Tschirn v Australian Executor Trustees Ltd
[2015] SASC 58
•13 April 2015
SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
TSCHIRN & ANOR v AUSTRALIAN EXECUTOR TRUSTEES LTD
[2015] SASC 58
Judgment of The Honourable Justice Parker
13 April 2015
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - SUMMARY JUDGMENT
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW - IN GENERAL
Appeal from a decision of a Master dismissing an interlocutory application by the defendants (appellants) for summary judgment. The plaintiff (respondent), as executor of an estate, brought proceedings against the defendants alleging that they unlawfully took advantage of their relationship with the deceased thereby diminishing the estate for their own benefit and gain. The statement of claim alleged that in the deceased’s final years over 1,900 transactions had been conducted on her savings account totalling in excess of $700,000. The defendants sought summary judgment under Rule 232 on the basis that the statement of claim did not identify which of the transactions were said to be utilised for the defendants’ benefit and to what extent. The Master held that the claim was reasonably arguable and refused the application for summary judgment.
Whether the Master erred in not finding that there was no reasonable basis for the claim against the defendants. Whether the Master erred in not making an order for summary judgment.
Held (Parker J):
Appeal dismissed. There are real questions of fact and law to be decided at trial. The Master did not err in not finding that there was no reasonable basis for the claim against the defendants. The requirement of Rule 232(2) not having been satisfied, it is not necessary to determine whether the Master erred in not making an order for summary judgment.
Supreme Court Civil Rules 2006 r 232, referred to.
Royal Bank of Scotland v Etridge [2002] 2 AC 773; Johnson v Buttress (1936) 56 CLR 113; House v The King (1936) 55 CLR 499; Ceneavenue Pty Ltd v Martin (2008) 106 SASR 1; Spencer v Commonwealth (2010) 241 CLR 118; Proude v Visic (No 4) (2013) 117 SASR 560; Three Rivers District Council v Bank of England [No 3] [2003] 2 AC 1, considered.
WORDS AND PHRASES CONSIDERED/DEFINED
"no reasonable basis for the claim"
TSCHIRN & ANOR v AUSTRALIAN EXECUTOR TRUSTEES LTD
[2015] SASC 58Appeal from a Master: Civil
PARKER J: This is an appeal from a decision of a Master of this Court dismissing an interlocutory application by the appellants (defendants) seeking an order for summary judgment, or in the alternative, strike out or further and better particulars.[1]
[1] The Master in fact made an order for further and better particulars in respect of paragraph 24 of the second statement of claim, but otherwise refused all other aspects of the application.
The notice of appeal referred to each of the preceding three issues. However, at the hearing of the appeal, counsel for the defendants abandoned the strike out and further particulars grounds. Thus, the only issue is whether the Master erred in refusing to make an order for summary judgment.
The grounds of appeal may be reduced to the following:
that the Master erred in not holding that there was no reasonable basis for the claim in paragraphs 26.4, 27.3.1, 27.3.2, 27.6 and 33 of the second statement of claim that all withdrawals made on Mrs Atkinson’s Bank SA savings account were made by the defendants or utilised for their own benefit.
The matter is governed by Rule 232:
232—Summary judgment
(1) The Court may, on application by a party, give summary judgment for that party.
(2) Summary judgment may only be given if the Court is satisfied that—
(a) if the applicant is the plaintiff—there is no reasonable basis for defending the applicant’s claim; or
(b) if the applicant is a defendant—there is no reasonable basis for the claim against the applicant.
Background
The primary action is brought by Australian Executor Trustees Ltd (the plaintiff), one of the executors of the estate of the late Joyce Atkinson (the deceased), against Grantley Tschirn and Sharon Tschirn (the defendants). The plaintiff alleges that the defendants unlawfully took advantage of their relationship with Mrs Atkinson during the final years of her life thereby diminishing the estate for their own benefit and gain.
Mr Tschirn, was the godson of Albert Atkinson, who was married to Mrs Atkinson. Mr Tschirn had a long relationship with both Mr and Mrs Atkinson. Mrs Atkinson had known Mr Tschirn since his birth and had frequent contact with him from 1980. Mrs Atkinson had frequent contact with Mrs Tschirn from about 1997. After Mr Atkinson died in 2003, the defendants began to assist Mrs Atkinson with various tasks and visited her regularly.
