulos asserts standing, noted at [7] above, is in her personal capacity as a residuary beneficiary under the Will. The second and third bases on which she asserts standing are to bring proceedings in a representative capacity, on behalf of the KLFT (second basis) or Kimon Litopoulos (third basis).

2. The master, in his reasons, rejected the first of these contentions and did not address the other two bases, in which standing to bring the proceedings in a representative capacity was asserted.  We will consider the question of Vicki Litopoulos' standing to bring proceedings in her own interest, before turning to consider the issue of whether she has standing to bring representative proceedings.

Interest as a beneficiary under Will

1. In our view, the master was correct to conclude that the fact that Vicki Litopoulos is a beneficiary under the most recent will prepared by Kimon Litopoulos does not give her standing to pursue the proposed claim.

2. The question of law raised by this aspect of the grounds is whether a beneficiary named in a will of a person who is still living has standing to invoke the court's equitable jurisdiction to set aside that person's transactions on grounds of incapacity, unconscionable dealing or undue influence.

3. The question as to standing is appropriately asked in these terms, rather than simply by reference to principles concerning when a declaration may be granted.[6]  The appellant's counsel referred to cases contemplating the grant of declaratory relief in respect of contingent rights or liabilities.[7]  However, aside from two Canadian authorities referred to by counsel (and discussed below), the circumstances of those cases were remote from the present.

   [6] As to which, see Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 581 - 582; Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 437 - 439.

   [7] Gouriet v Union of Post Office Workers [1978] AC 435, 501; Hordern-Richmond Ltd v Duncan [1947] 1 KB 545, 552 - 553; JN Taylor Holdings Pty Ltd (in liq) v Bond (1993) 59 SASR 432, 436 - 437 and the Canadian decisions in Ewart v Abrahams and Kirby v Grolmus discussed below.  See also Croome v Tasmania (1997) 191 CLR 119, 138.

4. In the present case, the proposed declaratory relief would, if granted, be in the exercise of the court's equitable jurisdiction to set aside a transaction procured by unconscionable dealing or undue influence, or entered into without capacity.  The justiciable controversy which the court is called on to resolve is whether the court should exercise its equitable jurisdiction to set aside the assignment by Kimon Litopoulos of the debt owed by the KLFT to Pavlos Litopoulos and Ms Papandreou.  It is that jurisdiction which Vicki Litopoulos must establish standing to engage.

5. It is established that a residuary beneficiary of a will has no proprietary interest in the assets of a deceased's estate even when the assets of the estate are in the hands of the executor of the estate.  Rather, until the point that the administration is complete, a residuary beneficiary holds only the right to enforce the proper administration of the deceased's estate by the executor.[8]

   [8] Commissioner of Stamp Duties (Q) v Livingston (1964) 112 CLR 12, 17 - 18, applied in Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306, 312.

6. In the present case, Vicki Litopoulos does not even have a right to enforce the due administration of her father's estate, as her father is still alive.  The assets of Kimon Litopoulos' estate have not been vested in executors who are subject to the fiduciary duties equity imposes in respect of those assets.  Kimon Litopoulos' relevant asset - his chose in action for the debt owed by the KLFT - was held by him for his own benefit. 

7. The law does not give a beneficiary under a will of a living person standing to seek to set aside a transaction entered into by the testator during his or her lifetime merely on the basis that the beneficiary's eventual inheritance may be greater if the transaction were to be set aside.  The fact that Vicki Litopoulos is a beneficiary of Kimon Litopoulos' Will does not give her any interest in the debt owed to Kimon Litopoulos by the KLFT.  Therefore, it is insufficient to give her standing to invoke the court's equitable jurisdiction to seek to set aside his assignment of that debt.

8. That is, as Bennett J observed in Klewer v Official Trustee in Bankruptcy [No 2]:[9]

   A 'beneficiary under [a] will derives, while the testator remains alive, no legal or equitable right or title from the will: all the beneficiary has is the prospect of acquiring a right or title if the testator dies in the lifetime of the prospective beneficiary without revoking or altering the will' (Meagher, Heydon and Leeming, Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (4th ed, LexisNexis Butterworths, 2002) at [6‑190]).  As was stated In Re Parsons; Stockley v Parsons (1890) 45 Ch D 51, at 55, per Kay J (approved in Ogden Industries Pty Limited v Lucas (1968) 118 CLR 32, at 37):

   It is indisputable law that no one can have any estate or interest, at law or in equity, contingent or other, in the property of a living person to which he hopes to succeed as heir at law or next of kin of such living person.  During the life of such person no one can have more than a spes successionis, an expectation or hope of succeeding to his property.

