Supreme Court New South Wales Medium Neutral Citation: Smith v Magi [2011] NSWSC 198 Hearing dates: 23 March 2011 Decision date: 25 March 2011 Before: Davies J Decision: (1) The applications contained in paragraphs 2 and 3 of the Defendant's Amended Notice of Motion filed 23 March 2011 are refused. (2) The Plaintiff is not permitted to rely on the report of Dr Guthridge of 8 April 2009. (3) Leave to the Plaintiff to serve a further report of Dr Guthridge in accordance with my reasons by 5pm 30 March 2011. (4) Reserve the costs of the Notice of Motion to be dealt with at the trial. Catchwords: PROCEDURE - expert evidence - leave to serve expert report - testamentary capacity case - small estate - late application by Defendant - principle of proportionality - application refused. Legislation Cited: Civil Procedure Act 2005 Evidence Act 1995 Uniform Civil Procedure Rules Cases Cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Fletcher v Besser [2010] NSWCA 30 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Nominal Defendant v Manning (2000) 50 NSWLR 139 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 49 Category: Interlocutory applications Parties: Jodie Smith (Plaintiff) Susan Gay Magi (Defendant Representation: Counsel: M Meek SC (Plaintiff) JJ Loofs (Defendant) Solicitors: Carroll & O'Dea (Plaintiff) Hartnett Lawyers (Defendant) File Number(s): 2010/9015 Judgment 1These proceedings concern a dispute about the testamentary capacity of the deceased Arthur Rice when he executed a will on 16 November 2007. 2Under that will he appointed his daughter Susan Magi as executrix. He gave half his estate to his great grand-children Brendan Kajic and Justin Kajic as tenants in common, a quarter of his estate to their mother (his granddaughter) Jodie Kajic (now Jodie Smith) and a quarter of his estate to his daughter (Jodie's mother) Susan Magi. 3The Plaintiff in the proceedings is Jodie Smith who was the substitute executrix in the will of the deceased made 7 September 1999. Under that will he left $10,000 and his watch to Brendan Kajic, $10,000 and a cabinet to Justin Kajic, $5,000 to each of his daughters Marilyn Dowd and Susan Rice (now Susan Magi) and the residue of the estate to Jodie. 4The present proceedings came before Palmer J as Probate Judge on 6 December 2010 when the Defendant asked for leave pursuant to r 21.19 UCPR to adduce the evidence of Dr John Obeid, consultant physician and geriatrician. At the time leave was sought the Defendant had obtained the report of Dr Obeid dated 22 November 2010. 5At the hearing before Palmer J Senior Counsel for the Plaintiff drew the Judge's attention to the costs incurred to that point by the legal representatives acting for the Defendant. 6The Plaintiff had, by that time, served 2 affidavits of doctors who had assessed the deceased before his death. The first such affidavit was from Dr Jacinta Guthridge sworn 19 May 2010. Dr Guthridge annexed 2 reports she had prepared. The first report was dated 14 February 2007 and was prepared for the purpose of an application to the Guardianship Tribunal. The report said that Dr Guthridge had seen the deceased at his home on 30 October 2006 regarding his failing memory. She obtained a history from the deceased, his neighbour Helen Perry who had known him for 19 years, and from some staff from Aged Care Australia.0 7Dr Guthridge diagnosed dementia probably of the Alzheimer's Type. She noted that he had a poor short-term memory and was vulnerable to financial misappropriation. She said he had no insight into his cognitive impairment and believed himself quite capable of managing his own affairs and caring for himself. 8On the other hand, his neighbour Helen Perry reported at least a 2 year history of gradual cognitive decline. She had managed his bills and finance for the previous 12 months, she had been cooking for him for many years, had assisted him with errands and generally looked out for him. 9Apart from noting findings on her physical examination, Dr Guthridge reported that he had global deficits on the Mini Mental State Examination (MMSE) and some difficulty with the clock-drawing test. She said he had a concrete interpretation of proverbs, was unable to generate lists and had difficulty with similarities and differences. She said h e was not competent to manage his own financial or care needs and would need to have someone act on his behalf in his best interests. 10Her second report was a report to the Plaintiff's solicitors Carroll & O'Dea dated 8 April 2009. Whilst these proceedings commenced on 11 January 2010 it seems clear by the fact that the solicitors were involved and from what is contained in this report that an issue had arisen as to the deceased's capacity to make the November 2007 will. 11This report referred to the fact that Dr Guthridge had seen the deceased on one occasion, that she diagnosed dementia and that her opinion was he was not competent to manage his own financial care needs. It went on to say this: I can't comment on Mr Rice's capacity to make a Will at 07/09/1999. Mr Rice clearly lacked capacity to make a Will at 16/11/2007. With respect to Question 4, on 16/11/07 Mr Rice had not been able to understand the nature of executing or publishing a Will and the effect of that instrument or call to mind the property that is in his power of dispose of in that Will or call to mind the person who may have claims upon his bounty or able to weigh up the relative claims of those persons to rise with suffering from Dementia of Alzheimer type. But in my opinion did not suffer from a delusion that influenced the disposition of his property. 