The action concerns three discrete periods of time from March 2007 until the death of Mrs Atkinson on 1 November 2009. The plaintiff pleads that during that time the defendants unlawfully took advantage of their relationship with Mrs Atkinson for their own financial benefit. By March 2007, Mrs Atkinson was suffering from increasingly severe physical and mental infirmities, was unable to care for herself in her home without assistance, and had become emotionally reliant upon the defendants. The plaintiff alleges that the defendants separately and jointly had a special relationship of influence over Mrs Atkinson which continued until her death.
The first period — March 2007 to July 2007. In March 2007, Mrs Atkinson moved to the defendants’ home. The plaintiff pleads at paragraph 24 of the third statement of claim that from March 2007 to July 2007, the defendants used their special relationship of influence over Mrs Atkinson to obtain her agreement to provide her assets to the defendants for their use.[2] Mrs Atkinson is said to have made a large number of cash withdrawals and EFTPOS payments at the request of the defendants that were expended primarily for their benefit.
[2] The pleading before the Master was the second statement of claim. A third statement of claim was filed following the Master’s order that the plaintiff provide further and better particulars in respect of paragraph 24. During the hearing of the appeal, counsel made submissions in respect of the third statement of claim. The third statement of claim, amongst other things, inserted as Annexure A a schedule of cash withdrawals and EFTPOS payments made from Mrs Atkinson’s savings account during the period 1 March 2007 to 30 July 2007.
The second period — July 2007 to 9 October 2009. The plaintiff alleges that from July 2007 to 9 October 2009, when Mrs Atkinson was admitted to hospital, the defendants used their special relationship of influence over Mrs Atkinson to gain access to her assets for their own use by obtaining her debit card and PIN number. The relevant paragraphs of the third statement of claim state:
26.4Between 1 July 2007 and 9 October 2009 a sum exceeding $607,258.02 was withdrawn from the deceased’s BankSA Savings Account, directly by the defendants, primarily by ATM and EFTPOS transactions using the deceased’s Visa Debit card.
…
27.3 Of the sum of $607,258.02 the sums of:
27.3.1$574,200.00 was withdrawn by the defendants by ATM or EFTPOS transactions;
27.3.2$31,758.02 was withdrawn by the defendants by way of periodical debits and variously credited to accounts numbered:
(i)U008380 105-911-999269240 being a BankSA Visa Credit card account in the name of the deceased;
(ii)U087021 032-797-880725 the owner of which account is not known to the plaintiff;
(iii)U012721 093-003-316326 the owner of which account is not known to the plaintiff;
27.4The sum of $1,300.00 was withdrawn by the defendants by teller cash withdrawals using the deceased’s Visa Debit card.
…
27.6The funds which were the subject of the transactions pleaded at paragraphs 27.3 and 27.4 above were utilised primarily for the defendants own benefit and to the detriment and harm of the deceased or alternatively for no or inadequate consideration to the deceased.
The third period — 9 October 2009 to 1 November 2009. The plaintiff pleads at paragraph 29.1 of the third statement of claim that on or about 4 September 2009, the defendants sought and the deceased gave the defendants authorisation to become signatories to operate her savings account. Paragraph 29.2 states that between 9 October 2009 (when Mrs Atkinson was admitted to hospital) and her death on 1 November 2009, withdrawals totalling $152,839.05 were made from her savings account. This comprised transfers made to the credit of three separate accounts in the amount of $50,000, $50,000 and $11,000 respectively and a further $41,839.05 by way of cash withdrawals or EFTPOS transactions.
Paragraph 33 of the third statement of claim then states:
The defendants used the deceased’s Visa Debit Card to debit the deceased’s BankSA savings account to:
·purchase items and to withdraw cash from businesses providing EFTPOS facilities,
·withdraw cash,
·establish periodical debits
as pleaded in paragraphs 24, 26, 27 and 29 and further as signatories to the said account withdrew and transferred funds as pleaded in paragraph 29.1.
