New South Wales Supreme Court CITATION : AJI Services Pty Ltd v Manufacturers' Mutual Insurance Limited [2005] NSWSC 709 HEARING DATE(S) : 14/7/05 JUDGMENT DATE : 22 July 2005 JUDGMENT OF : Bell J at 1 DECISION : Without prejudice to any further application by the defendant invoking the inherent jurisdiction of the Court, pursuant to Pt 63 r 5(2) of the SCR I direct that no step is to be taken in the proceedings by or against the second plaintiff until a tutor for him has been appointed by the Court District Court Rules 1973 LEGISLATION CITED : Mental Health Act 1990 Supreme Court Rules 1970 Gibbons v Wright (1954) 91 CLR 423 Martin v Azzopardi (1973) 20 FLR 345 Herron v McGregor (1986) 6 NSWLR 246 CASES CITED : Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 Murphy v Doman [2003] NSWCA 249 Newcastle City Council v Batistatos [2005] NSWCA 20 AJI Services Pty Ltd (First Plaintiff) PARTIES : Alan John Andrews (Second Plaintiff) Manufacturers' Mutual Insurance Limited (Defendant) FILE NUMBER(S) : SC 12823/92 Alan John Andrews (First and Second Plaintiff) COUNSEL : G. Curtin / P. G Fisher (Defendant) In person (First and Second Plaintiff) SOLICITORS : Phillips Fox (Defendant) LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION BELL J Friday 22 July 2005 12823/92 AJI Services Pty Limited v Manufacturers Mutual Insurance Limited JUDGMENT 1 BELL J: By further amended notice of motion filed in court on 20 October 2003 the defendant sought orders dismissing the proceedings pursuant to the Court's inherent power or under Pt 33 r 6 of the Supreme Court Rules 1970 (SCR). In the alternative it sought an order that the proceedings be permanently stayed. 2 The proceedings were commenced by statement of claim filed on 26 May 1992. The current pleading is the further amended statement of claim filed on 26 July 1996 (FASOC). At the commencement of the proceedings and up until and including the filing of the FASOC the plaintiffs were represented by Bassi & Co, Solicitors. 3 The FASOC pleads that the second plaintiff, Alan John Andrews (Mr Andrews) was at all relevant times the Managing Director of the first plaintiff, AJI Services Pty Ltd, a company carrying on business as insurance investigators and marketers of security systems. It is the plaintiffs' case that the defendant agreed to indemnify the first plaintiff against certain risks, including burglary, in respect of its offices. In or about September 1986 the first plaintiff made a claim against the policy seeking indemnity from the defendant in the amount of $95,877 in respect of losses incurred as the result of a burglary. It is alleged that the defendant appointed Messrs Blessington Judd, solicitors, as its agent to investigate the claim. Shortly put, it is the plaintiffs' case that the defendant maliciously procured the police to charge Mr Andrews with making a fraudulent claim on it. The proceedings arising from this charge terminated in Mr Andrews' favour in October 1988 when the Director of Public Prosecutions "no billed" the matter. The plaintiffs plead that on the date when the charge was laid and thereafter the defendant had in its possession material by virtue of which it knew, or ought to have known, that the charge was false. The plaintiffs also plead that the defendant owed them a duty to act with the utmost good faith throughout the management of the insurance claim and that it breached that duty thereby occasioning to them loss and damage. 4 The defendant's motion came on for hearing before me on 14 July 2005. Mr Andrews appeared on his own behalf and on behalf of the first plaintiff. He applied for the hearing of the motion to be adjourned. When his application was refused he left the Court in circumstances that I will set out more fully below. The defendant's counsel acknowledged that before I would grant the relief that it seeks it would be necessary for me to consider whether Mr Andrews is an incompetent person within the meaning of the SCR. In the event that I were to determine that he is an incompetent person it was the defendant's submission that notwithstanding the provisions of Pt 63 r 5(2) of the SCR I would, nonetheless, make an order permanently staying the proceedings. 5 It is necessary to set out the history of the proceedings in some detail. 6 There has been very considerable delay that has attended the conduct of these proceedings. Little focus has been directed to the delay in the period prior to 1 April 2003 when Master Harrison made directions for the future conduct of the proceedings. From that time on, it is to be observed that the defendant has made every effort to have the claim against it brought on for hearing. 7 The proceedings were commenced in May 1992. On 3 January 1995, Mr Andrews swore an affidavit in the proceedings which was directed to delays that had occurred up until that time. In that affidavit he stated that following his committal for trial on 2 May 1988 he had suffered a major nervous breakdown and was not able to attend to his affairs. From 1992 onwards he said that he had been partially capable of attending to his affairs, although he had not been able to devote "proper energy" to the conduct of the proceedings. He said that in or about July 1994 he had felt able, from a psychological point of view, to properly attend to his legal affairs. He went on to assert, "I am now able, with the assistance of my legal advisers, to properly prosecute the conduct of this matter." 8 On 20 September 1996, following the filing of the FASOC in July 1996, the plaintiffs filed a notice of motion seeking to challenge claims of client legal privilege in respect of a number of documents identified in the list of documents produced by the defendant. Thereafter, the proceedings appear to have been again prosecuted in a somewhat dilatory fashion. The matter came before Adams J on 24 August 1998 and directions were given with respect to the plaintiffs' motion. The motion ultimately came on for hearing before Master Harrison on 1 April 2003. I am unaware of the reasons for the lengthy delay between the filing of the FASOC and the hearing of April 2003. 