RFD Ltd v Harris
[2007] WASC 180
•8 AUGUST 2007
RFD LTD & ORS -v- HARRIS [2007] WASC 180
| Link to Appeal : |
|
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WASC 180 | |
| Case No: | CIV:2272/2006 | 30 JULY 2007 | |
| Coram: | TEMPLEMAN J | 8/08/07 | |
| 20 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed Mareva order to be discharged | ||
| B | |||
| PDF Version |
| Parties: | RFD LTD AIG EUROPE (UK) LTD AMERICAN HOME ASSURANCE COMPANY DANIEL PAUL HARRIS |
Catchwords: | Injunctions Return of interim Mareva orders Material nondisclosure when orders granted ex parte Whether evidence justifies continuance of orders Turns on own facts |
Legislation: | Nil |
Case References: | Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1 Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 Perth Mint v Mickelberg (No 2) [1985] WAR 117 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
AIG EUROPE (UK) LTD
Second Plaintiff
AMERICAN HOME ASSURANCE COMPANY
Third Plaintiff
AND
DANIEL PAUL HARRIS
Defendant
Catchwords:
Injunctions - Return of interim Mareva orders - Material nondisclosure when orders granted ex parte - Whether evidence justifies continuance of orders - Turns on own facts
Legislation:
Nil
(Page 2)
Result:
Application dismissed
Mareva order to be discharged
Category: B
Representation:
Counsel:
First Plaintiff : Ms K A Vernon
Second Plaintiff : Ms K A Vernon
Third Plaintiff : Ms K A Vernon
Defendant : Mr D R Williams QC
Solicitors:
First Plaintiff : DLA Phillips Fox
Second Plaintiff : DLA Phillips Fox
Third Plaintiff : DLA Phillips Fox
Defendant : Bradford & Co
Case(s) referred to in judgment(s):
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319
Perth Mint v Mickelberg (No 2) [1985] WAR 117
(Page 3)
1 TEMPLEMAN J: The plaintiffs in this action are the insurers of Austal Ships Ltd, the former employer of the defendant. The plaintiffs have applied to continue an interim Mareva order granted ex parte by Blaxell J on 11 December 2006 and extended by his Honour on 19 December albeit with some variations.
2 Although the defendant was represented at the second hearing, his solicitors had not then had sufficient time to prepare evidence in opposition to the application. For that reason, although the order was extended "until further order", it remained an interim order. The plaintiffs therefore have the onus of satisfying the Court that the order should now be extended until trial.
Background
3 The defendant suffered an injury on 26 March 2001 in the course of his employment. He was involved in a trial evacuation from a vessel by an escape slide. He suffered an injury to his head, neck and back when he became wedged in the slide and was hit by another employee who was descending behind him.
4 Subsequently, the defendant claimed to have been incapacitated by his injury, to the extent of losing the use of his legs. He claimed to be reliant on a wheelchair.
5 With one exception, the neurologists who had examined the defendant could not identify any organic cause of his symptoms. However, the defendant was diagnosed by psychiatrists as suffering from a conversion disorder. Such a disorder involves the conversion of an unconscious mental problem (such as anxiety) into neurological symptoms (such as paralysis).
6 The defendant received workers' compensation payments. In addition, he brought an action for common law damages in the District Court. That action was settled on or about 29 April 2005 when the plaintiffs paid him $650,000 by way of damages and $100,000 in respect of his legal costs. The plaintiffs claim to have paid to the defendant $1,052,000 in total.
7 Despite having settled with the defendant, the plaintiffs were apparently suspicious of him. They therefore placed him under surveillance.
(Page 4)
8 The results of that surveillance are set out in a report by Marine & General Insurance Services (Australia) Pty Ltd ("MGISA") in which it is said that between 4 June and 9 December 2005, "the defendant was observed walking and getting around without the assistance of a wheelchair". During the period of surveillance, the defendant was seen to attend the Central College of Tertiary and Further Education to complete a real estate agency course. MGISA reported that during his real estate agency course, the defendant did not rely on a wheelchair for mobility and was able to walk independently. He was said to have been similarly mobile while completing work experience with Roy Weston Whitfords.
9 On 30 September 2005, the defendant was observed attending a paintballing session in relation to which he signed a disclaimer to the effect that he was sufficiently fit to stand the strain and exertion involved in playing paintball.