Particulars
A copy of all transactions on the deceased’s said BankSA Savings Account in the period 1 July 2007 to 30 November 2009 is annexed to this Statement of Claim as Annexure “B”. The plaintiff says that each and every transaction debited on the face of this account was unlawfully used for the benefit of the defendants.
The plaintiff summarises its action in undue influence at paragraphs 37 to 40 of the third statement of claim as follows. The plaintiff says that the relationship between Mrs Atkinson and the defendants was such that the defendants were in a position to influence her because of her reliance and dependence upon them. A presumption arises that Mrs Atkinson was unduly influenced by the defendants to allow them to expend her monies or withdraw monies from her savings account. The amount withdrawn cannot be accounted for on the grounds of contract, friendship, charity or otherwise. Therefore, all transfers, expenditure and withdrawals from Mrs Atkinson’s savings account between March 2007 and 1 November 2009 were tainted by undue influence and ought to be set aside.
The plaintiff also relies on unconscionable conduct and breach of fiduciary duty. As those causes of action were not challenged before the Master or on appeal they do not need to be considered here.
The plaintiff seeks an order that the defendants pay equitable compensation for all monies expended by them and/or withdrawn by them or by Mrs Atkinson and provided to them from Mrs Atkinson’s savings account between March 2007 and 1 November. In the alternative, the plaintiff seeks an order that the defendants account to the plaintiff for all profits and benefits gained from their conduct of and access to the proceeds of Mrs Atkinson’s savings account between March 2007 and 1 November 2009.
Commencement of proceedings
By her will Mrs Atkinson appointed the plaintiff and Mr Tschirn as her executors. In administering the estate, the plaintiff found that before Mrs Atkinson’s death there had been transactions or withdrawals from her savings account since March 2007 in excess of $700,000.00. That amount included 334 cash withdrawals, each of $1,500.
Following an application for advice and directions filed by the plaintiff, Kelly J directed that it was appropriate and reasonable that action be taken against the defendants in relation to the monies withdrawn. On 18 February 2014 a second statement of claim was filed with a schedule of transactions and withdrawals from Mrs Atkinson’s savings account from July 2007 to November 2009.[3] A defence is yet to be filed.
[3] Then “Annexure A”, now “Annexure B” in the third statement of claim as referred to at paragraph 33.
Defendants’ interlocutory application
On 9 July 2014 the defendants’ interlocutory application for summary judgment, strike out or further particulars was heard before the Master. The application sought the following orders or directions:
1. An order for summary judgment pursuant to r 232 or, alternatively, the relevant paragraphs of the Second Statement of Claim be struck out pursuant to r 104 in respect of the claims for the period described in the pleading as “March 2007” to 8 October 2009 generally;
2. Alternatively, an order that the Second Statement of Claim filed 4 June 2013 be struck out and/or stayed as an abuse of process pursuant to rr 104 or 193 insofar as it relates to the claims for the period described in the pleading as “March 2007” to 8 October 2009; and
3. In the further alternative, an order for further particulars pursuant to r 102 of the withdrawals pleaded in paragraphs 24, 26, 27 and 33 of the Second Statement of Claim for the period described in the pleading as “March 2007” to 8 October 2009 that are alleged to have been made by the Defendants;
4. ...
5. The Plaintiff pay the Defendants; costs of this application.
6. ...
The defendants’ application was supported only by brief affidavits of their solicitors. There was no affidavit from deponents (eg the defendants) with direct knowledge of the purpose of the great many withdrawals made from Mrs Atkinson’s account and whom had received the benefit of those transactions.
The evidentiary material before the Master comprised the affidavit of Mr Neil Page (a solicitor employed by the plaintiff) dated 11 June 2014 which in turn exhibited (amongst compendious other material) his own affidavit dated 3 May 2012 and that of Mr Tschirn dated 16 August 2012. The latter two affidavits had been filed in relation to the application for advice and directions determined by Kelly J.
