PARTON AND ORS v AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, MEAGHER and SHELLER JJA 29 September 1992 [1992] NSWCA 181 Mahoney JA It is appropriate that the court indicate the views which the members have formed as to the disposition of the present proceeding. For this purpose it will be convenient for me to refer shortly, and because of the generality of reference, perhaps somewhat inaccurately, to the present state of the proceeding. The proceeding which was dealt with on 5 December 1991 by Mr Justice Giles resulted in the orders which appear on pages 2284 to 2286 of the appeal papers. Those orders involve the payment by Mr and Mrs Parton and the company, Parton Enterprises Pty Ltd, of the amount referred to in the judgment and there being granted the relief there referred to. The orders involve also the dismissal with costs of the proceedings brought by Mr and Mrs Parton and the company against the bank for relief in relation to the foreign currency loan which the bank arranged or gave in earlier years to the company. The appeal which was brought against the judgment given by Giles J was initially, in form, an appeal by Mr and Mrs Parton and the company against the judgment itself. Subsequently, for reasons which need not be canvassed, Mr Parton and the company have indicated that they do not propose to proceed with the appeal in relation to the substance of the matter, or at all, and they have submitted to the dismissal of the appeal with costs in relation to the matter on the merits and generally. However, a separate course has been taken by Mrs Parton. It is not appropriate that I attempt to indicate the reasons for this or the details of it. But she has sought separately, by a Notice of Motion, to raise, as I shall describe it, the mental capacity issue. She has sought to raise, and I am conscious that in putting the matter in this way I may be putting the matter somewhat inaccurately, the contention that during the course of the proceedings, and in particular during the course of the trial of the proceedings, she was a person whose mental capacity was affected to the extent that either the judgment given was, as it was described in the Notice of Motion, null and void or one which should be set aside by reason of her mental capacity or incapacity at the relevant time. At the moment she seeks, by Notice of Motion, to raise that issue in the proceeding and to have in the proceeding appropriate relief by reason of it. Reference has been made in the papers which have been given to the members of the court to the amendment of the Notice of Appeal so as to enable her to raise in the appeal this issue of mental capacity and to seek the appropriate relief in relation to it. No formal order has been made at the moment for the amendment of the Notice of Appeal in this regard, but no doubt in connection with the matter Mrs Parton will press for appropriate amendments in due course. 2 UNREPORTED JUDGMENTS In relation to the Notice of Motion, the defendant, Australia and New Zealand Banking Group Limited, indicate that it will propose to oppose the granting of relief claimed by reason of the mental capacity and will require cross-examination and no doubt undertake the production of evidence on the basis of a contest of the issues of fact raised in that regard. Mr Parton and the company have indicated, through counsel, that they submit to such order as the court may make in relation to that matter otherwise than as to costs. The court has therefore been required to consider in the motion two matters: firstly, the course to be followed in order to deal with the mental capacity issue which has been raised in the Notice of Motion and otherwise in the manner to which I have referred; and secondly, what steps should be taken to maintain the status quo as far as that is appropriate pending the determination of the mental capacity issue. I shall deal first with the procedural point. The issue has been raised in discussion before the court as to whether the determination of the claim, based upon the mental capacity point, should be made in a separate and collateral proceeding, that is a proceeding separate from the present proceeding, or whether the relief sought is relief which is appropriate and proper to be sought in the present proceeding, that is, in the proceeding which is now before the court as on the appeal. The court has not heard detailed argument in relation to the matter. Neither counsel was in a position to indicate that full and exhaustive research had been made in relation to the matter, although counsel had given some attention to the particular issue. I myself am not satisfied one way or the other as to what is the appropriate procedure in relation to such a matter. In particular, I am not, at the moment, convinced that the proper procedure would be by way of, to put the matter briefly, the dismissal of the appeal on its merits in respect of each of the plaintiff appellants and allowing Mrs Parton to bring proceedings to enforce her mental capacity claim and the relief based upon it by a separate and collateral proceeding. I am not at the moment satisfied that as a matter of principle this is the correct procedure. I say "not satisfied"; I mean by this that I am not satisfied one way or the other. I have significant doubts as to what, in principle, is the proper procedure. But in addition to this I am of the view that what is the proper procedure may well be significantly affected by what, in the event, are the facts upon which the mental capacity claim is based. The court has before it a number of affidavits in support of the Notice of Motion which Mrs Parton has filed and it has not found it appropriate at this stage to examine those affidavits in detail. There has been, of course, no cross-examination on them and the other parties have not had the opportunity to adduce evidence against the contentions set forth in the affidavits. It may be that the evidence, properly understood, will disclose that there was no relevant mental incapacity. It may be that it will disclose a mental incapacity such that Mrs Parton, for example, was completely non compos mentis at the relevant time. Or it may be that a situation will be disclosed in which she had some affect so far as her mental capacity was concerned but was not, as I have used the