New South Wales Supreme Court CITATION : Pratt v Woolgoolga & District Retirement Village [2008] NSWSC 623 HEARING DATE(S) : 11 June 2008 JUDGMENT DATE : 1 July 2008 JURISDICTION : Common Law JUDGMENT OF : Harrison AsJ (1) An extension of time to file the appeal is granted. (2) Leave to appeal is granted. (3) The appeal is allowed. DECISION : (4) The decision of his Honour Magistrate Bailey dated 15 January 2008 is set aside. (5) The matter is remitted to the Local Court, Coffs Harbour to be determined according to law. (6) The defendant is to pay the plaintiffs' costs as agreed or assessed. (7) The defendant is to have a certificate under the Suitor's Fund Act, if applicable. CATCHWORDS : APPEAL - Leave to appeal Local Court Decision - Summary Judgment Aged Care Act 1997 (Cth) LEGISLATION CITED : Probate and Administration Act 1898 Suitor's Fund Act 1951 Uniform Civil Procedure Rules CATEGORY : Principal judgment CASES CITED : General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 Clr 125 House v R (1936) 55 CLR 499 Wayne Anthony Pratt (First Plaintiff) PARTIES : Daniel Patrick Pratt ( Second Plaintiff) Woolgoolga & District Retirement Village Ltd (Defendant) FILE NUMBER(S) : SC 10857/2008 COUNSEL : P Batley (Defendant) SOLICITORS : W A Pratt (First plaintiff in person) Walsh & Associates (Defendant) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 299/07 LOWER COURT JUDICIAL OFFICER : Bailey LCM LOWER COURT DATE OF DECISION : 15 January 2008 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ASSOCIATE JUSTICE HARRISON TUESDAY, 1 JULY 2008 10857/2008 - WAYNE ANTHONY PRATT v WOOLGOOLGA & DISTRICT RETIREMENT VILLAGE JUDGMENT (Appeal, leave to appeal Local Court Decision – summary judgment) 1 HER HONOUR: By summons filed 28 February 2008 the plaintiff seek firstly, leave to appeal out of time; secondly, an order granting leave to appeal from the whole of the decision of his Honour Magistrate Bailey made on 15 January 2008; thirdly, an order that the decision of the Magistrate be quashed; and fourthly, an order that the case be remitted for hearing by the Local Court. The defendant does not oppose the appeal being filed out of time, nor does it oppose their application for leave to appeal. Leave to appeal against the interlocutory decision (if it is considered an interlocutory decision) is granted. A satisfactory explanation for the delay has been given. An extension of time to file the appeal is granted. 2 The first plaintiff is Wayne Anthony Pratt. The second plaintiff is Daniel Patrick Pratt ("the Pratts"). They are brothers and the executors of their mother's will. The defendant is Woolgoolga and District Retirement Village Ltd ("the retirement village"). 3 Mr Wayne Pratt appeared unrepresented on behalf of himself and his brother. He was articulate and his arguments were well presented. 4 On 15 January 2008, his Honour Magistrate Bailey dismissed the plaintiffs' claim pursuant to Rule 13.4 of the Uniform Civil Procedure Rules. The background facts (1) From March 2001 until her death on 8 September 2003, Mrs Pratt lived at the retirement village. Mrs Pratt's residence in the retirement village was governed by an agreement between her and the retirement village, which I shall refer to in more detail later in this judgment. (2) Under the agreement, Mrs Pratt paid an accommodation bond of $75,000 on her entry into the retirement village. (3) On 8 September 2003 Mrs Pratt died. (4) On 17 September 2003, a new tenant moved into the unit where Mrs Pratt had resided. (5) On 4 October 2006, the retirement village paid $81,238.64 into the bank account styled "the Estate of Theresa Mary Pratt" held at a local credit union ("the account"). This sum comprised of the bond of $75,000 and an interest component. (6) In April 2007, the Pratts obtained probate of Mrs Pratt's will. The pleadings 5 In October 2007, by statement of claim, the executors of Mrs Pratt's will alleged that there had been a breach of the agreement in that the retirement village refused to refund the accommodation bond balance until 4 October 2006. As a consequence the estate of the deceased was deprived the use of the accommodation bond balance from 8 November 2003 until 4 October 2006 and had thereby suffered loss and damage. They allege that they suffered a loss of opportunity to earn investment income assessed at $23,291.98. 6 The retirement village filed a motion for summary dismissal of the Pratts' claim. On 15 January 2008, the Magistrate heard the motion and dismissed the Pratts' claim with costs. The Magistrate decided that the claim based on breach of the agreement was so weak that it would be futile to proceed to trial (t 14-15). The law on summary judgment 7 Rules 13.4 of the Uniform Civil Procedure Rules provide: "13.4 Frivolous and vexatious proceedings (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings: (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1)." 8 In the well known passage in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, Barwick CJ at 129 stated: "It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the Court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense.'" 9 This is a demanding test. It had to established that the Pratts case was manifestly groundless or futile. The issues 10 The issue is the interpretation of two key provisions of the Agreement, Clause 5 contained in Schedule 7 and 6.2. 11 Clause 5 contained in Schedule 7 relevantly reads: "Refund of Accommodation Bond Balance 5.1 The Accommodation Bond Balance must be refunded by the Provider if: 5.1.1 the Resident dies; or … 5.1.5 in any case within two (2) months after the day on which the event referred to in clause 5.1.1, 5.1.2 or 5.1.3, whichever is applicable happens, provided that the refund must be made not later than fourteen (14) days after the next resident occupies the Resident's accommodation in the Care Facility. 5.3 If the Resident dies, the Accommodation Bond Balance will be paid within 14 days of sighting original grant of probate." 