In his affidavit, Mr Tschirn stated that Mrs Atkinson preferred to stay with the defendants, instead of living alone or in a nursing home, but did not want to cause them any financial burden. From the time Mrs Atkinson moved into the defendants’ home, her care was provided primarily by the defendants. Mr Tschirn attested that during this time Mrs Atkinson insisted on paying for various expenses, such as outings, lunches, dinners, and holidays which she enjoyed with the defendants. She also voluntarily paid for improvements to the defendants’ home. Some improvements facilitated her care and others gave her comfort or enjoyment. Mr Tschirn described the improvements and stated why Mrs Atkinson wished to pay for those not directly related to her care.
Mr Tschirn also stated that during the first period she would go with him and his wife to the bank where she would withdraw cash and give it to them to make various payments. At some point during the second period, Mrs Atkinson no longer wished to attend the bank personally and requested the defendants to become signatories to her savings account. Mr Tschirn stated that all of the cash withdrawals of $1,500 were either made by Mrs Atkinson or by one or the other of the defendants on her express instruction after she had discussed with them some expense that she wanted paid. However, he did not indicate how the withdrawals had been used and nor did he deny having benefitted from the transactions save to the extent that, as noted above, he referred to certain expenditure made for the benefit of Mrs Atkinson.
Mr Tschirn stated that during the third period, following Mrs Atkinson’s admission to hospital, she told him that she wished to have her will changed to provide for the defendants’ children. On about 23 October 2009 she told him that she wished to make a gift of $50,000 each to two of the defendants’ children when they reached the age of 18 years and $11,000 to a third child for his education and general advancement. As there was insufficient time to have Mrs Atkinson’s will changed, Mrs Tschirn withdrew those sums at her request.
The Master’s reasons
The defendants’ application for summary judgment or strike out related only to the first and second periods, ie from March 2007 to 8 October 2009. The application referred only to “the relevant paragraphs” and did not specify the paragraphs intended to be covered.
The Master summarised the summary judgment application as follows. The defendants took no issue with the statement of claim insofar as it pleads breaches of fiduciary duty, unconscionable conduct and undue influence. Rather, the defendants complained that there was no identification of the impugned transactions. The plaintiff simply annexed a schedule of withdrawals and EFTPOS payments from Mrs Atkinson’s savings account for the relevant period and asserted that all of those transactions were to the benefit of the defendants. The defendants contended that this would have the effect of shifting the onus of proof onto them. However, the plaintiffs should carry the onus of identifying the allegedly tainted transactions. Thus, the defendants contended that the plaintiff has no reasonable prospect of establishing this part of its claim.
The Master held that the issues to be tried are “real”, “not fanciful” and “fairly arguable” and that the plaintiff “has a reasonable prospect of success”.[4]
[4] At [28].
Noting that the defendants sought summary judgment only in respect of period one and period two, and not period three, the Master considered that “it is usually inappropriate to give part summary judgment in a matter where a trial will have to be pursued in relation to the remaining portions of the action in any event.”[5]
[5] At [29].
The Master held that it could not be said that the plaintiff does not have a reasonable prospect of success in pursuing and obtaining an order for an account and noted that Kelly J had been satisfied that there was a reasonable basis for the plaintiff to pursue the claim.[6]
[6] At [30].
The Master inferred that the paragraphs intended to be the subject of the strike out application were those identified by the application for further particulars, ie (relevant to this appeal) paragraphs 26, 27 and 33.
While the defendants no longer pursue the strike out application, both counsel made submissions at the appeal hearing on the basis that the Master’s reasons in respect of paragraphs 26, 27 and 33 as they relate to the strike out application are relevant to the question whether there was a reasonable basis for the claim in those paragraphs that all of the identified withdrawals were made by the defendants and utilised for their benefit.
The Master considered the particulars to paragraph 33 to be at “the heart of the defendants’ complaint” in respect of paragraphs 26, 27 and 33. Paragraph 33 refers to what is now Annexure B to the third statement of claim. This is a schedule comprising 36 pages that refers to over 1,900 transactions on Mrs Atkinson’s savings account between 2 July 2007 and 30 November 2009. The Master held that pleading to be appropriate and able to be responded to by the defendants, stating:
[39] ... The defendants’ position is that each and every time that they were instrumental in withdrawing funds from Joyce’s account it was at her specific instructions and with her consent and endorsement. To require then to plead to each and every transaction identified in Annexure [B] is oppressive and should not be tolerated by the Court.