phrase, completely non compos mentis at the relevant time. It may be, I think, that what is the appropriate procedural order to be made will be affected by the state of the facts. It may be, for example, that if Mrs Parton was at the relevant time completely non compos mentis, then the appropriate order would be that the attack upon the present judgment should be made by a collateral proceeding, UAARTON AND ORS v AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD (Mahone9 JA) whereas if her condition were less it may be that the appropriate attack upon the judgment would a claim for a re-trial based upon, for example, the existence of a real and substantial injustice. In putting the matters in this way, I emphasise that I am not in any way indicating any view in relation to these matters or suggesting any course to be followed. The point that I desire to emphasise is that the course to be followed procedurally may well be affected by what is the outcome of the factual investigation in relation to the issues raised in the affidavits touching the mental capacity point. This leads me to the conclusion that before the court can properly determine what course should be followed by way of procedure, it needs to know what are the relevant facts. It needs to have the issues of fact determined so that it, or perhaps some other judge or court, may make the appropriate orders in this regard. The issues which will be raised by way of factual dispute appear to be such as to make it inappropriate for this Court to attempt to determine those factual issues. In my opinion, it is appropriate for the court to order that the Notice of Motion be remitted to the appropriate Division for the determination of the questions raised by it, under s51, subs4 of the Supreme Court Act 1970 and generally the powers of the court in relation to the determination of issues of fact by a Division. The precise details of the orders may require attention in due course. In my opinion, the appropriate order to be made is to remit the Notice of Motion to the Division to determine the issues raised by it. The matter may then, if it is necessary, be returned to this Court insofar as that course is essential to the making of final orders in relation to the appeal. The result of this is, I appreciate that the court is not presently in the position to make final orders for the disposition of the appeal. The orders which I have proposed might result in a situation emerging in which, in the present proceedings, Mrs Parton would be entitled to relief against the judgment given by the judge and now existing in the present proceeding. If that be so, then it appears to follow that it would not be appropriate presently to make a final order in this Court dismissing the appeal and making final and definitive orders in relation to costs. I would propose, therefore, that the present Notice of Motion be dealt with in that way. If and insofar as it is necessary in order properly to constitute an appeal in relation to these matters, to grant amendments to the Notice of Appeal, the court should, in my opinion, give attention to that matter and necessary amendments can be sought either by agreed Chamber orders or by an application on motion to a single judge in the ordinary way. In the meantime the bank is in the position where the bank has rights determined in its favour against Mr Parton and the company. There is, in my opinion, no reason procedurally why it should not take full advantage of such rights as it has against Mr Parton and the company in this regard. Reference has been made in argument to the amount of the judgment which is now said to be of the order of $600,000, and no doubt interest may be accruing upon that judgment. It is in the interests of all parties that insofar as the judgment may properly be reduced by action against Mr Parton and the company, steps should be taken without delay to reduce it and to prevent the accrual of unnecessary interest. The court has invited the parties to indicate agreement as to the form of orders which should be made for this purpose. The difficulty that arises arises because the court should in my opinion hold in abeyance the position of the bank against 4 UNREPORTED JUDGMENTS Mrs Parton and the property which she owns. The court has been informed that she has an interest only in two properties, they being properties which she owns jointly with Mr Parton. Those two properties comprise, as to one of them, the matrimonial home, and as to the other, what appears to be an investment property. The parties have sensibly drawn up a form of document which indicates the course which the bank may pursue in the interim, pending the determination of the mental capacity question. There has been a dispute between the parties in relation essentially to one provision of the document, that is CL2 of the draft which I have initialled and which I will place with the papers. In my opinion the proper orders to be made are in this regard orders in accordance with paral to para6 inclusive in the form of the document which I have, as I have said, initialled and will place with the papers. This document involves the adoption of the first and not the alternative CL2 in the document drafted by the parties. It involves the omission of the words in para6 "subject to the above orders", and it involves an addition in CL2, which Ihave effected, after the words "consents to a temporary stay", of the words "for fourteen days". That is the period of the stay agreed to be appropriate to enable Mrs Parton, should she so desire, to seek further relief in that regard from the court. I would therefore propose that an order be made for remission of the Notice of Motion in accordance with s51(4) upon the basis to which I have referred, and Iam of the opinion that orders should be made and undertakings and intentions noted in accordance with CL1 to CL6 of the document to which I have referred. I would propose that the costs of the present proceeding be reserved to the court finally dealing with the appeal. Meagher JA Unfortunately I find myself unable to agree. In the absence of any authority at all which has been cited to us by counsel, the matter must be determined in accordance with principle, and in my view principle authorises the following result. Either Mrs Parton was, at the time of the initiation