Sangen v Sangen
[2021] VSC 590
•17 September 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS EQUITY AND PROBATE LIST
S ECI 2021 03108
| PETER ALEXANDER SANGEN | Plaintiff |
| and | |
| ROSS JOSEPH SANGEN (who is sued both personally and in his capacity as executor of the will and estate of Dorothy Melba Sangen, deceased) | Defendant |
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JUDGE: | MOORE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 9 September 2021 |
DATE OF JUDGMENT: | 17 September 2021 |
CASE MAY BE CITED AS: | Sangen v Sangen |
MEDIUM NEUTRAL CITATION: | [2021] VSC 590 |
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PRACTICE AND PROCEDURE – Alleged lack of decision making capacity of defendant - Proposed referral to VCAT – Section 179 of the Guardianship and Administration Act 2019 (Vic) – Goddard Elliott v Fritsch [2012] VSC 87.
NATURAL JUSTICE – Application of fair hearing rule to determination of whether to refer to VCAT issue of appointment of administrator – Bahonko v Moorfields Community & Ors [2008] VSCA 6 – Thompson v State of Victoria [2021] VSC 181.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr Jonathan McCoy | RNG Lawyers |
| For the Defendant | In person | |
| Amicus curiae | Mr Robert Miller | O’Brien Law |
HIS HONOUR:
On 9 September 2021, I made an order pursuant to s 179(1) of the Guardianship and Administration Act 2019 (the Act) referring the issue of whether or not the defendant requires an administrator or supportive administrator to the Victorian Civil and Administrative Tribunal (VCAT) for determination. These are my reasons for making that order.
Factual background
The plaintiff and the defendant are brothers and the adult children of Dorothy Melba Sangen who died on 24 October 2020.
The deceased left a will dated 25 March 2020 which appointed the defendant as her executor and left her residuary estate equally between the plaintiff and defendant. Probate of the will was granted to the defendant on 6 April 2021. As executor of the estate, the defendant retained Paul Connor of O’Brien Law to act as solicitor for the deceased’s estate.
The principal asset of the estate is a property situated at 10 Louise Avenue, Mont Albert (the property) which is valued at $1.7 million in the Inventory of Assets and Liabilities.
On 22 May 2021, the property was sold at public auction by the defendant as the executor of the deceased’s estate for $2 million. Pursuant to a contract of sale entered into for the property, settlement was to occur on 20 August 2021. Settlement has not in fact occurred.
Procedural history
On 27 August 2021, the plaintiff filed a summons in which he sought various orders, including that the defendant do all things and execute all documents necessary to effect the settlement of the sale of the property by 1 September 2021. In his supporting affidavit, he deposed that the purchaser of the property had agreed to extend the date for settlement to 3 September 2021. The summons was returnable before the Practice Court on Tuesday 31 August 2021.
On 30 August 2021, Mr Connor served an affidavit of that date in which, in his capacity as an officer of the Court, he raised various concerns about the instructions that he had been given by the defendant in relation to the contract of sale for the property. Those instructions included that the defendant would not effect settlement of the sale of the property, despite advice from Mr Connor that he should do so. Mr Connor deposed that the defendant had stated to him that he did ‘not care if the estate loses money or indeed if he has to personally bear the losses’. Of particular significance was the following statement by Mr Connor in his affidavit:
I am concerned not only for the protection of the estate but for the Executor’s mental wellbeing as in my judgment the Executor based on his recent behaviour and statements to me has not had the requisite mental capacity to understand my advice and in particular my advice to settle the sale.
When the matter first came before me in Practice Court on 31 August 2021, counsel appeared for the plaintiff and the defendant appeared by telephone from a public telephone booth. The defendant informed the Court that he did not have an internet connection, a functioning mobile phone or a functioning landline. I also granted leave for Mr Robert Miller of counsel to appear in the proceeding as amicus curiae. Mr Miller was instructed by Mr Connor.
In the course of the hearing on 31 August 2021, the defendant informed the Court that he considered that he did have mental capacity to understand the advice given to him by Mr Connor in relation to the settlement of the property. He also informed the Court that he wished to settle the contract for the sale of the property if ‘all the details are what I believe are correct, and complied with all the protocols and procedures’. To that end, the defendant agreed to send to Mr Connor and the plaintiff’s solicitors a list of the matters with which he took issue in relation to the contract of sale and its settlement. I adjourned the plaintiff’s summons to 1 September 2021.
When the matter returned to Court on 1 September 2021, the defendant again appeared by telephone from a public phone booth. Counsel informed the Court that the list of concerns which the defendant had agreed to provide had not yet been received.