[40] The first defendant in his exhibited affidavit has already identified that some payments were taken by the defendants and used for purposes associated with directions given by Aunty Joyce. He has in his affidavit denied that there was any unlawful use of any of those monies for the benefit of the defendants. All monies were taken and used as directed by Joyce. It is difficult to see why the defendants cannot in those circumstances plead to paragraph 33 by denying it. It will then be a matter for the Court to determine whether or not the circumstances of the relationship between the defendants and Joyce are such that the plaintiff should succeed on its various applications for declarations or an account. That determination will need to be made before any right to account, if it exists, can be established. However, there is no warrant at this stage to strike out the plea as offending the Rules of Court, or as an abuse of process. Nor does it provide any warrant to stay the action. The liability of an attorney or a fiduciary to account can be onerous. Whether or not the liability can be established in these proceedings is yet to be determined.
The Master referred to the judgment of the House of Lords in Royal Bank of Scotland v Etridge,[7] where Lord Nicholls of Birkenhead said:
[13] Whether a transaction was brought about by the exercise of undue influence is a question of fact. Here, as elsewhere, the general principle is that he who asserts a wrong has been committed must prove it. The burden of proving an allegation of undue influence rests upon the person who claims to have been wronged. This is the general rule. The evidence required to discharge the burden of proof depends on the nature of the alleged undue influence, the personality of the parties, their relationship, the extent to which the transaction cannot readily be accounted for by the ordinary motives of ordinary persons in that relationship, and all the circumstances of the case.
[14] Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant's financial affairs, coupled with a transaction which calls for explanation, will normally be sufficient, failing satisfactory evidence to the contrary, to discharge the burden of proof. On proof of these two matters the stage is set for the court to infer that, in the absence of a satisfactory explanation, the transaction can only have been procured by undue influence. In other words, proof of these two facts is prima facie evidence that the defendant abused the influence he acquired in the parties’ relationship. He preferred his own interests. He did not behave fairly to the other. So the evidential burden then shifts to him. It is for him to produce evidence to counter the inference which otherwise should be drawn.
[7] [2001] UKHL 44 at [13] – [14]; [2002] 2 AC 773 at 796.
The Master held that “[s]uch an approach is reasonably arguable in this matter” and refused the application for summary judgment, strike out or further particulars.
Issues on appeal
This appeal may be reduced to three key issues:
1whether the Master erred in not holding that there was no reasonable basis for the plaintiff’s claim that every withdrawal and transaction during the relevant period was to the benefit of the defendants as a matter of law;
2if so, whether the Master erred in not holding that there was no reasonable basis for the plaintiff to allege this as a matter of fact; and
3in any event, whether the Master erred in not making an order for summary judgment.
Defendants’ submissions on appeal
Counsel for the defendants contended that the plaintiff has made no attempt in the third statement of claim to particularise those withdrawals during the relevant period said to be to the defendants’ benefit. The plaintiff has merely pleaded the aggregate amounts withdrawn by the various types of transaction, ie EFTPOS, ATM and so forth. Annexure B did not provide any particulars other than the date or the amount of the withdrawals. Counsel submitted that this was not, both as a matter of fact and as a matter of law, adequate to establish a reasonable basis for the plaintiff’s claim.
Counsel further submitted that to establish the cause of action of undue influence the plaintiff must prove that the defendant benefited from each transaction. The Master was said to have misapplied Lord Nicholls’ statement in Etridge. The evidentiary burden cannot shift to the defendants until it is shown that they have received a gift or benefited from a transaction of substantial value. That submission relied on Johnson v Buttress where Dixon J (as he then was) held:[8]
the parties may antecedently stand in a relation that gives to one an authority or influence over the other from the abuse of which it is proper that he should be protected. When they stand in such a relation, the party in the position of influence cannot maintain his beneficial title to property of substantial value made over to him by the other as a gift, unless he satisfies the court that he took no advantage of the donor, but that the gift was the independent and well-understood act of a man in a position to exercise a free judgment based on information as full as that of the donee. This burden is imposed upon one of the parties to certain well-known relations as soon as it appears that the relation existed and that he has obtained a substantial benefit from the other. (Emphasis added.)