9 On 28 November 2003 the defendant's counsel informed me that the application to dismiss the proceedings for want of prosecution was based on the plaintiffs' failure to prepare the case since 1 April 2003 (28/11/03 T 12.55-13.1). 10 Before examining the history of the proceedings since 1 April 2003, it is necessary to refer to some other proceedings. In April 2003 proceedings were instituted in the Local Court against Mr Andrews seeking the issue of an apprehended personal violence order for the protection of Mr Curtin, counsel for the defendant. Subsequently Mr Andrews was charged with a criminal offence, which it would seem is related in some way to the apprehended violence order proceedings. His trial on this charge is fixed to commence in the District Court on Monday 25 July 2005. 11 The plaintiffs did not adhere to the timetable fixed on 1 April 2003. 12 The need to adhere to the timetable had been brought to the plaintiffs' attention. Mr Andrews swore an affidavit in the proceedings on 27 November 2003 to which he annexed a copy of a letter sent to him by Mr Levet, the barrister who appeared on his behalf (and on behalf of the 1st plaintiff) before Master Harrison on 1 April 2003. In his letter dated 2 April 2003 Mr Levet set out the directions made by Master Harrison and advised Mr Andrews (at p 2): "I must stress to you that it is in your interests to comply with this timetable." And at p 3: "It is essential that we stick to this timetable and comply in a timely manner so that we can then progress settlement discussions." 13 The defendant's solicitors notified Mr Andrews in a letter dated 5 June 2003 of their client's intention to apply to have the proceedings dismissed when the matter was next before the Court on 16 June 2003. 14 On 10 June 2003 the defendant filed a notice of motion claiming orders, including that the proceedings be dismissed. 15 On 16 June 2003 the proceedings came before Master Harrison who imposed a fresh timetable for the conduct of the proceedings. The defendant's motion was adjourned to 20 October 2003. 16 The plaintiffs did not comply with the fresh timetable. 17 On 20 October 2003 the defendant's motion was listed before Master Harrison. Mr Andrews appeared in person and on behalf of the first plaintiff. He stated that he was not able to remain in the same room as the defendant's counsel and he had filed a motion claiming orders, including that the proceedings be temporarily stayed until the AVO proceedings were finalised (T 20/10/03 7.47). Both the defendant's motion and the plaintiffs' motion were referred to the Duty Judge, Shaw J. His Honour adjourned the plaintiffs' motion until the resolution of the AVO matter in the Local Court, giving liberty to the parties to have the proceedings re-listed in the event that that there was any delay in finalising the AVO proceedings. His Honour also stood over the defendant's motion until after the resolution of the AVO matter. 18 The proceedings came before me on 6 November 2003. On that occasion I was informed that the AVO proceedings had been adjourned and were next before the court on 26 November. I stood both the defendant's and the plaintiffs' motion over for hearing to 1 December 2003. I fixed a timetable for the service of evidence in support of the motions and directed that any further motions in the proceedings be returnable before me. 19 On 28 November the proceedings were re-listed at Mr Andrews' request. Mr Andrews appeared in person and informed the Court that he had filed four affidavits in the proceedings evidencing the efforts being made to prepare the matter for trial (T 28/11/03 2.35). He applied to vacate the date fixed for the hearing of the two motions and complained that he had lost the services of Mr Levet by reason of the AVO proceedings. His application was stood over to 1 December 2003. 20 On 1 December 2003 Mr Andrews renewed his application for an adjournment. He complained that he was suffering from chronic fatigue syndrome and from traumatic stress disorders (01/12/03 T 3.44-45). A medical certificate, apparently signed by his general practitioner, Dr Davey, was tendered in support of his application. I dealt with two of the prayers for relief in a motion filed on the plaintiffs' behalf on 20 October 2003. The defendant's counsel acknowledged that in light of the service of the affidavits it would be difficult for his client to press for the proceedings to be dismissed. On 2 December I stood over the defendant's further amended notice of motion to 27 February 2004 for mention and fixed a timetable for the future conduct of the proceedings. 21 The proceedings were mentioned on 27 February 2004. Counsel for the defendant foreshadowed that in the event the plaintiffs failed to adhere to the timetable the defendant would move on its further amended motion for the proceedings to be dismissed (27/0/204 T 7.21). The defendant's further amended motion, together with the plaintiffs' motion (which claimed, among other things, an order that the defendant's counsel, Mr Curtin and Mr Fisher, be joined as defendants) was stood over for hearing to 8 April 2004. 22 The plaintiffs did not adhere to the timetable fixed on 2 December 2003. 23 On 8 April 2004 Mr Andrews sought to have the hearing of the two motions adjourned. A number of grounds for that application were advanced, including his medical condition. 