   [9] Klewer v Official Trustee in Bankruptcy [No 2] [2008] FCA 1788 [50], approved in George v Fletcher (Trustee) [2010] FCAFC 53 [106] and Frigger v Reid [2017] WASC 138 [11] - [12].

9. Counsel for the appellant was unable to cite any case which held that a beneficiary named in a will of a person who is still living has standing to invoke the court's equitable jurisdiction to set aside that person's transactions.  His inability to do so does not appear to be for want of diligent research, as he referred to two Canadian decisions in support of his argument.  However, neither of those cases involved a testator who was alive at the time the proceedings were commenced.

10. Ewart v Abrahams is a 1988 decision of the Court of Appeal of British Columbia.[10]  In that case, the deceased had transferred his interest in real property to his wife and a daughter as joint tenants in May 1967.  He died intestate and without any significant assets in August 1967.  In November 1981, another daughter commenced proceedings alleging that the transfer of the real property by the deceased was void and should be set aside on the grounds that the deceased lacked capacity or the transfer was procured by undue influence.  The question arising for determination by the court was whether the 10 year limitation period for recovery of trust property had expired.

    [10] Ewart v Abrahams (Unreported, Court of Appeal of British Columbia, Library No CA006742, 20 January 1988), also reported in Ewart v Abrahams (1988) 22 BCLR (2d) 138.

11. Lambert JA (with whom Hinkson and Macdonald JJA agreed) held that, if the conveyance of the property was void when it was made, the new proprietors would hold the property on trust for the deceased while he was alive and for the persons entitled to his estate on an intestacy after his death.[11]  Lambert JA said:[12]

    In my opinion, [the daughter's] contingent defeasible interest, arising after [the deceased's] death in 1967, constituted a sufficient interest to permit her to sue, at that time, for a restoration of the trust property to the rightful owner.  In short, I think that a child who would take on an intestacy of a parent has a sufficient interest to attack a conveyance made by the parent at a time when the parent lacked capacity.

    …

    The result is that if [the daughter] had known about the conveyance of 24 May, 1967, and if she had known that her father was senile and may have lacked capacity, then she could have brought an action to restore the trust property to its rightful owner at least as soon as her father died, in August, 1967, or perhaps as soon as the conveyance was made.

    (emphasis added)

    [11] Ewart v Abrahams (6).

    [12] Ewart v Abrahams (7).

12. The court held that, on any view, the limitation period had expired by November 1981 and the action had to be dismissed on that basis.

13. Three points may be made about this decision.  First, it appears to depart from Australian law by holding that a residuary beneficiary gains an equitable interest in the deceased's assets before the administration of the deceased's estate is complete.  Secondly, the right which the court found to exist arose on the death of the deceased, which was sufficient to reach a conclusion as to the limitation period.  Thirdly, the prospect that the daughter may have taken action as soon as the conveyance was made was merely put forward as a possibility without analysis, and the court did not determine that the daughter could have done so.

14. The second decision relied on by the appellant's counsel is Kirby v Grolmus, a 2016 unreported decision of a single judge of the Superior Court of Justice of Ontario.[13]  The court in that case was dealing with a motion to strike out certain paragraphs of a plaintiff's pleadings.  The pleadings included claims that the son of the deceased, who was the brother of the plaintiff, had misappropriated money from the deceased during her lifetime.  The court held that, given the financial interest of the plaintiff under a will she was propounding, and 'the effect on the size of the estate of the transactions alleged to have been improperly done' the plaintiff '[had a] sufficient interest or at least the appearance of an interest such as to give her standing to move forward with all aspects of the claim'.[14]  However, nothing in this case supports the proposition that the plaintiff would have had standing while the deceased was still alive.

    [13] Kirby v Grolmus [2016] ONSC 7426.

    [14] Kirby v Grolmus [49].