10 On the strength of the report from MGISA, a surveillance video, and various other medical reports, the plaintiffs sought opinions from some of the medical practitioners who had examined the defendant before his case was settled.
11 Through their solicitors, the plaintiffs asked these medical practitioners to provide reports addressing a number of issues: and in particular, whether they considered, on the balance of probabilities, that the defendant had been "deliberately fabricating his symptoms".
The post-surveillance medical opinions
12 Dr Ross Goodheart is a consultant neurologist. He had examined the defendant on 5 January 2004. In a report dated 18 August 2006 to the plaintiffs' solicitors, he said he had considered at the time of his examination in January 2004 that the defendant "was suffering with a non-organic loss of power in his legs". Dr Goodheart said there were two possible diagnoses:
"Either [the defendant] was suffering with a true conversion disorder (a psychiatric diagnosis), or he was feigning his symptoms. In other words, his leg weakness would be part of a malingering process."
- Dr Goodheart went on to opine that:
"[The defendant's] lower leg weakness was the result of his malingering. It would seem that [the defendant] was feigning his symptoms for direct financial gain."
(Page 5)
13 Dr John Ker is a consultant physician in rehabilitation medicine. Dr Ker had examined the defendant on 16 August 2001. He also formed the opinion that there was no organic cause of the defendant's symptoms. However, Dr Ker was then "happy to exceed [sic, accede] to" the opinion from psychiatrists that the defendant was suffering from a conversion disorder.
14 In August 2006, Dr Ker's opinion was that:
"The dramatic and apparently complete reversal of [the defendant's] 'psychiatric disorder' in a period of four months - directly following the settlement of his medico-legal affairs for a sum of substance - does not fit with my experience of the outcomes of chronic 'conversional paraplegic states'."
- Dr Ker went on to say that the resolution of the defendant's condition was "more in keeping with the achievement of secondary gain (ie a sum of money)".
15 Dr Helena Piirto is a consultant psychiatrist. She had diagnosed the defendant as suffering from a conversion disorder in December 2003, and again in April 2005, shortly before his claim was settled. At that time, Dr Piirto said she did not believe there would be any significant change in the defendant's "profile" while he remained in the medico-legal system. The profile to which Dr Piirto referred was that of a man whom she diagnosed as having "a personality disorder by definition", the features of which Dr Piirto set out in some detail.
16 In her report of 20 September 2006, Dr Piirto said that "the vast majority of people with conversion disorders, between 90 to 100 per cent, have their initial symptoms resolved in a few days, or less than a month". Dr Piirto therefore regarded the defendant's presentation as being "quite unusual in its chronicity". Ultimately, Dr Piirto was of the opinion that the defendant had presented with a conversion disorder soon after the accident of March 2001 but that he recovered from it before settlement of his claim in 2005:
"I believe he entered a phase which was more consciously mediated, and that issues of primary and secondary gains were largely determining his presentation."
17 Indeed, Dr Piirto said that when she reviewed the defendant previously, she "had concerns regarding the legitimacy of his complaints".
(Page 6)
- It appears, however, that Dr Piirto deliberately withheld this concern from the plaintiffs because:
"If these had been expressed overtly, I am aware [the defendant] would have become privy to this, and it is probable he may have been more wary of 'recovering' so quickly, perhaps to prove a point to yet another medical professional, or to avoid possible legal repercussions post settlement. Thus in the intermediate post settlement phase (eg a year) he may have more convincingly presented with the behaviours associated with a Conversion Disorder."
"I now consider it more probable that [the defendant] had reiterated previously experienced symptoms and limitations in functioning while having increasing awareness, understanding and appreciation of his physical reality. However he elected not to disclose this because of potential financial gain. Thus there was a shift from unconscious, complex psychological mechanisms to conscious fabrication. Thus in my opinion, for a substantial period of time prior to 2005 [the defendant] was deliberately misleading, essentially malingering."
19 Dr Lawrence Terace is a consultant psychiatrist. He had examined the defendant on 12 September 2001 and diagnosed "abnormal illness behaviour and possibly conversion or hysterical paraplegia", rather than a conversion disorder.