24 On each of the occasions when the proceedings were before me, Mr Andrews was assisted by Mr Paul Cummins, an employee who was present in court throughout the proceedings. Mr Cummins is a solicitor with experience in the conduct of litigation. On 8 April 2004 counsel for the defendant made the following submission: "My submission is in light of all those matters your Honour would find that there has been, despite the protestations of Mr Andrews to the contrary, every attempt made to delay the prosecution of these proceedings concerning events almost 20 years old. Today is the third occasion on which Mr Andrews has made an application for adjournment without service of medical reports prior to the day of the application. With respect it can't be the fact that Mr Andrews with the assistance of Mr Cummins as your Honour has heard has legal qualifications and has been assisting him since mid-October and having been reminded by the rejection of a medical report of 27 February this year, it is my submission it cannot be accepted that Mr Andrews failed to recognise his obligation to give due notice of the application. It must be the fact that he was aware of course because your Honour told him on 2 December that any such evidence would have to be in such a form so it could be tested." (08/04/04 T 24.42-25.2) 25 In counsel's submission, the focus of the plaintiffs' preparation in the period since December 2003 had been on applications to adjourn motions filed in the proceedings. Counsel referred to the decision of the Court of Appeal in Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274. 26 During the course of proceedings on 8 April I said this: "May I draw your attention to this Mr Andrews. I have, in the past, given directions providing for a timetable for these proceedings. Before I did that Master Harrison gave directions of a like character. Persistently you have failed to comply with those timetables. I am not criticising you. I am merely noting the history of the matter. You appear for yourself and I am conscious that that may pose difficulties for you, particularly in light of the matters that Dr Davey has raised in his report. Equally, the defendant must not be put to further costs and expense in proceedings that are drawn out with repeated failures by a plaintiff to prosecute its claim. That is simply common justice. In the event that you are not able to conduct the proceedings on your own behalf, by reason of your mental condition and in that regard I refer to the state described as extreme anxiety and depression to which Dr Davey referred, you may wish to put on evidence on the next occasion, in addition to that which is annexed to your affidavit of today's date, relating to medical issues. I am not telling you how to conduct your case. I merely draw to your attention that the evidence that has been put on thus far, is the subject of challenge and has been criticised in the way you heard earlier today. In other words, Mr Curtin has taken up the fact that Dr Davey doesn't set out the history that led him to come to the conclusions that he expresses in his report. If it is the case, Mr Andrews, that your mental condition is such as to make it impossible for you to prosecute your case, the Court will have to look to what is an appropriate form of order, to ensure not only justice to you, but justice to the defendant, who thus far has expended money on repeated court appearances in an attempt to have the litigation brought on, which has been time and time again frustrated. You may wish to give consideration, if you are not yourself able to prosecute your claim, to whether you should consider seeking the appointment of a tutor. That is a matter for you. Mr Cummins can give you some advice about that matter. If not, you should consider that if the medical evidence establishes that you are not in a position to prepare your case, and you do not instruct solicitors to do so on your behalf, or have the court appoint a tutor to do so on your behalf, then it may be necessary for consideration to be given to the proceedings being stayed, so as to avoid further costs to the defendant. I am not expressing a conclusion about any of these matters, but they have been the subject of discussion during the course of today, and I draw them to your attention, so that you can focus your attention on these issues and perhaps obtain advice from Mr Cummins, or from other sources to whom you may have recourse. You understand that we cannot simply keep on having these proceedings listed before me and to have a day, or more than one day taken up on argument that does not, at the end of the day see any useful progression of the proceedings." (08/04/04 T 39.1-40.9) 27 The defendant's motion (that the proceedings be dismissed) was stood over for hearing to 28 April. Mr Andrews filed a motion on 22 April 2004 seeking an order that the proceedings be stayed for six months to permit his mental condition to stabilise. In support of his motion Mr Andrews filed an affidavit sworn by Paul Cummins and a number of medical reports, including a report from Dr O'Sullivan, a psychiatrist. The defendant sought to cross-examine Dr O'Sullivan on his report. Dr O'Sullivan's evidence was taken by telephone. Dr O'Sullivan had had one consultation with Mr Andrews. His opinion at that time was that Mr Andrews was suffering from chronic depression. In addition Dr O'Sullivan referred to a secondary diagnosis that concerned personality issues. He was unwilling to express an opinion with respect to the latter diagnosis until he had the opportunity of knowing Mr Andrews somewhat better (28/04/04 T 18.12-22). 28 Dr O'Sullivan gave evidence of the difficulty experienced by sufferers of chronic depression in motivating themselves and attending to tasks. Counsel sought to take up with him the question of whether Mr Andrews' failure to comply with directions, given the assistance available to him from Mr Cummins, was a matter of rational choice, rather than one affected by his mental condition. Dr O'Sullivan said this: "The bottom line, I think, from me regarding this patient/client is I don't believe he's mentally well and I don't believe he is able to consider the full range of issues [properly]. … It is difficult because, in a sense, you're asking me questions that, in a sense, go beyond my own medical psychiatric knowledge and my one-hour interview and I am making speculations, but the bottom line is I don't believe this client/patient is mentally well and I believe he has access 1 and access 2 problems and I think it's most inadvised (sic) of him to go into these matters without legal advice." (28/04/04 T 24.12-29). 