15. Counsel for the appellant also contends that, due to incapacity associated with his dementia, Kimon Litopoulos cannot now alter his Will.  Assuming that to be the case, whether Vicki Litopoulos inherits anything under that Will remains subject to a number of contingencies.  These include whether:

    (1)there is a challenge to the validity of the Will;

    (2)probate is granted in respect of the Will;

    (3)Kimon Litopoulos' liabilities at the date of his death, and the costs involved in the administration of the estate, exceed the value of the assets of the estate (even assuming those assets to include the debt owed by the KLFT);

    (4)relief is sought by any party under the Family Provision Act 1972 (WA); and

    (5)Kimon Litopoulos predeceases her.

1. Moreover, if the (necessarily uncertain) prospect of inheritance gives a person named as a beneficiary in the will of a living person standing to set aside transactions that the prospective testator enters into, there is no principled reason for distinguishing between a testator who retains capacity to change their will and one who does not.  The interest of the beneficiary remains the same, but is merely subject to an additional contingency - being the prospect that the testator may later revoke or alter their will.

2. Counsel for the appellant submitted that it was sufficient that there was a 'real issue' for the court's determination and the person seeking a declaration as to that issue had a 'real interest'.  He contended that a beneficiary under a will or an intestacy would have a real interest where, if a declaration were granted, there might be a change in circumstances leading to a prospect of the beneficiary inheriting more or inheriting something as opposed to nothing.  In those circumstances, on counsel for the appellant's argument, the beneficiary would have standing to attack any transaction made by a person, or seek relief in relation to claims that might be made by the person against third parties.[15]

   [15] Appeal ts 7 - 10.

3. The logical consequence of the appellant's argument would be that a beneficiary under a will of a living person has a sufficient interest to seek declaratory relief as to the rights and liabilities of a living person against third parties which might affect the benefit which the beneficiary may receive once the testator dies and his or her estate is administered.  A declaration might also be sought as to the validity of transactions which may have been entered into by a living testator, such as whether contracts entered into by a testator are enforceable or should be set aside, or as to the existence and extent of liabilities owed by or to a testator.  Conferring a beneficiary with standing to interfere in the personal affairs of a living testator would be a significant step for the court to take.  If, which we doubt, it is a step that this court - as an intermediate appellate court - could take, it is not, in our view, a step that should be taken.

4. In our view, the master was correct to hold that the appellant did not have standing, by virtue of her status as a beneficiary of the Will of Kimon Litopoulos, to pursue the claim sought to be added by amendment to the originating summons.

Appellant's standing to bring proceedings in a representative capacity

1. We turn to consider issues arising from the appellant's claim to bring proceedings in a representative capacity, either on behalf of the KLFT or on behalf of Kimon Litopoulos.

Claimed standing to bring proceedings on behalf of the KLFT

1. The second basis on which Vicki Litopoulos claims standing arises from her claimed right to be restored as a beneficiary of the KLFT in the primary proceedings.  Vicki Litopoulos contends that this gives her standing to engage this court's equitable jurisdiction to set aside the assignment of the debt. 

2. It is established that in special circumstances a beneficiary of a trust may sue a third party in his or her own name, joining the trustees and other beneficiaries as defendants, to enforce a right of action against the third party where the trustees fail to perform their duty to protect the trust estate and the interests of the beneficiaries therein.[16] 

   [16] See Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109 [55] - [56]; Chahwan v Euphoric Pty Ltd [2009] NSWSC 805 [16] - [17].

3. There are a number of impediments to a conclusion that Vicki Litopoulos has standing to bring proceedings on behalf of the KLFT on this basis.

4. It cannot be said that Indiana Holdings has failed to perform that duty by failing to have the assignment of the debt set aside.  The assigned debt is a liability rather than an asset of the KLFT.  The position of Vicki Litopoulos as a beneficiary of the KLFT (if that status is re-established in the primary proceedings) is not affected by a change in the identity of the person or persons to whom the liability of the trust is owed.

5. Counsel submitted that there may be a prospect that Indiana Holdings might pay the debt to Pavlos Litopoulos and Ms Papandreou and, after Kimon Litopoulos' death, the executor of Kimon Litopoulos' estate may claim against Indiana Holdings, for example under the second limb of Barnes v Addy.[17]  He suggested that it is open to Vicki Litopoulos, as beneficiary of the KLFT, to bring an action against Pavlos Litopoulos and Ms Papandreou so as to avoid Indiana Holdings incurring that potential liability as trustee of the KLFT.[18]  There seems to us to be a good deal of speculation in that submission, including as to whether Indiana Holdings would have a right of indemnity against the trust assets in respect of the liability, and whether the trustee of the KLFT would have any recourse against Pavlos Litopoulos and Ms Papandreou, in those circumstances.  Moreover, it is not obvious why such proceedings ought to be any more than interpleader type proceedings. 