20 Dr Terace's opinion as expressed in his report of 14 September 2006 (omitting emphasis) was:
"… it is possible that a miraculous recovery from abnormal illness behaviour or conversion disorder or hysterical paraplegia has occurred. However, it is even more likely, and even more probable, that -
(a) [the defendant] never had a conversion disorder or hysterical paraplegia at the time I examined him, and rather, conscious exaggeration of physical complaints was more likely at that time.
(b) I did base my opinions expressed in prior reports upon the matters you list, including the history I obtained from [the
- defendant], [the defendant's] response to my questions during examinations, the statements [the defendant] made during my examinations, and [the defendant's] physical presentation during my examinations when he claimed to be wheelchair bound. Therefore, if this in effect is [the defendant] on the videotape then it strongly raises the index of suspicion that I was misled by false statements (that he could not walk/was paralysed etc) which were more likely than not designed to deceive ie - a deliberate fabrication of symptoms occurred at the time I examined him with a view to maximising the claim."
21 Apparently in reliance on the surveillance evidence and the medical reports to which I have referred above, the plaintiffs commenced proceedings against the defendant by writ issued on 29 November 2006. The gravamen of the plaintiffs' claim is that the defendant made false and untrue representations to:
• the plaintiffs (by his statement of claim filed in the District Court action);
• the plaintiffs (by the further and better particulars of his claim filed in the District Court action);
• the plaintiffs (by way of the defendant's schedules of damages);
• the plaintiffs in correspondence;
• doctors, nurses, and allied health providers;
• surveillance agents.
22 The alleged representations, in essence, are that the defendant was paralysed below waist level and unable to walk or move his legs. It is alleged further that "at all material times", the defendant was not paralysed below waist level and was able to walk and move his legs. The allegations appear to be based on the proposition that from the very outset, the defendant was not paralysed as he claimed to be. This, despite the fact that Dr Piirto's opinion was that the defendant did have a conversion disorder. Indeed, this was the diagnosis of a number of appropriately qualified medical practitioners.
The application for a Mareva order
23 On 11 December 2006, the plaintiffs applied ex parte to Blaxell J for a Mareva order in which they sought to freeze the defendant's assets. So far as the plaintiffs were then aware, the defendant's principal assets were
(Page 8)
- interests in three properties, two of which had been purchased before his damages claim was settled, while the third was purchased subsequently.
24 The evidence relied on by the plaintiffs in support of their application was contained in an affidavit of Mark Lewis Williams, the solicitor having the conduct of the matter. Mr Williams exhibited to his affidavit the recent reports from Drs Goodheart, Ker, Piirto and Terace to which I have referred above. Mr Williams said that having viewed the surveillance video and read those reports, he believed that the defendant had "fabricated his symptoms" in order to mislead the medical practitioners who had reviewed him, and that the plaintiffs have a cause of action against the defendant "for fraudulent misrepresentation and deceit outlined in the statement of claim".
25 The defendant submits that Mr Williams' expression of opinion is irrelevant, and therefore, inadmissible. That is obviously so. However, the defendant submits that the opinions expressed in the four reports are also inadmissible.
26 In my view, there is considerable substance to that submission. Clearly, it is open to a medical practitioner to express the opinion that there is no explanation for the symptoms exhibited by the person under examination, and therefore, that the person concerned may be malingering. However, I have grave doubts about the admissibility of a medical report containing a retrospective diagnosis of this kind, without any further review of the patient or knowledge of his recent history. This is particularly so, when the opinion is directed to the issue which is central to these proceedings and which is therefore a matter for the Court to determine.
27 However, it is not necessary for me to form a concluded view about this aspect of the matter because I am satisfied that the application to Blaxell J was supported by a misleading affidavit and tainted by material non-disclosure.
The defective evidence
28 It is well settled that a plaintiff who applies to the Court ex parte is under a duty to place before the Court all the facts which are material to the exercise of the relevant jurisdiction. The law is summarised succinctly in Seaman on Civil Procedure, [52.1.13].
29 In the present case, not only did the plaintiffs fail to make such disclosure, they presented evidence which was materially misleading.
(Page 9)
- That evidence is contained in par 22 of Mr Williams' affidavit of 28 November 2006 in which he referred to medical reports prepared by a number of medical practitioners who had examined the defendant during the course of the District Court action. Mr Williams said:
"The majority of the medical reports diagnosed the defendant as having:
22.1 no spinal cord injury and
22.2 a conversion (psychiatric) disorder manifesting as paralysis likely to be permanent." (My emphasis)
(1) On 11 April 2001, Mr Philip Hardcastle, an orthopaedic surgeon, referred to the defendant's condition as being "most likely a conversion reaction" and expressed the hope that there would be restoration of lower limb function "fairly shortly".