29 It is appropriate to note the following further evidence that Dr O'Sullivan gave on 28 April: "I note that he came to see me just on the 11th hour too with very brief notice and my secretary slotted him in there on a cancellation and really there wasn't enough time to write any reasonable report. It was only a three-liner, so he probably – he seems to leave things right to the 11th hour. But if you're asking me whether he's made some wilful decision to flout the directions of the Court or – I can't answer that. Q. Could you answer it if I told you that directions of the nature I've described were first made on 1 April last year, again on 16 June, 2 December of last year, and that Mr Andrews was warned on 2 December last year and again on 27 February and 8 April this year that if he did not attend to these matters his case might be dismissed? Can you also add to that that Dr Hugh Jolly advised Mr Andrews, I think, in 1994 and again, I think, in 1996, to seek medical assistance and to my knowledge did not do so. Can I ask you you assume that Mr Cummins has, from time to time, advised Mr Andrews to seek some medical assistance and it was only very recently that Mr Andrews followed that advice and hence the appointment with you and that's, of course, in the context of these repeated warnings about what might happen to the case if it wasn't prepared. If you accept those matters as being factually accurate, would you then say, on the balance of probabilities, that Mr Andrews has made a wilful and rational decision not to prepare or take these preparatory steps for the hearing of this case? A. Yes, I'd have to say, if I accept all of what you said is factual, I think anyone would be very suspicious that, in fact, that's a decision made not to follow the directions of the Court; I agree with that." (28/04/04 T 25.44-26.19). 30 Mr Cummins gave oral evidence on 28 April 2004. He agreed that he had been present in Court assisting Mr Andrews on each occasion since 20 October 2003. He had advised Mr Andrews of the steps that should be taken in order to prepare the case. Mr Cummins was aware of the decision in Micallef and had supplied a copy of it to Mr Andrews. 31 The defendant pressed for the relief claimed in its further amended motion on 29 April 2004. I indicated a preliminary view that it would not be appropriate to dismiss the plaintiffs' claims having regard to the medical evidence of Mr Andrews' condition. In these circumstances the defendant submitted that the appropriate course was to stay the proceedings until a date in September 2004 and to direct that there be no motions filed in the proceedings by the plaintiffs without leave in the interim. 32 On 29 April 2004 I said this: "Mr Andrews, you have sought in your motion filed on 22 April 2004, firstly, a stay for a period of six months. What I am proposing to do is to give you something coming close to that which you have sought, that is, to vacate the dates fixed for the hearing of the defendant's motion for summary dismissal and to stand the matter over to 23 September to address the issue of your mental condition with a view to determining the future conduct of the proceedings. This is against a background that the defendant's motion for summary dismissal would be before the Court again on that date. I am not dealing with that motion today and I have certainly not dismissed that motion. What I anticipate would happen on the adjourned date is that the question of your medical condition, which has been at the forefront of the application you made before me yesterday and today, would be further considered. In the event that your condition has improved, I would expect you to be in a position to identify precisely what steps you had taken to have your matter ready for trial and I would expect to be able to fix a date for the hearing, if not on that date very shortly after that date do you understand? SECOND PLAINTIFF: Yes." (29/04/04 T 100.48-101.13). Nothing that I have said should be viewed by you as an invitation, in the event that you are well enough, to not take any step to prepare evidence in support of your claim. Directions have previously been given on a number of occasions relating to the preparation of evidence, both expert and non-expert evidence; directions have been given that non-expert evidence is to be led in this case in chief on affidavit. The material before me, including the 17 affidavits that you read in support of your motion, is clear enough evidence to me that, even without the benefit of solicitors acting for you, you are able, with Mr Cummins' assistance, or it may be without it, to prepare affidavits. In the event that you are sufficiently recovered from your present condition, you should attend to the preparation of evidence in support of your claim. I emphasise again, as I emphasised in November 2003, December 2003, February 2004 and on the occasions when this matter has come before me in April, that it is the defendant's entitlement to have the claim that you bring resolved. To that end it is incumbent on you to comply with directions of the Court designed to have the matter ready to take a date for hearing. There will, as you have frankly acknowledged in the submissions you have made in the last half hour, come a time when relief of the sort that the defendant seeks, namely, the summary dismissal of the proceedings, because of your repeated failure to comply with the Court directions may come about." (29/04/04 T 103.51- 104.22). 33 Orders were made on 29 April standing the defendant's motion over for hearing to 23 September 2004 and preventing Mr Andrews from filing any further motion in the proceedings without the leave of a judge. 34 Due to matters that were not the fault of either party the hearing was not able to proceed on 23 September. The matter was mentioned on 6 September and stood over for hearing to 5 November 2004. 