   [17] Barnes v Addy (1874) LR 9 Ch App 244.

   [18] Appeal ts 16 - 17.

6. Despite his submission, counsel for the appellant could point to no authority supporting the proposition that a beneficiary under a discretionary trust may take action as proposed in the amended originating summons against third parties in this or any analogous circumstance.[19] 

   [19] Appeal ts 17 - 18.

7. It is sufficient for present purposes to note the above weaknesses in the appellant's argument, without finally resolving them.  That is because, as discussed below, even assuming that Vicki Litopoulos might ultimately succeed in establishing standing on the above basis, leave to appeal should be refused as there is no substantial injustice in leaving the master's interlocutory order undisturbed.

Appointment as next friend or litigation guardian

1. The third basis on which Vicki Litopoulos claims standing is as a proposed next friend of Kimon Litopoulos, as a person under a disability, by bringing an action for him under Order 70 of the Rules of the Supreme Court 1971 (WA).

2. The difficulty for the appellant in respect of this third claimed basis for standing is that the amendment to the originating summons did not claim a declaration that Kimon Litopoulos was incapable of managing his affairs in respect of the proceedings seeking to set aside the assignment of the debt.  Counsel for the appellant accepted that no application for a declaration was made.[20] 

   [20] Appeal ts 27.

3. Further, Kimon Litopoulos was not a party to the primary proceedings, which had been instituted by Vicki Litopoulos to protect her own interests, rather than as her father's next friend. The amendment to the originating summons did not seek to add Kimon Litopoulos as a party suing by his next friend. It is true that the last paragraph of the appellant's submissions referred to the court making 'any further or other order the Court deems appropriate including the joinder of Mr K Litopoulos as a joint Plaintiff by his representative Mrs Vicki Litopoulos'. However, it was reasonably open for the master to take the view that the application was not an application to join Kimon Litopoulos as a plaintiff by a next friend, to which a declaration of incapacity under par (c) of the definition of 'person under a disability' in O 70 r 1 would be a necessary precursor in the circumstances of this case.[21] 

   [21] It was not suggested that Kimon Litopoulos otherwise fell within the definition of a 'person under a disability' in O 70 r 1 of the Rules of the Supreme Court 1971 (WA).

4. A further difficulty for the appellant's argument is that, in our view, the evidence before the master did not support the making of a declaration that Kimon Litopoulos was incapable of managing his affairs in respect of the proposed proceedings. 

5. Even where the issue of capacity does not seem to be contentious between the parties to the proceedings, the court will usually require a medical opinion before taking the serious step of declaring a person to be under a disability.[22] 

   [22] See A v City of Swan [No 4] [2009] WASC 155 [30] - [32] and cases there cited.

6. The evidence to which the appellant's counsel pointed was a 'My Aged Care' report, dated 29 September 2018, which contained the reasons of a delegate of the Secretary of the Commonwealth Department of Health for approving Kimon Litopoulos to be eligible to receive certain types of subsidised aged care.  The report was over two years old and does not appear to have been prepared by a medical practitioner.[23]   Counsel also referred to third-hand hearsay statements about Kimon Litopoulos appearing to be in a confused state in around July 2017.[24]  Having regard to the seriousness of the issue to be determined, this material was and is, in our view, insufficient to enable a declaration of incapacity to be properly made.

   [23] Annexure VL-03 to the affidavit of Vicki Litopoulos sworn in the primary proceedings on 28 June 2019.

   [24] Par 15 of the affidavit of Vicki Litopoulos sworn in the primary proceedings on 26 March 2020.

7. It is again sufficient for present purposes to note the above weaknesses in the appellant's argument, without finally resolving the question of whether they are fatal to the appellant's prospects of success on appeal.  As with the second basis on which standing was claimed, leave to appeal should be refused as there is no substantial injustice in leaving the master's interlocutory order undisturbed.

No substantial injustice

1. The orders subject to appeal merely refuse leave to the appellant to amend her originating summons.  The procedural interlocutory nature of the order means that it does not give rise to any res judicata or issue estoppel as to the validity of the assignment of the debt or as to Vicki Litopoulos' capacity to bring proceedings in a representative capacity.  