(2) On 11 June 2001, Ms Madeleine Wapnah, a manipulative physiotherapist, expressed the view that there was no apparent reason that the defendant would not make a full recovery.
(3) On 27 June 2001, Dr Brad Gallagher of the Phoenix Health Care Centre expressed the opinion that the defendant's prognosis was for "eventual full recovery from these injuries".
(4) On 1 July 2001, Mr Antonio Graneri, a psychologist, said he was not averse to the diagnosis of a conversion disorder which would be "a godsend" because it would mean that the defendant had "a great chance at recovery and walking again".
(5) On 19 July 2001, Ms Wapnah said that she had been optimising her time with weight-bearing and mobilisation "with aims to help [the defendant] to walk again …"
(6) On 24 September 2001, Dr Terace (who then said there was no clear psychiatric evidence to suggest malingering) expressed the view that "there is a clear trajectory of recovery" from the defendant's current psychiatric condition of adjustment disorder.
(Page 10)
- (7) On 2 November 2001, the neurologist Dr David Rosen said of the defendant that "he is now talking in terms of rehabilitation and hoping to be able to get walking again".
(8) On 30 January 2002, Dr Phillip Finch, a specialist in pain medicine, referred to the defendant's feeling that his "paraplegia" should recover.
(9) On 10 February 2002, Dr Rosen referred to the defendant as "talking in terms of rehabilitation and hoping to be able to get walking again".
(10) On 25 February 2002, Dr Finch said he had suggested to the defendant that "with the lack of severe spinal findings there should be recovery, and that he should work with his rehabilitation providers towards this goal".
(11) On 3 March 2002, Dr Terace expressed the opinion that the defendant's prognosis was "reasonable, rather than poor" based on factors which included the proposition that "most states of emotional adjustment are temporary conditions".
(12) On 1 December 2003, Dr Piirto apparently agreed with an opinion expressed by Dr Rosen in November 2001 that the defendant had "a Functional Paraplegia with no obvious organic cause, and Adjustment Disorder, which was resolving, and a Chronic Pain Disorder, which was also resolving".
31 None of these reports was disclosed to Blaxell J: and none of them suggests that the defendant was likely to suffer from a permanent disability.
32 It is true that on 17 September 2003, Associate Professor John Yeo expressed the view that if the defendant's paraplegia continued beyond three years following the accident, then he would expect the condition would probably be permanent. Similarly, in her report dated 5 April 2005, Dr Piirto referred to "the chronicity of the defendant's complaint". She said:
"It is coming up to four years since he first went to hospital, and thus his prognosis becomes more bleak with each passing month."
- However, even in that report, Dr Piirto noted that once the defendant's claim had settled, there would be "more opportunity" for him to recover.
(Page 11)
33 Counsel for the plaintiffs submitted that the reports to which I have referred above, in which the various authors expressed optimism about the defendant's prospects of recovery, had all been written within a year or so of the accident in which the defendant suffered injury. Counsel emphasised the opinion that the prognosis would become more pessimistic with the passage of time (although, as I have noted above, Dr Piirto felt that settlement of the defendant's claim would act as a spur to recovery).
34 Clearly, the plaintiffs were entitled to pursue that line of argument. However, that is not what they did at the hearing before Blaxell J. On the evidence to which I have now been referred, I can see no justification for Mr Williams' assertion that the majority of the medical reports obtained during the course of the District Court litigation suggested that the defendant's paralysis was likely to be permanent. Had the plaintiffs disclosed the reports in which optimism was expressed (albeit at an early stage) Blaxell J would have been able to see for himself that Mr Williams' assertion was incorrect.
35 In my view, by relying on a misleading affidavit and by failing to disclose any of the material evidence referred to above, the plaintiffs breached their duty to the Court. I consider the breaches to be so serious as to warrant the immediate discharge of the Mareva order.
Should the Mareva order be reinstated?
36 An order made ex parte which is discharged for non-disclosure can nevertheless be reinstated if the circumstances otherwise justify such a course. In the present case, counsel for the plaintiffs submits that nothing has changed since the order was granted by Blaxell J: indeed, that the plaintiffs' position has been strengthened by a subsequent affidavit of the defendant.