35 Mr Andrews appeared in person on 5 November. He presented at the commencement of proceedings on that day in a somewhat agitated state and sought to ventilate matters arising out of the AVO proceedings in the Local Court. He opposed the dismissal of the proceedings and called Dr O'Sullivan to give further evidence as to his medical condition (05/11/04 T 88.40-50). Dr O'Sullivan gave evidence that (05/11/04 T 106.24-45): "I think it is self-evident that Mr Andrews is not in a competent mental state to conduct his own litigation. I held that view quite early in the interviews I had with Mr Andrews and also in regard to a report that I had seen from Dr Hugh Jolly previously. My clinical diagnosis at that time was of major depression with severe cognitive impairment and this being on the background of some personality concerns that were rather long term. I found in my interviews with Mr Andrews that he has been entirely fixed upon an injustice done to him some previous years and I formed the view that his desire to achieve a certain goal from the court system was unrealistic. I found interviews difficult to conduct because they are quite often – the information is provided in a tangential, dissociated manner and there has been a history of noncompliance with medication despite there being some improvement clinically in response to medication early in the course of treatment. So, in summary, I don't feel that Mr Andrews is competent to conduct any business affairs or his current litigation on the grounds of mental ill health which is continuing." 36 Dr O'Sullivan said that Mr Andrews had made considerable improvement while on medication. He observed that Mr Andrews had a cycle (dating back to 1993) of taking medication, getting better, ceasing the medication and so on. Mr Andrews had been treated with antidepressant and anti-psychotic medication. In the period March to June 2004 Mr Andrews made significant improvement, including in cognition, sleep cycle, the level of energy and generally he had felt less hopeless and had been calmer and less irritable (05/11/04 T 113.59). Nonetheless, Dr O'Sullivan's prognosis was guarded. He said that Mr Andrews had been a difficult patient to engage in treatment for his own benefit and that he was frequently inflamed and enraged about the injustices that he perceived had been done to him. Dr O'Sullivan went on to say (05/11/04 T 115.47-116.3): "I am quite concerned that he has invested so much of his life in this litigation. There is no sense in his mind of justice or completion and he may well deteriorate further and he may not find there is any cause or redress or any means by which he can seek redress once this case is finished. At times he has expressed suicidal thoughts. He has expressed extreme anger. I think he needs ongoing care and counselling over a number of years and I think he will always be prone to relapses in depression, bearing in mind men who have depression quite often do manifest as aggressive and I would worry if we had a substantial episode of depression where he lost further insight that he would act out against himself." 37 Dr O'Sullivan doubted that Mr Andrews' mental condition was likely to improve to the degree that he would be able to attend to the preparation of his case. In his opinion it was unlikely that there would be improvement within the next twelve months (05/11/04 T 116.45). 38 A significant aspect of the evidence given by Dr O'Sullivan related to his view that Mr Andrews has an interest in avoiding the proceedings being finalised. He said this (05/11/04 T 119.17-39): "Mr Andrews may be concerned if litigation finally ceases then there will be no further hope of any redress of the inequities and so to perpetuate litigation at least engages you and engages the company with which there is a dispute in costs. So on one hand he may not have a realistic win but the fight continues and the concern is that if the fight ceases, he would feel very bereft. … At the moment the only recognition he is getting is the fact [that] you are continuing litigation indefinitely." 39 Dr O'Sullivan said that Mr Andrews was not mentally impaired to the degree that he could be scheduled and receive treatment against his will. 40 I asked the doctor if Mr Andrews was a person incapable of managing his own affairs. His response was (05/11/04 T 120.27-44): "I have thought of that a bit and I wish it was a clear line of distinction and it is not. Without the benefit of formal neuropsychological testing it is probable that he has suffered some degree of cognitive impairment through his boxing and has got some IQ points and judgment capacity and some ability to inherent rage attacks. These are all frontal lobe disabilities. … this is a cognitive deficit which pre-existed before the endogenous depression and in any of these litigation matters he would need to, on balance, qualify for being unable to manage his own affairs. If you look at recent history you would say he cannot manage his own affairs and one attributes that to the under-treated or untreated depression. If over a period of 12 months he recovered optimally, which is usually how long it takes, then you would have to address his neurocognitive function at that time because I expect there are definite deficits over the years through multiple minor traumas." 41 Dr O'Sullivan considered that with an incentive it was possible that Mr Andrews' condition may improve. 42 The question of whether Mr Andrews was an incompetent person within the meaning of the SCR was not one that I considered able to be resolved without the benefit of the transcript of Dr O'Sullivan's evidence (10/11/04 T 2.45-59). I stayed the proceedings until further order, and directed the plaintiffs to file and serve affidavit evidence setting out details of any psychiatric or psychological treatment undertaken by Mr Andrews in the period 10 November and 11 March 2005 and I stood the defendant's motion over for mention to 24 March 2005. 43 On 24 March 2005 Mr Andrews appeared in person. Again he appeared to be agitated and sought to ventilate concerns relating to the AVO proceedings. In accordance with the direction given in November 2004 he had prepared an affidavit. 