[8] [1936] HCA 41; (1936) 56 CLR 113 at 134.
Counsel contended that the statement of claim should, but fails to, identify any specific substantial gift or other transaction of benefit to the defendants. Further, the manner in which transactions are at some points pleaded as having been entirely used for the benefit of the defendants and at other points used “primarily” for their benefit was contradictory and an impermissible attempt to shift to the defendants the burden of proving whom had benefited from transactions.
Counsel also contended that, as a matter of fact, there was no reasonable basis upon which it could be alleged that every withdrawal was made or caused by the defendants for their benefit. No evidence had been put forward by the plaintiff beyond Annexure B and a letter showing when Mrs Tschirn became a signatory to Mrs Atkinson’s account. The plaintiff did not have any knowledge or evidence as to whether any withdrawals were used for the defendants’ own benefit. Mr Tschirn, on the other hand, had deposed as to some of the expenditures for which Mrs Atkinson wished to pay, and the reasons why, and that all transactions were made by Mrs Atkinson or on her express instruction. Further, in respect of the periodical debits pleaded at paragraph 27.3.2 of the third statement of claim, the plaintiff did not plead and did not have any evidence identifying the owners of two of the accounts to which certain payments had been credited.
Counsel for the defendant submitted that the court need not be satisfied that the Master’s reasons disclose an error in the House v The King sense.[9] While Rule 232 uses the word “may”, a determination under that rule does not involve the exercise of a judicial discretion. To succeed on the appeal, it is sufficient for the defendants to show that the Master should have made a finding that there was no reasonable basis for the plaintiff’s claim. Counsel submitted that in Ceneavenue Pty Ltd v Martin[10] and Spencer v Commonwealth[11] the test was held to be whether a party had a reasonable prospect of success rather than whether there was an identifiable error in the exercise of a discretion. Counsel also submitted that it would be an unusual outcome if a court were able to determine that there was no reasonable basis for a party’s claim but then nevertheless refuse to strike out the claim as a matter of discretion.
[9] [1936] HCA 40; (1936) 55 CLR 499.
[10] [2008] SASC 158; (2008) 106 SASR 1.
[11] [2010] HCA 28; (2010) 241 CLR 118.
Summary judgment under Rule 232
There was little dispute between the parties about the basis upon which summary judgment may be granted under Rule 232.
In Ceneavenue Pty Ltd v Martin,[12] Debelle J held that Rule 232(2) requires the court to identify the issues to be tried and then to assess whether the claim has reasonable prospects of success. The question whether there is no reasonable basis for the claim must be determined in a summary way and the court is not to conduct a mini trial on that question.[13] It must be evident or obvious that there is no reasonable basis for the plaintiff’s claim, and the question must be capable of resolution without prolonged argument.[14]
[12] [2008] SASC 158 at [81]; (2008) 106 SASR 1 at 21.
[13] Ibid at 21 [82].
[14] Ibid.
Those principles were applied in Proude v Visic (No 4)[15]where Blue J considered the meaning of the expression “no reasonable basis for the claim” and held that no gloss should be placed upon that expression.[16] His Honour referred to Spencer v Commonwealth, where Hayne, Crennan, Kiefel and Bell JJ held that the phrase “no reasonable prospect” ought not be paraphrased or subject to contrast with other expressions. It was necessary to give full weight to the expression as a whole. Their Honours also noted that the power to dismiss an action summarily is not to be exercised lightly. [17]
[15] [2013] SASC 154 at [14], [18]; (2013) 117 SASR 560 at 563 – 564, 566.
[16] Ibid at 565 – 566 [17] – [18].
[17] [2010] HCA 28 at [58] – [60]; (2010) 241 CLR 118 at 141.
In Spencer v Commonwealth, French CJ and Gummow J held that the task is one of “practical judgment”.[18] Relevantly to this appeal, their Honours said:[19]
That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.
[18] Ibid at 132 [25].
[19] Ibid.