37 I do not accept the submission that nothing has changed. That is because there is now before the Court an affidavit from the defendant in which he sets out in some detail the means by which he has achieved the full use of his legs. There is also an affidavit sworn by Susan Elizabeth Barter, who describes herself as the defendant's "estranged spouse" and who, in essence, corroborates the defendant's account of his recovery.
38 The defendant says that from 28 March 2001 until about early March 2004, he received treatment in the form of physiotherapy and hydrotherapy. He says that from about March 2003 he has used and
(Page 12)
- continues to use magnetic therapy involving the use of various magnetic devices including braces for his back, thighs, calves and ankles.
39 The defendant says he met Ms Barter at a magnetic therapy conference in Brisbane in about October 2003 and that he and Ms Barter formed a relationship. In the course of that relationship, Ms Barter moved to Perth to live with the defendant. She continued, on a daily basis, the massaging and manipulation of the defendant's legs which she had commenced while the defendant was staying with her previously in Sydney. Ms Barter also assisted the defendant to stand: and she supported him while he attempted to use callipers and a walking frame and crutches.
40 The defendant says that at various times before the settlement of his claim, encouraged and assisted by physiotherapists and others, as part of his rehabilitation regime, he used callipers and a walking frame in an effort to mobilise in a manner that could be described as "rudimentary walking".
41 The defendant says that his progress was such that by about late February 2005 he was able to take one or two steps with the assistance of Ms Barter, but without the use of callipers or the walking frame. However, he said that in doing so he was unable to feel his legs and remained wheelchair reliant.
42 While the defendant claims to be unable to recall precisely when he began to be able to take one or two steps without assistance, he asserts that he was certain that at the time of the settlement he was wheelchair reliant and was not experiencing any progressive improvement in his condition.
43 Following settlement, the defendant said he felt a great sense of relief for a number of reasons. These included his resentment of medical practitioners "who were scrutinising my condition and who couldn't identify precisely what I was suffering from and who offered little or no help to remedy my situation". Further, the defendant said that the doctors who had reviewed him, did not believe him and had treated him with little respect or regard to his condition.
44 The defendant says that after the settlement, he continued with physical manipulation and an exercise regime. However, it was not until about July or August 2005 that he was able to stand without assistance. Thereafter, the defendant claims to have had significant progressive improvement such that, by about the end of August 2005, he was able to rise and walk for short distances without assistance. However, from
(Page 13)
- August to about November 2005, the defendant still used the wheelchair because he did not have a great deal of strength in his legs and lacked balance and coordination. He recalls that by about October 2005 he was able to drive his motor car without using hand controls, but that he still reverted to those controls well into 2006.
45 The defendant says that by late 2005 he had regained sufficient strength, coordination and balance to be able to walk unassisted. He then no longer needed the wheelchair. The defendant believes his recovery results from the use of magnetic therapy, regular physical manipulation and exercise and patience and hard work by himself and Ms Barter.
46 Ms Barter, in her affidavit, says that while employed by Qantas as a flight attendant, she suffered from low back pain and became interested in alternative treatment techniques. In exploring that interest she was introduced to Nikken Wellness Pty Ltd, a company which promotes and distributes health products, concerned primarily with magnetic healing. Ms Barter says that Nikken products relieved her symptoms and that she became actively involved in assisting others with those products.
47 In the course of that involvement, in August 2003, she met the defendant at a Nikken conference in Brisbane. Ms Barter observed that the defendant was himself an active user of Nikken products and was also promoting them.
48 Ms Barter then began to motivate the defendant. She recommended treatment techniques which would reduce or cure his incapacity.
49 Ms Barter says that between August 2003 and June 2004, the defendant visited her in Sydney and that he was then wheelchair reliant. Ms Barter became emotionally attached to the defendant. In June 2004 she came to Perth and commenced living with him. At that time, Ms Barter says, the defendant remained incapacitated and wheelchair bound. He did not move his legs. At no time had she seen the defendant move his legs voluntarily. However, she did on occasions feel the defendant's legs jerk during his sleep.
