New South Wales Supreme Court CITATION : Smith v MacDonald [2008] NSWSC 574 HEARING DATE(S) : 10 June 2008 JUDGMENT OF : Gzell J EX TEMPORE JUDGMENT DATE : 10 June 2008 DECISION : Hearing vacated. Defendant to pay plaintiff's costs thrown away. CATCHWORDS : PROCEDURE - Miscellaneous procedural matters - Ajournments - Application to vacate hearing at late stage - A claim by son that mother holds property on trust for him as to 61% - Whether defendant should be entitled to investigate whether option to purchase to son at an undervalue and mental capacity when agreement to make a will executed - Civil Procedure Act 2005, s 57 as against Queensland v J L Holdings Pty Ltd (1996-1997) 189 CLR 146 LEGISLATION CITED : Civil Procedure Act 2005 CASES CITED : Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Queensland v JL Holdings Pty Ltd (1996-1997) 189 CLR 146 PARTIES : Malcolm Clive Smith (Plaintiff) Sheila Barker MacDonald (Defendant) FILE NUMBER(S) : SC 6007/07 COUNSEL : Mr A J McInerney (Applicant) Mr R M Jefferies (Respondent) SOLICITORS : Shaw McDonald Solicitors (Applicant) Davis Legal Solicitors (Respondent) - 3 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J TUESDAY 10 JUNE 2008 6007/07 MALCOLM CLIVE SMITH v SHEILA BARKER MACDONALD EX TEMPORE JUDGMENT 1 This matter was set down for hearing before me for one day on 16 June 2008. When it was set down by the Registrar on 31 March 2008, the defendant opposed the matter being set down on the basis that an independent valuation was sought. Nothing happened until 27 May 2008 when Mr McInerney of counsel was retained. 2 Malcolm Clive Smith, the plaintiff, is the son of the defendant, Sheila Barker MacDonald. The Protective Commissioner of New South Wales is her tutor. 3 Mrs MacDonald holds title to a property at Mosman. Mr Smith claims that he paid moneys towards the improvements on the property. The evidence thus far with respect to the improvements suggests that the value of the property with an old house on it in May 2001 was $3.5 M. The value of the property with the new house on it in September 2004 was $6 M. The present value of the property is $7.5 M. As has been submitted, the improvements are substantial. 4 Mr Smith seeks a declaration that Mrs MacDonald holds the property on trust for both parties in the proportion of 61 per cent to Mr Smith and 39 per cent to Mrs MacDonald. 5 Mr McInerney has submitted that there is an area of investigation that ought to be made and that is in relation to the capacity of Mrs MacDonald. That concern arises from the circumstance that there was an option to purchase executed by her which enabled the property to be purchased from her for $1.19 M. The option can be exercised up to 31 December 2010. 6 In light of the values both before and after the new house was erected, it is submitted that there is a concern as to whether the option was granted at an undervalue. 7 There is also a question of capacity in relation to a contract to make a will dated 9 August 2000. 8 Mr Jefferis, who appears for Mr Smith, submits that investigations that are now sought to be made could have been made at an earlier stage. The Protective Commissioner was appointed in approximately July 2007 and sought material from Mr Smith's solicitors and was given that material. 9 Mr Jefferis also submits that the issue to be determined in the current proceedings is a narrow one and the issues with respect to the option to purchase and contract to make a will need not be raised in the current proceedings. They could be raised in subsequent proceedings. 10 It seems to me, however, that there is a serious prospect that arguments based upon Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 might be raised if the matters now sought to be agitated are not dealt with in these proceedings. 11 Contrary to the submissions of Mr Jefferis, I am of the view that they are inextricably linked to the issues that need to be resolved with respect to the equitable interests in the property. 12 Mr Jefferis submitted that the Civil Procedure Act 2005, s 56 ought to lead me to the conclusion that the application for adjournment that is made by Mr McInerney should be rejected. That section provides that the overriding purpose of the Act and of the rules in their application to civil proceedings is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Section 57 provides that for the purpose of furthering that overriding purpose, proceedings in the Court are to be managed having regard to the just determination of them, the efficient disposal of the business of the Court, the efficient use of available judicial and administrative resources and the timely disposal of the proceedings, and all other proceedings, at a cost affordable by the respective parties. 13 Notwithstanding the width of the latter provision, it seems to me that the principle stated by the High Court in Queensland v JL Holdings Pty Ltd (1996-1997) 189 CLR 146 is an important factor to be taken into account. One must see justice done between the parties. A party ought not to be debarred from having the real issues determined by the Court on the basis of the efficiency of management of Court time and resources if the grant of an adjournment may be made at the expense of an order for costs. 14 The Protective Commissioner is not in a position to take instructions from Mrs MacDonald but there are siblings of Mr Smith and friends of Mrs MacDonald including medical persons and solicitors whose testimony may be highly significant to the resolution of the issues. 15 Furthermore, the Protective Commissioner wishes to issue subpoenas to Mr Smith's bankers and the contractors who carried out the development on the property in order to investigate the nature and extent of the work performed. 16 Leave may also be sought to adduce valuation evidence as to reasonable occupation fees, Mr Smith and his family having resided in the new house. 17 In the affidavit in support of the application for adjournment the identity of some six persons from whom production of files under subpoena may be sought are set out. 18 In the exercise of my discretion, I grant the relief sought in the notice of motion, that is, that the hearing on the 16 June 2008 be vacated. I order the defendant to pay the plaintiff's costs thrown away by the adjournment. I stand the matter over before the Registrar at 9.30 am on Tuesday 17 June 2008. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.