French CJ and Gummow J considered the following passage of Lord Hope in Three Rivers District Council v Bank of England [No 3] to be particularly relevant where a case involves apparently complex questions of fact: [20]
The method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well-recognised exceptions. For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman, … that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all.
[20] Ibid at 130 [21], 132 [26]; Three Rivers District Council v Bank of England [No 3] [2003] 2 AC 1 at 260 [94] – [95].
The principles referred to in Spencer v Commonwealth must be applied in the present case.
Consideration
The first question to be determined is whether the plaintiff’s claim as pleaded has, as a matter of law, any reasonable prospect of success.
As I have noted at [35] the defendants have relied upon Johnson v Buttress,[21] to support the contention that the evidentiary burden does not shift to the defendants until it is established that they have obtained a substantial benefit from each of the impugned transactions.
[21] [1936] HCA 41; (1936) 56 CLR 113 at 134 (Dixon J).
The alternative proposition advanced by the plaintiff is that it merely needs to prove as a matter of fact that there has been undue influence and that transactions have occurred which call for explanation. Once those requirements are met the defendants will be required to provide a satisfactory explanation for the transactions. That approach was said to be supported by the passage from the judgment of Lord Nicholls in Etridge set out at [31] above.
I consider it to be reasonably arguable that the legal position expressed by Lord Nicholls in Etridge is correct. If that approach were to be applied at trial, should the plaintiff be able to prove as a matter of fact a relationship of undue influence and that there had been transactions which called for explanation, the evidential onus would fall upon the defendants to establish that the transactions were not tainted by undue influence. I consider that the Master did not err in finding it to be reasonably arguable that this was the correct approach.
The adoption of such an approach would not require the plaintiff to identify specifically in the statement of claim each of those transactions that were said to be used improperly for the benefit of the defendants and to what extent they were so used. It would be sufficient to plead that all withdrawals benefitted the defendants. For that reason I accept the plaintiff’s contention that it is of no moment that the statement of claim merely asserts that the withdrawals were used primarily for the benefit of the defendants.
I consider that the Master did not err in holding that it was likely that the first step in the trial will be to determine liability by reference to Mrs Atkinson’s legal capacity and the influence, if any, exercised over her by the defendants. Upon those issues being resolved, it can be determined whether the defendants should be ordered to account. I also consider that the Master did not err in rejecting the defendants’ contention that there was no reasonable basis as a matter of law for the plaintiff’s claim.
The second question is whether the plaintiff had a reasonable prospect of success in proving its claim as a matter of fact, ie was there a reasonable basis for the plaintiff to allege that all withdrawals made during the relevant period were to the benefit of the defendants. It is clear that in deciding a strike out application the court need not conduct a mini trial nor should it make a final determination of the disputed facts. The task of the court is to critically examine the evidentiary material before the Master to determine whether there is a real question of fact to be determined at trial.
This is not a case where there are matters of fact which are incontestable and do not need to be determined at trial. The limited affidavit evidence was not sufficient for the Master to determine that there was no reasonable basis for the plaintiff’s allegation that the defendants were involved in each of the transactions identified in the statement of claim.
Accordingly, I do not consider it to be so clear on the necessarily limited evidence before the Master that the plaintiff’s claim must fail. There was insufficient evidence before the Master as to the various withdrawals and their use to permit the factual finding needed for summary judgment.
I consider that there are real and legally significant questions of disputed fact to be decided at trial. The Master did not err in not finding that there was no reasonable basis as a matter of fact for the plaintiff’s claim.
I agree with the finding by the Master that the issues to be tried are “real”, “not fanciful” and “fairly arguable” and that the plaintiff “has a reasonable prospect of success”.[22] The Master did not err in declining to make an order for summary judgment.
[22] At [28].
Because of that conclusion, it is not necessary for me to consider the parties’ submissions as to whether or not Rule 232 confers a discretion and, if it does, whether the Master’s reasons reveal an error in the House v The King[23] sense.
[23] [1936] HCA 40; (1936) 55 CLR 499 at 504 – 505 (Dixon, Evatt and McTiernan JJ).
Conclusion
I dismiss the appeal.
2
7
0