of the litigation below, in such a mental state that she had no mental capacity whatever, in which event she was unable to authorise the bringing or defending of any proceedings, and if those proceedings were brought by some other person purportedly in her name, she may impugn the result in separate proceedings because they would be a nullity as far as she was concerned. That, on a superficial view of the evidence in front of me, seems an unlikely result. Alternatively she was in some lesser state of mental capacity in which case her precise state of mind could have been the subject of evidence in the trial below, if it were relevant to any issue. And not having been led below it can only be raised here as a matter of fresh evidence, the rules regarding which have not been complied with. If it could have been made the subject of an issue below but was not, then doubtless she has her rights to sue her previous legal advisers for damages. Either way, the only result which should be given effect to here, in my view is: the motion should be dismissed with costs and the appeal should be dismissed with costs. Sheller JA I, like the learned presiding judge, have considerable doubt as to the correct procedural course which should now be taken. If the appeal by Mrs Parton is to be dismissed, that dismissal necessarily involves dismissing the Notices of Motion which have been filed on her behalf. For my part, I would not UAARTON AND ORS v AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD (Shellie JA) be prepared to take that course without having had the benefit of full argument from counsel and without having given proper consideration to the evidence filed in support of the Notices of Motion. Accordingly it seems to me that the appropriate course is that suggested by the presiding judge. I have in mind that the remission to the Division of the Notices of Motion would involve a determination by the judge of the questions of fact raised by Mrs Parton's claim that she suffered, at a relevant point of time, some mental disability. I should say that it would be convenient, if those advising Mrs Parton advise her that separate proceedings are appropriate, that those separate proceedings be set in train in order, if possible, to have them dealt with at the same time as the factual issues on the Notices of Motion. For these reasons I would agree with the course suggested by the presiding judge and the orders that he proposes, subject only to it being made plain that the Notices of Motion are referred or remitted for the purposes of those issues of fact being determined. MAHONEY AP: The orders are accordingly as I have proposed, as explained by Sheller JA. It is possible, and I say this for the guidance of the judge in the Division who deals with the matter, that in the course of the determination of the Notice of Motion, issues may arise which legally can only be decided by the Court of Appeal. As I have indicated previously, those matters will ultimately of course be referred by the judge back to this Court. But the issues of fact to be determined will be determined by the judge. NICHOLAS: Para4 of the orders in the note we handed up to you does not provide a time within which the undertaking should be discharged. We would ask that your Honour require the withdrawal of the caveat within seven days. EINSTEIN: We consent to that. MAHONEY AP: I note that in relation to the document which I have initialled and placed with the papers, that it is agreed the caveat referred to in para4 will be withdrawn within seven days from today's date. NICHOLAS: We would be, for our part, very concerned not to lose any expedition that the learned President saw fit to give us in relation to the hearing of this appeal and hence brought the matter on within three weeks of the stay being brought before him, so we would ask, in making the order remitting this matter, we would suggest to the Commercial Division because it was that Division that dealt with this matter, by remitting it to that Division, your Honours would require Mrs Parton's representative to proceed with expedition or your Honours would indicate that it is a matter in respect of which it ought to be afforded expedition. EINSTEIN: We are prepared to undertake to proceed with the highest of expedition and we will endeavour to have it before the Commercial Division in its list this week. NICHOLAS: The matters relating to the subpoenas, I wonder if the subpoenas already issued and returnable before you today, can remain alive and your Honours make an order directing they be brought before the judge who is allocated to deal with this matter. MAHONEY AP: We have indicated previously those matters should be dealt with by the judge and no doubt he will treat the subpoenas before the Appeal Registry as sufficient documents before him. JANES: In view of your orders not to dismiss the appeal at this stage, am I to take it that the first and third appellants, Mr Parton and the appellant company, are still on record as such as appellants in these proceedings? 6 UNREPORTED JUDGMENTS MAHONEY AP: The appeals are not disposed of. They will be stood over to a date to be fixed. That will be the effect of the order and the date will be fixed after we see what the determination of the issues of fact is. JANES: Might I indicate as for the remainder of the proceedings, we submit to the orders of the court save as to costs. MAHONEY AP: That will be noted. NICHOLAS: Item No 3 obviously is inappropriate to be regarded as an order and perhaps it should be deleted, with respect. MAHONEY AP: I think it is dealt with by the orders and undertakings. I think the phrase I have taken is, or at least is intended to be, wide enough to cover all those matters. NICHOLAS: I understand what your Honours say about the appeal not being finally disposed of, but we would have thought we would be entitled to an order to the effect that Mr Parton's and the company's appeal be dismissed and we have an order for costs against them, reserving the question of costs against Mrs Parton until after the determination of these matters. MAHONEY AP: Assuming Mrs Parton succeeded beyond her wildest dreams, the form of order that would be made might affect the form of the judgment, and I do not think it would be appropriate for me to make such order now. Orders accordingly.