2. Nothing in the master's orders would prevent Kimon Litopoulos from bringing proceedings against Pavlos Litopoulos and Ms Papandreou seeking to set aside the assignment of the debt, by his next friend if required.  Nor would the orders preclude Vicki Litopoulos from bringing proceedings in a representative capacity on behalf of the KLFT if she were able to establish a proper basis for doing so.  It could not be said that the bringing of such proceedings would be an abuse of process on the basis that they involved an attempt to re-litigate an issue determined by the master.  The master did not purport to resolve any question of Vicki Litopoulos' right to bring proceedings in a representative capacity.

3. At the hearing of the leave application, both parties accepted that the orders made by the master do not prevent Vicki Litopoulos from:[25]

   (1)applying for a declaration that Kimon Litopoulos is incapable of managing his own affairs and seeking an order of the Supreme Court appointing her to be his next friend; or

   (2)seeking a guardianship order from the State Administrative Tribunal under s 43 of the Guardianship and Administration Act 1990 (WA), appointing a plenary guardian(s) or a limited guardian(s) authorised to conduct legal proceedings on behalf of Kimon Litopoulos.

   [25] Appeal ts 22, 29, 31 - 32.

4. The second of these options would appear to be the least costly and most appropriate means of seeking to address the appellant's concern that her father may have been improperly deprived of his only substantial asset.  Of course, nothing in these reasons should be taken to indicate any view as to the appropriate outcome of an application of the kinds referred to in the previous paragraph.  The present point is that the master's orders do not prevent Vicki Litopoulos applying for the appointment of a guardian authorised to bring proceedings on behalf of Kimon Litopoulos.  Any such application which might be made by Vicki Litopoulos in the future will be dealt with on its own merits (whatever they may be).

5. Therefore, the master's orders do not prejudice Vicki Litopoulos bringing proceedings seeking to set aside the assignment of the debt in a representative capacity.  No substantial injustice would arise from any failure by the master to deal with this aspect of the appellant's submissions in the primary proceedings, even assuming that Vicki Litopoulos' standing to bring proceedings in a representative capacity was properly raised before the master and her claim had merit. 

6. Counsel for the appellant submitted that additional costs would be incurred by Vicki Litopoulos if she was required to make a further application.  The prospect of procedural inconvenience with attendant additional costs does not ordinarily constitute substantial injustice for the purpose of the exercise of this court's discretion to grant leave to appeal.  In our view, it does not do so in this case.

7. In any event, we are not convinced that the overall costs burden on the parties will be greater if leave is refused.  It would be necessary to take into account the additional costs the parties would incur in the present appeal if leave were granted. 

8. Further, it is not in the interests of efficient case management for any claim to set aside the assignment of the debt to be made in the primary proceedings.  Those proceedings, which have been commenced without Kimon Litopoulos being joined as a party by originating summons, are not an appropriate vehicle for bringing such a claim. 

9. If a claim to set aside the assignment of the debt is to be made, it would more appropriately be made in proceedings commenced by writ to which Kimon Litopoulos is a party and in which the case for contending lack of capacity and that the assignment was procured by unconscionable dealing or undue influence is properly pleaded.  That will allow the claim to be put in a proper framework for resolution by the court, and reduce the prospects of delay in the resolution of the separate dispute as to Vicki Litopoulos' status as a beneficiary of the KLFT. 

10. The approach outlined above is likely to reduce rather than increase the overall legal costs to be incurred by the parties.  To the extent, if any, that a case manager thought that there was some advantage to hearing the claims together, then pre-trial orders to that effect could be made.

Conclusion

1. For the above reasons, the primary decision is not attended by sufficient doubt to justify the grant of leave to appeal, so far as the master refused to allow an amendment to the originating summons to enable Vicki Litopoulos acting in her personal capacity to seek to set aside the assignment of the debt.  Further, in circumstances where the impugned order does not prejudice Vicki Litopoulos from seeking that relief in a representative capacity, no substantial injustice would arise from leaving the master's interlocutory order undisturbed.

2. Having regard to all of the above matters, in our view, it is not in the interests of justice to grant leave to appeal in this case. 

Orders

1. For the above reasons, the application for leave to appeal will be refused and the appeal will be dismissed.  We will hear the parties on costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

MT

Associate to the Honourable Justice Mitchell

27 MAY 2021