50 Ms Barter says that she used various Nikken products on the defendant on a daily basis.
51 Over the first six months of their cohabitation, the defendant remained incapacitated and did not move his legs. He remained wheelchair bound. Ms Barter says that on a daily basis, it was necessary for the defendant to ascend stairs to the bedroom. He did so by placing
(Page 14)
- his buttocks on the stairs and moving himself upwards on the palms of his hands. Ms Barter says she held his legs whilst he did so, to assist him.
52 Shortly before Christmas 2004, Ms Barter says she became "forceful" in her care of the defendant. Despite her motivation and treatment, his condition had remained unchanged and she therefore actively encouraged him. Ms Barter says she held the defendant's knees straight and forced him to stand. With that assistance, the defendant was able to stand for a few seconds. However, on many occasions, he fell and had to be assisted by Ms Barter into his wheelchair.
53 Between December 2004 and May 2005, the defendant remained incapacitated and wheelchair reliant. Ms Barter says she continued an active treatment regime encouraging the defendant to use his legs in the manner described above. During that period, Ms Barter observed that the defendant was able to stand for a few seconds at a time and that he started to take one or two steps at a time, with Ms Barter's assistance. However, on many occasions, the defendant fell: and for several weeks he would remain unable to stand or step. He remained incapacitated and wheelchair reliant and there was no vast or progressive improvement in his condition.
54 Ms Barter says that between May and October 2005 she continued to assist the defendant who began to improve on a daily basis. He stood upright for longer periods and took an increased number of steps. By the end of 2005, the defendant was able to take a number of steps as he demonstrated to his family. Ms Barter says that by the end of July 2005, the defendant was able to walk unaided around shopping centres. However, he continued to need a wheelchair from time to time, until September or October 2005 when he was no longer wheelchair reliant.
55 Ms Barter says that she has observed a continued improvement in the defendant's ability and manner of walking since then: the improvement has been gradual.
56 Ms Barter and the defendant ceased cohabiting in December 2006.
57 The plaintiffs' solicitor, Mr Williams, sent copies of the affidavits of the defendant and Ms Barter to Dr Goodheart, Dr Terace and Dr Piirto and asked them to comment on the accounts they had given of the defendant's recovery. Further, Dr Goodheart saw the defendant in clinical consultation on 12 March 2007, before the defendant and Ms Barter provided their affidavits.
(Page 15)
58 In a report dated 31 May 2007, Dr Goodheart said that at the March 2007 consultation, he specifically asked the defendant about the progress of his recovery. Dr Goodheart said the defendant "was very vague and could certainly not give me the detail that now appears in his affidavit". Later in his report, Dr Goodheart said he was not aware of any physical therapies that would specifically improve the condition of patients with conversion disorder: and that in his experience, the use of magnetic devices such as those used by the defendant would not improve neurological illness or conversion disorder.
59 Dr Goodheart concluded his report by opining that there were only two possible diagnoses in the defendant's case: either the defendant might have suffered a conversion disorder, or he might have been deliberately fabricating his symptoms from the time of his accident in 2001 until he found he was able to walk again.
60 Although in his report of September 2006 Dr Goodheart had expressed the opinion that the defendant had been deliberately fabricating his symptoms, Dr Goodheart said in his report of 31 May 2007 that "this is a diagnosis that I am not trained to make". I accept the submission of counsel for the defendant that this significantly undermines the evidence presented to Blaxell J.
61 Dr Terace reported on 30 June 2007. He noted that he had not described the defendant as suffering from a conversion disorder, but rather, had used "the umbrella term of abnormal illness behaviour". He had done so, he said, because he had not found sufficient evidence for the presence of a conversion disorder.
62 Dr Terace went on to say that in his experience, magnetic aids such as those relied on by the defendant did not increase the prospects of recovery from a conversion disorder.
63 Although Dr Terace did not comment on the history of the defendant's recovery as explained in his and Ms Barter's affidavits, he remained of the view, on the balance of probabilities, that the malingering diagnosis "is probably the correct one".
64 Dr Piirto reported on 10 July 2007. She noted that the defendant was "selective in the history he gave to her during the course of the review shortly before his claim was settled". Dr Piirto said on that occasion the defendant "very much emphasised that as far as he was concerned he was permanently incapacitated by a loss of movement and sensation in his lower limbs".
(Page 16)
65 Dr Piirto was also dismissive of the utility of the magnetic therapy the defendant had undertaken. Dr Piirto said that none of the items to which the defendant had referred were indicated for the treatment of a conversion disorder:
"Furthermore I am not aware of any reputable scientific, medical, psychiatric or psychological journal which would advocate any of these for the treatment of any psychiatric disorder."