The list prepared by the defendant was subsequently received by the plaintiff’s solicitor and by Mr Connor on 2 September 2021 and subsequently provided to the Court. It was in the form of a three page letter from the defendant dated 31 August 2021 (the 31 August letter). The letter was comprised of a broad ranging list of 25 matters generally relating to the sale of the property and the administration of the deceased’s estate. It included references to, amongst other things, issues about the name in which the property was registered, the amount for which it was sold, the names of the purchasers, various asserted errors in documents the defendant was asked to sign relating to the contract of sale and claimed errors in rates notices, an asbestos report and water accounts.
Given the matters deposed to by Mr Connor in his affidavit of 30 August 2021 referred to in [7] above and the need for the Court to address as a priority any issues raised about whether a litigant has mental capacity, on 1 September 2021 I adjourned the plaintiff’s summons to 9 September 2021 to consider whether the Court should make an order that the defendant be independently examined for mental capacity by a medical doctor and for the doctor to report directly to the Court. I also expressed my concern that, in light of the issues raised about whether the defendant had mental capacity, the defendant should appear in person before the Court. I informed the parties that, in the context of the current lockdown in the Melbourne metropolitan area, I would make enquiries to determine whether arrangements could be made to enable the defendant to appear in person on 9 September 2021. In order to inform the parties of the outcome of those enquiries in circumstances where the defendant was unable to be contacted by telephone or email, I also ordered that the summons be listed for mention on Friday, 3 September 2021.
The defendant again appeared by telephone from a public telephone booth at the mention on 3 September 2021. I informed the parties that the defendant would be able to appear before the Court in person at the listed hearing on 9 September 2021 and I gave the defendant detailed practical information to assist him in locating and entering the Court that day. The defendant informed me that he would attend the Court in person on 9 September 2021.
During the mention of the matter on 3 September 2021, I also informed the parties that, on further reflection, I considered that a more convenient means to assess whether the defendant had mental capacity may be to make a referral pursuant to s 179 of the Act, rather than the Court obtaining a report from a medical doctor. I ordered that, at the hearing on 9 September 2021, the defendant be invited to make submissions as to whether or not the Court should make a referral pursuant to s 179 of the Act.
Sub-sections 179(1) and (2) of the Act, the terms of which I explained to the defendant, provide as follows:
Matters before a Court
(1)If in any civil proceeding before a Court the Court considers that a party may be in need of a guardian, a supportive guardian, an administrator or a supportive administrator, the Court may refer the issue to VCAT for determination.
(2)If a Court refers an issue to VCAT under subsection (1)—
(a)the referral is to be treated as if it were an application to VCAT for the making of the relevant order under this Act; and
(b)the prothonotary (in the case of a referral by the Supreme Court) or the principal registrar of the Court (in any other case) is to be taken to be the applicant.
Submissions and consideration
The plaintiff filed submissions in support of the proposition that the procedure under s 179(1) of the Act was available to the Court in the circumstances of this case and that it appeared that the defendant may be in need of an administrator with power to act on his behalf in the proceeding. The plaintiff submitted that, instead of requiring the Court to engage in a fulsome inquiry as to the defendant’s capacity, it was preferable to refer the issue to VCAT for determination.
Counsel as amicus curiae also provided detailed submissions as to why this was a suitable case for the making of a referral under s 179(1) of the Act.
The defendant did not appear in person before the Court on 9 September 2021; he again appeared by telephone. He opposed the making of a referral under s 179 of the Act. In support of that position he relied on the contents of the 31 August letter. He submitted that there had been ‘specific’ and ‘crucial’ errors and mistakes in the ‘protocols and procedures’ in the administration of the deceased’s estate. Except as referred to in the 31 August letter, the precise nature of these errors was not identified or explained.
The defendant also stated that he opposed the making of a referral under s 179 of the Act because he categorically refuted Mr Connor’s statement that he did not understand the advice given to him, or his role as executor. The defendant also asserted that Mr Connor had ‘possibly’ delayed or ‘obfuscated’ him in carrying out his duties in administering the estate and selling the property. The defendant asserted that, at a lengthy meeting with Mr Connor on 5 August 2021, Mr Connor provided him with ‘possibly incorrect’ advice which ‘inhibited’ him in carrying out his role as executor. The defendant otherwise submitted that he was committed to acting in the best way possible to resolve the issues which had arisen in relation to the administration of his mother’s estate.
In Goddard Elliott v Fritsch,[1] Bell J gave extensive consideration to the duty and the powers of the court in relation to the mental capacity of litigants appearing before it. His Honour observed that, where an issue in relation to the mental capacity of a litigant is properly raised, ‘it is the duty of the court at the earliest opportunity to examine whether the person has the mental capacity which is required’.[2] His Honour referred with approval to the following statement of principle by Pullin JA in Allregal Enterprises Pty Ltd v Carpaolo Nominees Pty Ltd:[3]
[I]f the court is put on notice by evidence that a person may not have the capacity to manage his or her own affairs, then in my opinion, the court is duty bound to decide whether the person does have capacity. To proceed without determining the issue means that the court is participating in what may be irregular proceedings.[4]
[1][2012] VSC 87 (‘Goddard Elliott’).