44 On the defendant's application I fixed the hearing of its motion for 14 July 2005. Mr Andrews was given leave to file a motion seeking to have a tutor appointed to conduct the proceedings on his behalf. His attention was drawn to the circumstance that it was open to him to take any steps to prepare the proceedings for hearing, but that he was precluded by the earlier order from filing motions in the proceedings without leave (24/03/05 T 14.44-55). 45 The proceedings were listed for mention on 8 July at Mr Andrews' request. He applied for an adjournment of the hearing of the defendant's motion. He referred to the criminal trial in the District Court. In addition he sought to tender two medical reports, one from Dr O'Sullivan and the other from his general practitioner. In developing his submission relating to the pending criminal trial Mr Andrews stated that he had been held in custody for fifty-five days and that this had impeded his preparation of his defence. He stated his belief that his custody had been brought about as the result of the actions of the defendant's representatives. I declined to adjourn the hearing of the defendant's motion. 46 When the matter came on for hearing on 14 July Mr Andrews informed me that he had attempted to obtain representation from two firms of solicitors, neither of whom had been able to take the matter on short notice. He pressed for an adjournment of the hearing of the defendant's motion because of the difficulties that he faced in dealing with it while preparing for the forthcoming criminal trial. When this application was not granted Mr Andrews left the Court. For a time Mr Cummins remained in Court. Mr Cummins left at a time when the defendant's counsel was advancing a submission about the inferences that I might draw concerning Mr Andrews' ability to prepare the matter for trial, taking into account the assistance available to him from Mr Cummins. 47 The defendant proceeded to seek the orders claimed in its further amended motion. The transcript of proceedings on each occasion when the matter had been before the Court since 1 April 2003 was tendered on the application. A bundle of documents, including correspondence passing between Bassi Lawyers and the defendant's solicitors, dating back to a time when the former were retained on the plaintiffs' behalf was in evidence. The defendant tendered an affidavit that had been filed by Mr Andrews sworn on 4 July 2005. Annexed to that affidavit was a report of Dr Davey and a report of Dr O'Sullivan dated 1 July 2005. In the latter report Dr O'Sullivan said that he had continued to see Mr Andrews on a monthly basis since November 2004. Dr O'Sullivan reported that: "It is my professional opinion that Mr Andrews is not currently mentally ill, but is not of sufficient health or adequate mental state to undertake these proceedings without proper legal representation. I said the same at my last attendance at the Court. I don't think anything has greatly improved since that time, except that, if anything, the overall predicament seems to worse! …On medical psychiatric grounds, I do not consider him to be fit enough to face either court on 14th and 15th July 2005, or on 25th July 2005. I would in fact sound a warning that Mr Andrews should not be pressured any further at this time and that his mental health would likely be seriously adversely affected if either or both these matters were to proceed at this time. He will continue on antidepressant medication and to see me more regularly for the present time." 48 Dr O'Sullivan and Dr Davey were both present at Court on 14 July the defendant sought to cross-examine each in relation to the reports annexed to Mr Andrews' affidavit. That application was made after Mr Andrews had absented himself from the proceedings. Dr O'Sullivan is Mr Andrews' treating psychiatrist. Dr Davey is his treating general practitioner. On the earlier occasion Mr Andrews called Dr O'Sullivan and no issue of professional confidential relationship privilege arose. On that occasion Dr O'Sullivan gave evidence of the potential for his evidence to adversely affect his therapeutic relationship with Mr Andrews. 49 Although Dr O'Sullivan's report had been served on the defendant by Mr Andrews it was tendered by the defendant. I accept that this was done in an effort to place the most up to date evidence as to Mr Andrews' mental condition before the Court. However, in the absence of Mr Andrews I was not willing to accede to the application that Dr O'Sullivan be orally examined. In this respect I had regard among other things to the provisions of s 126B(3)(b) of the Evidence Act 1995. 50 The defendant's counsel drew to my attention the decision of the Court of Appeal in Murphy v Doman [2003] NSWCA 249. In that case the Court was dealing with Pt 45 r 5 of the District Court Rules 1973, which is in like terms to Pt 63 r 5(2) of the SCR. The latter rule is in these terms: "5(2) Where, after the commencement of proceedings, a party becomes an incompetent person, no step in the proceedings shall be taken by or against the incompetent person until a tutor for him has been appointed by the Court." 51 Part 1 r 8 defines "incompetent person" to mean: "(a) A person who is not a minor and who is: (i) Incapable of managing his or her affairs, or (ii) incommunicate." 52 In Murphy Handley JA (in a judgment with which Tobias JA agreed) said at 61, [52]: "The application of Pt 45, r 5(3) to an incompetent person who seeks to litigate in person will involve practical difficulties. There may be no-one who is willing to accept appointment as tutor. A professional person might have no prospects of being remunerated for his or her work. In any event, he or she may be unwilling to accept the risk of being ordered to pay the costs of the other party. In some cases the Protective Commissioner may be willing to accept the appointment. However, whatever the practical difficulties may be, the court cannot ignore the prohibition in Pt 45, r (3), when it knows that a litigant in person is not capable of managing his own affairs. If a tutor cannot be appointed the court may have to stay the proceedings until the litigant recovers or a tutor can be appointed." 