66 Dr Piirto therefore maintained her opinion that, on the balance of probabilities, the defendant did not have a true conversion disorder at the time of settlement of his claim.
67 Again, I have grave reservations about the admissibility of the opinions of Dr Terace and Dr Piirto. There remains the difficulty that they are purporting to express opinions as to the issue which is for the Court to decide. Further, neither Dr Terace nor Dr Piirto commented on the history given by the defendant and Ms Barter in their respective affidavits.
68 In any event, there is a difference of opinion between the medical practitioners who have reviewed the defendant as to whether he was malingering.
69 In a report dated 23 February 2007, Dr Oleh Kay, a psychiatrist, reported to the defendant's solicitors that he had examined the defendant on one occasion, 20 February 2007.
70 Dr Kay said in his report that he understood the question had now arisen as to whether the defendant had malingered his symptoms so as to consciously receive his settlement by deception. He said:
"I state at the outset that a psychiatrist is no better than any other member of the community, and quite possibly worse, at detecting malingering. Despite having attended workshops and courses of [sic] the subject, I would be loathe [sic] to make such a 'diagnosis' unless there was sufficient corroborative objective evidence to."
- Dr Kay went on to refer to many features of the defendant's case that struck him as being inconsistent with malingering. These included the consistency of the defendant's presentation to all examining medical practitioners, the relative understatement of his symptoms (because
(Page 17)
- malingerers tend to grossly exaggerate their symptoms), the defendant's attempts to rehabilitate himself before settlement and his gradual progressive but relatively rapid recovery post-settlement.
71 Dr Kay's opinion was shared by Dr Peter Burvill, a consultant psychiatrist. Dr Burvill had reviewed the defendant in June 2003 when he made a provisional diagnosis of a conversion disorder. The diagnosis was provisional because the defendant did not satisfy all of the DSM diagnostic criteria for that condition.
72 Dr Burvill reviewed the defendant again on 5 April 2007 at the request of his solicitors. Having been informed about the recent history, including that provided by the defendant himself, Dr Burvill expressed the opinion that "there is nothing in his history to negate the original diagnosis of Conversion Disorder". Nor did that history "support the accusation that [the defendant] was malingering".
73 Dr Burvill also emphasised that malingering "is an extraordinarily difficult diagnosis to make in the absence of strong corroborative, objective evidence to support such an assertion". Dr Burvill said that in the defendant's case he had not been supplied with such evidence. Further, he was of the opinion that the available history was consistent with recovery from the psychiatric condition of a conversion disorder.
The plaintiffs' present position
74 In my view, the plaintiffs have an arguable case that the defendant acted fraudulently at some stage between March 2001 when he was injured and April 2005 when he settled his claim for common law damages. I note that in the course of argument, counsel for the plaintiffs put the case somewhat differently from the way it is pleaded in the plaintiffs' statement of claim. As I understood counsel's submissions, they were not so much that the defendant had acted fraudulently from the outset (as pleaded) but that he had misrepresented the extent of his recovery in the period shortly before settlement so as to give the impression that he was incapacitated to a far greater extent than was the fact.
75 The position is, therefore, that there is evidence which, if not explained satisfactorily by the defendant, could give rise to the inference that he had been malingering. However, there are differences of medical opinion about the possible inferences: and about the nature and extent of the defendant's condition.
(Page 18)
76 It would be quite inappropriate, in the context of this application, for me to form any view as to the likely outcome of the plaintiffs' claim. The allegations made against the defendant are of the most serious kind: but, it cannot be said that the claim is frivolous or vexatious. The claim can be resolved only by a trial.
77 In those circumstances, the question arises whether the plaintiffs have made out a sufficient case for the grant of a Mareva order.
Should a Mareva order now be made?
78 As the plaintiffs rightly submit, an applicant for a Mareva order must satisfy two criteria. First, the plaintiffs must demonstrate that they have a vested and accrued cause of action against the defendant: and secondly, that there is a danger of the defendant removing or dissipating his assets so as to prevent the plaintiffs from enjoying the fruits of any judgment which they might obtain against him.
79 Although different standards have been adopted from time to time in the relevant authorities, I consider that as there is a serious question to be tried, the first of the above criteria will be satisfied.
