Burnett v Browne (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 15 April 2021
• Neutral Citation: [2021] FCA 373
• Date: 15 April 2021
• Court: Federal Court

Federal Court of Australia

Burnett v Browne (No 2) [2021] FCA 373

File number(s):	TAD 25 of 2020
Judgment of:	O'CALLAGHAN J
Date of judgment:	15 April 2021
Catchwords:	BANKRUPTCY – practice and procedure – further application to appoint litigation representative – application dismissed
Legislation:	Evidence Act 1995 (Cth) ss 76, 76(1), 79, 79(1) Federal Court Rules 1979 (Cth) O 43, r 13(6) Federal Court Rules 2011 (Cth) rr 9.63, 10.09
Cases cited:	AJI Services Pty Ltd v Manufacturers’ Mutual Insurance Ltd [2005] NSWSC 709 Burnett v Browne [2021] FCA 85 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Owners of Strata Plan 58041 v Temelkovski [2014] FCCA 2962 Owners of Strata Plan No 23007 v Cross (2006) 153 FCR 398 Slaveski v State of Victoria (2009) 23 VR 160 Vishniakov v Lay (2019) 58 VR 375
Division:	General Division
Registry:	Tasmania
National Practice Area:	Commercial and Corporations
Sub-area:	General and Personal Insolvency
Number of paragraphs:	45
Date of hearing:	8-9 April 2021
Solicitor for the Applicant:	Mr G Williams of Glyn Williams Legal
Counsel for the First and Second Respondents:	Mr A Walker
Solicitor for First and Second Respondents:	FitzGerald and Browne Lawyers
Solicitor for the Third Respondent:	Mr M Rapley of Butler McIntyre & Butler

ORDERS

		TAD 25 of 2020
BETWEEN:	GAIL LOUISE BURNETT Applicant
AND:	ROLAND ALEXANDER BROWNE AND ANTHONY FAIRLEA FITZGERALD First and Second Respondents ; PAUL JOHN COOK Third Respondent

order made by:	O'CALLAGHAN J
DATE OF ORDER:	15 April 2021

THE COURT ORDERS THAT:

1. The applicant’s interlocutory application dated 9 April 2021 be dismissed.

2. The respondents’ costs of the application be taxed and paid out of the applicant’s bankrupt estate in accordance with s 109(1)(a) of the Bankruptcy Act 1966 (Cth).

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’CALLAGHAN J:

The application and the principles governing it

1. This is a further application by the applicant in this proceeding, Ms Gail Burnett, for the appointment of a litigation representative pursuant to r 9.63 of the Federal Court Rules 2011 (Cth) (the Rules) on the basis that, under the Rules, she is a “mentally disabled person”, being “a person who, because of a mental disability or illness, is not capable of managing the person’s own affairs in a proceeding”.

2. The relevant general principles applicable were not in dispute. See Burnett v Browne [2021] FCA 85 at [15].

3. At the hearing of this application, counsel for the first and second respondents (the creditors), Mr Andrew Walker, referred me to the decision of Derham AsJ in Vishniakov v Lay (2019) 58 VR 375, which, if I may say so with respect, contains a careful and detailed exposition of the relevant principles and their rationale, relevantly as follows (at 385-7 [30]):

(a) There is a presumption that everybody of full age has the mental capacity to manage their own affairs, including the commencement and defence of legal proceedings. The burden of proving to the contrary rests with those asserting incapacity (citing Murphy v Doman (2003) 58 NSWLR 51 at 58 [36] (Murphy); L v Human Rights and Equal Opportunity Commission (2006) 233 ALR 432 at 437-8 [20]; Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511 at 1520 [17] (Masterman-Lister); A v City of Swan (No 5) [2010] WASC 204 at [66] (City of Swan); Owners of Strata Plan No 23007 v Cross (2006) 153 FCR 398 at 414-15 [66]-[68]; Slaveski v Victoria (2009) 25 VR 160 at 182-3 [25]-[26] (Slaveski); Goddard Elliott v Fritsch [2012] VSC 87 at [546] (Goddard Elliott)).

(b) The law requires that a person must have the necessary mental capacity if [they are] to do a legally effective act or make a legally effective decision for [themselves] (citing Masterman-Lister at 1533 [57]; Goddard Elliott at [547]).

(c) The authority of a lawyer to represent a client depends on the client having the requisite mental capacity. A lawyer has a duty of care not to coerce their client into a settlement or to take or act on instructions from a client to settle a case when they know or should know the client lacked the mental capacity to give the instructions or could not be reasonably satisfied the client had that capacity (citing Goddard Elliott at [548], [541]).

(d) The commencement of proceedings on behalf of a client implies the solicitor, as an officer of the court, is reasonably satisfied the client has that capacity. It is therefore the solicitor’s responsibility to be reasonably satisfied that the client has the mental capacity to participate in the proceeding and to instruct. If the issue cannot be resolved to the reasonable satisfaction of the solicitor, they must raise the issue with the court. It is the court which has the final responsibility to determine the issue (citing Goddard Elliott at [541], [549], [568]; Borchert v Terry [2009] WASC 322 at [69]; Pistorino v Connell [2012] VSC 438 at [6] (Pistorino)).

(e) A solicitor who persists with representing a client who has lost mental capacity is liable to have costs awarded against them on an indemnity basis even if there is no impropriety (citing Yonge v Toynbee [1910] 1 KB 215 at 228; Goddard Elliott at [549]).

(f) The authority of a court-appointed litigation guardian may be challenged, and a proceeding issued by them dismissed, where the party is shown to be capable of managing their affairs (citing J (by her next friend) v J [1953] P 186 at 191; Martin v Azzopardi (1973) 20 FLR 345 at 348 (Martin); Goddard Elliott at [550]).

(g) The appointment of a litigation guardian protects the person under a disability and the processes of the court as these apply to the parties generally (citing Masterman-Lister at 1525 [31], 1536 [65]; City of Swan at [63]-[65]; Goddard Elliott at [552]).

(h) Provisions of the kind established by O 15 [of the Supreme Court (General Civil Procedure) Rules 2015 (Vic)] are procedural and not substantive law designed to ensure that:

(i) there is someone answerable to the Court on behalf of the litigant with a disability;

(ii) crucial decisions affecting that litigant can be properly and responsibly made

(citing State Rail Authority of New South Wales v Hammond (1988) 15 NSWLR 395 at 400-1).

(i) An application for the appointment of a litigation guardian for a person is very serious because it deprives the person of their fundamental civil rights under the common law, most especially the ‘right to sue or defend in [his or her] own name, and ... compromise in litigation without the approval of the court’ (citing Masterman-Lister at 1520 [17]; Goddard Elliott at [553]).

(j) There is no universal test for determining whether a person is capable of managing his or her affairs. Lack of capacity is usually denoted by a person’s inability to understand the nature of an event or transaction when it is explained (citing Murphy at 58 [33]; Slaveski at 183 [26]; Gibbons v Wright (1954) 91 CLR 423 at 437; Masterman-...