53 In counsel's submission Mr Andrews is not an incompetent person within the meaning of the SCR. 54 Counsel drew attention to Handley JA's observation in Murphy at 58, [33] that, "there is no universal test for determining whether a person is capable of managing his own affairs". His Honour went on to cite the joint judgment in Gibbons v Wright (1954) 91 CLR 423 per Dixon CJ, Kitto J and Taylor J at 437-438: "The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation … the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained." Handley JA went on to also refer to the judgment of Fox J in Martin v Azzopardi (1973) 20 FLR 345 at 347. That was a case involving the Rules of the Supreme Court of the Australian Capital Territory, which in the same context as Pt 63 r 5, are couched in the language of persons of "unsound mind". His Honour observed, at 347: "What is unsoundness of mind for the purpose of the rule has not been defined and I shall not attempt to define it. In Richmond v Branson [1914] 1 Ch. 968, Warrington J, treated the phrase as equivalent to capacity to give instructions to sue and in Jay v Jay [1958] P 186 Collingwood J treated it as equivalent to capacity to manage one's affairs. At 348 his Honour observed, "If, and as soon as, the plaintiff was in this condition he would be unable to retain a solicitor. That is to say, he would not have the mental capacity to understand the nature of the acts or transactions which he would be authorizing." 55 The defendant submitted that Mr Andrews has demonstrated that he has the capacity to understand the proceedings. He complied with directions with respect to the filing of an affidavit addressing medical issues in March 2005. While Mr Andrews may not have progressed the principal proceedings, he has shown himself capable of preparing affidavits (or arranging for someone to do so on his behalf). It is apparent that Mr Andrews has understood the reasons for proceedings being listed from time to time and he has been able to address submissions in support of the orders that has sought. Counsel noted that Dr O'Sullivan states in his report of 1 July 2005 that Mr Andrews is not currently mentally ill. 56 It seems to me clear from Dr O'Sullivan's most recent report that in his opinion Mr Andrews is not mentally ill within the meaning of the Mental Health Act 1990. This is consistent with the evidence that he gave on 5 November 2004 (05/11/04 T 120.14). I do not read the doctor's report as expressing an opinion that Mr Andrews has responded to treatment or that he has otherwise improved such that he no longer suffers from the depressive illness with which he diagnosed Mr Andrews as suffering from on 5 November 2004. To the contrary, I read the report as conveying that as at 1 July 2005 Mr Andrews' mental condition had not improved since November 2004. The diagnosis was that Mr Andrews was suffering from major depression and had severe cognitive impairment, and as I have noted, the doctor's opinion was that "I don't feel that Mr Andrews is competent to conduct any business affairs or his current litigation on the grounds of mental ill health which is continuing" (05/11/04 T 106. 43-45). 57 I accept the defendant's submission that the ability to manage one's own affairs is not to be equated with the ability to make prudent decisions. This case, to my mind, is considerably removed from one of a litigant in person suffering from some degree of depression who is nonetheless capable of managing his or her own affairs. Mr Andrews' conduct of the proceedings on each of the occasions when they have been before me has been eloquent of him suffering from pronounced psychiatric difficulty. I rather understood Dr O'Sullivan to be referring to this in his observation that it was "self-evident that Mr Andrews is not in a competent mental state" (05/11/04 T 106.25). 58 Handley JA in Murphy at 58, [35] said: "The cases do not consider the level of mental capacity required to be a "competent" litigant in person but it cannot be less than that required to instruct a solicitor. It should be greater because a litigant in person has to manage court proceedings in an unfamiliar and stressful situation." 59 With the benefit of the transcript of the evidence given by Dr O'Sullivan on 5 November 2004 I consider that Mr Andrews was incompetent at that time and I am satisfied that he continues to be so. It follows from this conclusion that no step in the proceedings may be taken by or against him until a tutor has been appointed. No submissions were addressed as to the position of the first plaintiff. It appears that Mr Andrews is the controlling mind of the first plaintiff. 60 In the defendant's submission, taking into account the history of the proceedings that I have detailed and matters to which I will turn, this is a case where, notwithstanding the provision of the SCR, I would, in the exercise of the Court's inherent jurisdiction, direct that the proceedings be permanently stayed. 61 Counsel relied on the decision in Newcastle City Council v Batistatos [2005] NSWCA 20. In that case proceedings were commenced by the plaintiff's tutor for damages arising out of injuries suffered by the plaintiff in a motor vehicle accident. The plaintiff at all times suffered from severe intellectual disability. The proceedings were commenced more than twenty-nine years after the accident. Following the commencement of proceedings there were great delays in the preparation for trial. The second defendant applied for orders that the proceedings be dismissed or permanently stayed pursuant to the provisions of the SCR. There was evidence of prejudice to the defendants in the conduct of the trial by reason of the delay. Bryson JA (with whose judgment the other members of the Court concurred) considered the inherent jurisdiction to stay proceedings upon the ground that their continuance would be harsh, oppressive and an abuse of process. His Honour