80 I take that view on the basis of the judgment of the majority of the High Court in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1 at 46 where it was said that it was "well open" to the primary Judge to make a Mareva order having formed the view as to the existence of a serious question with respect to the matter in issue.
81 The first and second criteria are not necessarily to be considered independently. As Burt CJ said in Perth Mint v Mickelberg (No 2) [1985] WAR 117 at 119:
"… it seems to me that the sufficiency of the strength of the plaintiff's case will always fall to be judged in the context of the risk that the defendant will dissipate his assets with the intention of placing them beyond the reach of the plaintiff. As has been said, those two considerations must be judged in combination."
82 The plaintiffs rely on the decision of the Court of Appeal of New South Wales in Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319. There, the Court adopted a similar approach to that of Burt CJ in the Mickelberg case (supra). Gleeson CJ said (at 325):
(Page 19)
- "There is no reason in principle why the evidence which is relevant to the first of the issues earlier referred to might not also have a bearing on the second, and this will especially be so where the prima facie case that is made out against a defendant is one of serious dishonesty involving diversion of money from its proper channels."
- Gleeson CJ went on to say that it was reasonable to infer that the defendant, against whom there was a prima facie case of serious dishonesty involving diversion of money from its proper channels, "is not the sort of person who would, unless restrained, preserve his assets intact so that they might be available to his judgment creditor".
83 In my view, it is important to note that in Patterson v BTR Engineering there was strong prima facie evidence of dishonesty in respect of which no explanation had been proffered by the defendant.
84 The present case is therefore distinguishable. For the reasons given above, all that can be said is that there is an arguable case against the defendant: not that there is a strong prima facie case: or even a strong case. That being so, I do not consider that there is any basis for drawing an inference that the defendant is likely to dissipate his assets.
85 The plaintiffs rely on the defendant's affidavit as providing evidence that he intends to dispose of some of the assets which are currently the subject of the Mareva order. Those assets include two properties at Orange Springs and a property at Mindarie which the defendant holds as a joint tenant with Ms Barter. The defendant contends that the properties are worth $900,000, $600,000 and $1,000,000 respectively.
86 The defendant says that he and Ms Barter have a joint and several liability in respect of a loan of approximately $700,000 which is secured by a mortgage over the three properties. He says he would very much like to dispose of one of the properties to enable him to reduce significantly the amount of the loan secured by the mortgage.
87 Counsel for the plaintiffs pointed to the fact that there was no valuation evidence relating to the properties: nor even market appraisals. Nor is there any independent evidence as to the amount actually secured by the mortgage. Indeed, the certificates of titles relating to the properties disclose that they are mortgaged to different entities.
88 Counsel for the plaintiffs expressed concern that if the Mindarie property was sold at a price in excess of the amount secured by the
(Page 20)
- mortgage, the defendant would be left with cash so that "the opportunities for the plaintiffs to use the processes of this Court to trace and find how the asset has been converted into cash, [would] be significantly diminished".
89 Counsel went on to say that the plaintiffs would have no ability to identify any liquid assets held by the defendant and that therefore:
"We have no means of securing in any way but for the terms of the Mareva order." (TS 25)
90 In my view, four points emerge from these submissions. First, a desire to sell a property to enable a mortgage to be discharged cannot be equated to an intention to dissipate assets. And that is so, I think, even if the sale takes place in a rising market.
91 Secondly, as counsel for the plaintiffs rightly accepted, the plaintiffs could not achieve any priority over a mortgagee. In any event, the discharge of a mortgage can only be to the advantage of the plaintiffs because it will result in the defendant no longer dissipating his assets by making payments of interest.
92 Thirdly, the plaintiffs would have no right to a tracing remedy in any event: their claim is for common law damages.
93 Fourthly, as Gleeson CJ said in Patterson v BTR Engineering (supra), at 324:
"To impose a complete or partial freeze on the assets of a person is no light matter."
94 This emphasises that a Mareva order should not be granted simply as a means of providing security for the plaintiffs' costs. Its purpose is to avoid the processes of the Court being frustrated.
95 In all the circumstances, I am not persuaded that the second criterion for the grant of a Mareva order has been made out. The result is that the plaintiffs' application to extend the order made by Blaxell J should be dismissed and the order should be discharged.
3
1