[2]Ibid [563].
[3][2009] WASCA 33.
[4]Ibid [8] cited in Goddard Elliott (n 1) [563].
Justice Bell described the issue of a person’s capacity to commence or participate in legal proceedings as being a matter of ‘first importance’.[5] Where sufficient concern is raised about a person’s capacity, the court may need to adjourn the proceeding to examine that question.[6] His Honour observed that, in most cases, the court will base its decision about capacity on medical evidence and will be reluctant to proceed without it.[7]
[5]Goddard Elliott (n 1) [569].
[6]Ibid [567].
[7]Ibid [565].
In this matter, Mr Connor, mindful of his professional duties as an officer of the Court, has sworn an affidavit in which he has expressed his view that, based upon the defendant’s behaviour and statements, the defendant does not have the mental capacity to understand his advice. It is apparent from Mr Connor’s affidavit that that view is drawn from his extensive dealings and communications with the defendant in relation to the administration of the deceased’s estate. These matters, together with the abstruse nature of some of the issues raised by the defendant in the 31 August letter and the number of such issues raised in relation to what would appear to be an unexceptional and straightforward proposed conveyance of real property, give me sufficient concern that the defendant may not have the mental capacity to participate in this proceeding. I emphasise that I have no concluded view on that issue and am mindful that the defendant has strenuously contested Mr Connor’s claim that he is not able to understand the advice which has been provided to him.
The issue then is to identify the most appropriate course in order to determine whether, as a matter of fact, the defendant has the requisite mental capacity to participate in this proceeding. A difficulty which arises in that connection is the fact that, not only is there no medical evidence before the Court about the defendant’s mental capacity, I have no information about the defendant’s medical history, or whether he has any treating medical professionals and, if so, their identity. The absence of information of this type would likely present practical difficulties for the exercise of the Court’s inherent jurisdiction to order that the defendant be independently examined by a doctor to ascertain his mental capacity. Further, in the circumstances I have described, the resources and facilities of the Court are not well suited to identifying and then engaging a medical doctor for the purposes of examining a litigant’s mental capacity.
I am also cognisant of the power under order 15 of the Supreme Court (General Civil Procedure) Rules 2015 to appoint a litigation guardian. However, as I have noted, there is no medical evidence before me upon which such a power might be exercised; neither is it apparent who might appropriately be appointed as a litigation guardian in the circumstances of this case.
In comparison, the procedure under ss 179(1) and (2) of the Act presents as a practical means which I consider is likely to assist the Court in determining whether the defendant has the requisite mental capacity to participate in this proceeding. The section was recently considered by Incerti J in Thompson v State of Victoria.[8] Her Honour recognised the applicability of the statement by Nettle JA in Bahonko v Moorfields Community[9] in which his Honour, in dealing with the predecessor provision to s 179, identified that a litigant is ordinarily entitled to be heard before the issue of an appointment of a guardian or administrator is referred to VCAT.[10] In Thompson, Incerti J made an order listing the proceeding for submissions as to the making of a referral under s 179 of the Act.
[8][2021] VSC 181.
[9][2008] VSCA 6.
[10]Ibid [25].
The defendant has had, and has exercised, an opportunity to be heard in relation to whether or not I should make an order under s 179 of the Act. For the reasons I have given in [22] above, I consider that the defendant may be in need of the appointment of a supportive administrator or an administrator within the meaning of the Act. While I acknowledge that the defendant genuinely and strongly refutes the suggestion that he is without capacity, in the absence of medical evidence, that assertion is insufficient to assuage my concern about the defendant’s capacity based on Mr Connor’s sworn expression of concern as an officer of the Court and the disparate set of issues raised by the defendant in the 31 August letter. The other points raised by the defendant in opposition to the exercise of my discretion have little, if any, bearing on the matter.
In determining to exercise my discretion to make a referral under s 179(1) of the Act, I am also influenced by the fact, unlike the Court, VCAT has a specialist jurisdiction in guardianship and administration matters with established procedures for determining whether particular circumstances require the appointment of an administrator or supportive administrator for a person. Although it would remain for the Court to determine whether or not the defendant has the requisite mental capacity, in undertaking that task, the Court is likely to be assisted by VCAT’s consideration of whether an administrator or supportive administrator should be appointed in relation to the conduct of the defendant’s affairs and any relevant material, including medical evidence, which may be produced in the course of VCAT’s consideration of that issue.
A referral under s 179(1) of the Act will accordingly be made.
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