said at [56]: "The observations in Walton v Gardiner confirm the availability of the Court's power in civil proceedings, and its availability in cases where there is not, as well as where there is intended abuse of the powers and procedures of the Court. My researches suggest that the use of this power on the basis of delay in instituting proceedings in civil cases must be rare. Norman v Howarth (2003) 180 FLR 1 is an instance. A circumstance which has probably restricted applications for and exercise of the power in civil cases is the availability of statutory time limits for the institution of civil proceedings. Such statutes typically do not operate by conferring authorisation to delay, but simply prevent effectual institution of proceedings, irrespective of merits, after a period determined by the legislature, and they appear to give an authorisation of a kind to allow most of whatever period the statute allows to pass, so long as proceedings are instituted within that period. Observations of McHugh JA in Herron v McGregor at 253 illustrate the difficulty of concluding that there has been an abuse of process where this apparent authorisation exists. A similar difficulty presents itself in a different context where the Court is asked to dismiss proceedings which have been commenced in due time but have not been conducted in accordance with time scales prescribed by Rules of Court; there has been a strong general reluctance to dismiss proceedings in such circumstances where the statutory time limits have not expired and it remains open to a plaintiff to commence fresh proceedings. See Birkett v James [1978] AC 297 and Stollznow v Calvert [1980] 2 NSWLR 749. [57] However I am unable to see any reason in principle why the power should not be exercised in a proper case. The existence of apparent authorisation in a statue of limitation is not in principle a reason why great delay may not be an abuse of process, or a reason why the power of the Court may not be exercised." 62 The proceedings in Newcastle City Council were permanently stayed. It is to be noted that Bryson JA observed the overwhelmingly clear position to be that no useful evidence was available upon which to conduct a trial into the question of whether the plaintiff's injuries were caused by the negligence of the defendants and that no further search of inquiry was in any way likely to locate any such evidence. It was in these circumstances that his Honour observed at [81]: "To my mind it would manifestly be quite unjust to allow these proceedings to go to what would in form be a trial but in substance would be only a ceremonial enactment of an opportunity to establish whether or not the plaintiff has the rights he claims." 63 Central to the case that the plaintiffs make in these proceedings are allegations concerning the role played by a solicitor, Mr Rohl, employed by Blessington Judd, in the conduct of the claim made by the first plaintiff upon the defendant. Mr Rohl died on 18 January 1991. The defendant acknowledges that Mr Rohl died before the proceedings were commenced, but submits that the impact of loss of memory with the passing of years on persons peripherally associated with events is likely to be greater than with the principal actors. I am invited to infer a greater degree of presumptive prejudice to the defendant (in light of the death of Mr Rohl) than might otherwise be inferred from the fact of delay. Apart from this no matter of prejudice in the conduct of the defence was identified. 64 Considerable emphasis was placed on what counsel described as considerations of "commercial prejudice". The defendant has had to make provision for the plaintiffs' claim from year to year with no expectation that the proceedings will be finalised one way or the other within the foreseeable future. Counsel referred to the judgment of McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 553-554 and, in particular, to his Honour's observation: "Nevertheless, it is a charge on the revenue of the insurer for the relevant year and is ultimately met by the shareholders of the insurer or the individual proprietors of the insurance business if the insurer is not incorporated." 65 In the defendant's submission, the present case is to be distinguished from Murphy. There exists the real possibility that the plaintiff's mental condition will not improve. Although he has recourse to the assistance of Mr Cummins, there is no reason to think that he will take steps to appoint a tutor (if a person willing to undertake the role could be located). Part of his psychiatric condition is manifested by his desire to see the present proceedings remain on foot rather than face the desolation of them being finalised in a manner that may be adverse to him. 66 It may be that the Court's inherent power extends to making an order permanently staying the proceedings, notwithstanding the provisions of Pt 63 r 5(2) and the finding that Mr Andrews is an incompetent person. However, I am not persuaded that it is appropriate to make such an order. The content of Dr O'Sullivan's report of 1 July 2005 and his evidence on 5 November 2004 suggest that Mr Andrews' preoccupation with the proceedings in the Local and District Courts is a complicating factor affecting his mental state. It is not clear that Mr Andrews will never recover such that he is no longer an incompetent person nor is it apparent, in light of my finding, that steps will not be taken to appoint a tutor on his behalf. 67 The orders that I propose will not prevent the defendant at some future time from seeking to invoke the inherent power of the Court to permanently stay the proceedings. ORDER Without prejudice to any further application by the defendant invoking the inherent jurisdiction of the Court, pursuant to Pt 63 r 5(2) of the SCR I direct that no step is to be taken in the proceedings by or against the second plaintiff until a tutor for him has been appointed by the Court. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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