12 Clause 6 relevantly reads: "DEFAULT OF PAYMENT … 6.2 In addition to any other right or remedy available to them, including by way of enforcement of security or under the Aged Care Act, each party to this Agreement shall retain all rights and remedies otherwise available to them in relation to recovery of any money due under this Agreement and unpaid together with interest to which such party may be entitled and its costs of recovery." 13 So far as Clause 5.3 was concerned, between October 2003 and 4 October 2006, there had been no grant of probate made. 14 The retirement village submits that as there had been no grant of probate it had never sighted such a grant and there was no legal obligation upon it to pay the refund of the accommodation bond balance into the account. 15 It referred to ss 44 and 61 of the Probate and Administration Act 1898 which read: "44(1) Upon the grant of probate of the will or administration of the estate of any person dying after the passing of this Act, all real and personal estate which any such person dies seised or possessed of or entitled to in New South Wales, shall as from the death of such person pass to and become vested in the executor to whom probate has been granted… 61 From and after the decease of any person dying testate or intestate, and until probate, or an order to collect is granted in respect of the deceased person's estate, the real and personal estate of such deceased person shall be deemed to be vested in the Public Trustee …" 16 The retirement village submits that without a grant of probate the Pratts had no legal entitlement to the refund. Mrs Pratts real and personal estate had not during period 4 October 2003 until 4 October 2006 passed to the executors. 17 The Pratts argue that as there was only a small sum of money in their mother's account, the Pratts did not need to seek a grant of probate but they could, as executors, administer the estate by way of an informal distribution. They submit that pursuant to Clause 6.2 they have the right to recover the unpaid money due under the agreement, interest and their costs of recovering this amount. This right according to the Pratts is mirrored in s 57-21 of the Aged Care Act 1997 (Cth) (B 205). 18 The retirement village submits that so far as Clause 6 is concerned, the rights and remedies available to the Pratts are only those rights and remedies that exist under this agreement. The Magistrate's decision 19 The Magistrate in his extempore reasons for decision (at t 14-15) stated: "…the contract has a clause in it which provides that this money would have been paid upon production of probate and I am lead to believe that that is now provided for, that particular clause is basically provided for in the Aged Care Act . One can understand as to why that particular clause might be in any contract, that would be to protect the beneficiaries under any will in case of some fraudulent procedure where a person may alleged to be an executor of an estate and money be paid over to that individual when it ought not have been so one can understand as to why an organisation would have put that type of clause in there. … It would appear, what is undisputed, is that within a period of two months after the death, the money was invested. …the plaintiff was ultimately paid money which was the balance of the refund plus interest as from a period of time of two months prior to – or after the death of the plaintiff's mother. That is a matter which the plaintiff takes issue with because the plaintiff says that there has been lost opportunity and he could have done something with the money that would have earned greater interest and indeed $23,000 more interest in relation to the money if it was refunded on time and this, Mr Batley indicated that of course is another issue but having regard to the court's power in relation to this particular ruling which has been placed to me, there is a discretionary power to dismiss the proceedings if the plaintiff's case is so weak it be futile to go to trial." The appeal to this Court 20 The principles according to which this Court is to decide whether the Magistrate's discretionary decision to dismiss the plaintiffs' claim constitutes an error of law, are stated definitively in a short passage in the joint judgment of Dixon, Evatt and McTiernan JJ in House v R (1936) 55 CLR 499 at 504-505. It is, I think, useful to re-state them as follows: "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." 21 This is also a demanding test. 22 The Magistrate did not address the interpretation of Clause 5 in Schedule 7 and Clause 6 of the agreement, which is a material consideration. The Magistrate did not adequately explain how he arrived at the decision that he did. In my view there has been a failure to properly exercise discretion. It may be that as the arguments are the same whether it is a summary judgment application or a hearing, there is no utility pursuing the summary judgment application. The appeal is allowed. The decision of his Honour Magistrate Bailey dated 15 January 2008 is set aside. 23 The matter is to be remitted to the Local Court, Coffs Harbour to be determined according to law. 24 Costs are discretionary. Costs normally follow the event. The defendant is to pay the plaintiffs' costs as agreed or assessed. The defendant is to have a certificate under the Suitor's Fund Act 1951, if applicable. The Court orders: (1) An extension of time to file the appeal is granted. (2) Leave to appeal is granted. (3) The appeal is allowed. (4) The decision of his Honour Magistrate Bailey dated 15 January 2008 is set aside. (5) The matter is to be remitted to the Local Court, Coffs Harbour to be determined according to law. (6) The defendant is to pay the plaintiffs' cost as agreed or assessed. (7) The defendant is to have a certificate under the Suitor's Fund Act , if applicable. ********** 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.