12That affidavit was served by mail and fax on 25 May 2010. 13Dr Garry Clemensen swore an affidavit of 5 August 2010 which annexed a report he had written at the request of the Defendant's solicitors dated 21 April 2010. The report disclosed that Dr Clemensen was a general practitioner and that the deceased had attended the practice where he worked, the Forster Tuncurry Medical Centre in Forster, since 1989. Dr Clemensen became involved himself in the deceased's care from 1997 up until the deceased's death on 26 July 2008. Dr Clemensen said he attended the deceased throughout 2007 and specifically around November 2007 . 14His report then said this: 4. I am not of the opinion that he was of sound mind in the terms that you have described in your letter. I enclose a copy of a report by Dr Jacinta Guthridge (geriatrician) dictated on the 30th October 2006. I agree with her assessment that he suffered with dementia and that his condition made him not competent to manage his own financial needs. His condition continued to deteriorate further up until his death. 5. He suffered with dementia, most probably of Alzheimer's type. This did effect his mind, memory and understanding. 15That affidavit was served by mail and email on 10 August 2010. 16Interestingly, the report of Dr Clemensen was annexed to the principal affidavit sworn in the proceedings by the Defendant on 6 May 2010, and by virtue of being attached to Dr Clemensen's report, so was the first report of Dr Guthridge. 17Palmer J did not deliver a judgment as such on the Defendant's application but his reasons for refusing the application can easily be discerned from the following passages in the transcript of the hearing on that day: HIS HONOUR: If the matter is allowed to go on as it is, all will be consumed in costs, which I am not going to allow, and I am not going to allow $142,000 for legal expenses in any event. This court has made the position on costs perfectly clear on many occasions. I am not criticising you, Ms Cohen. You know perfectly well what the situation is. Perhaps your solicitors don't. They will find out to their cost. This matter is not going to go on in this fashion. You intend to call the geriatrician? MEEK: Yes. To put it in context, the treating doctor was served by them. HIS HONOUR: Why can't you rely on cross-examining the doctors who will be called and people who saw the deceased before death? COHEN: Because of the context in which they saw the deceased and the timing at which they saw the deceased, and the factual matters that are outside, where the evidence shows the behaviour of the deceased and the behaviour of the deceased -- HIS HONOUR: You can cross-examine and have your lay witnesses. You will not have an expert. MEEK: It was my advice that these were expert reports, they were not treating doctor reports. HIS HONOUR: They were to assess capacity. They were to assess capacity for financial management, which is not the same at testamentary capacity. That assessment is better done with the patient while living than an assessment based on a multitude of records. Direct observation this court accepts in preference to extrapolated opinion after death. Has leave yet been granted to serve an expert's report? COHEN: No. HIS HONOUR: It won't be. MEEK: This is my brief copy. IS HONOUR: This matter will go to trial as quickly as possible and with as little possible further expense, before all the estate is gone in legal costs. You can tell your instructing solicitor in Queensland that they will find it very difficult, whatever the result of the case, to persuade the court that they should have that amount in costs out of the estate. Whether your clients choose to pay it is a matter for them. This court has made it very very clear in any number of reported decisions. MEEK: The first document was a report. The second document was an updating thing before the proceedings had commenced. COHEN: I believe that is an expert report and the defendant is entitled to file an expert report. HIS HONOUR: You are not entitled without leave, and you are not getting it for this estate. You will have lay witnesses who will come along and give observations of the deceased's behaviour before death. That, coupled with the medical evidence, will enable the court to reach a conclusion, adequately and fairly, in accordance with the principles of proportionality established in section 56 of the Civil Procedure Act . No leave to rely upon any expert's reports on your side. COHEN: I have to say, your Honour, on the last occasion the court adjourned the matter so that we could file an expert's report. HIS HONOUR: That was then. This is now. It may be that the court didn't know what I know now, and whatever the court knew then, that's what I am going to decide. No leave for an expert's report. The matter will go to trial on the evidence, the medical evidence, as it is. That leaves you to file any lay evidence you want as to the behaviour of the deceased shortly before death. That will be taken into account. 18The Defendant thereafter filed a Notice of Motion on 17 March 2011 seeking leave to adduce the expert report of Dr John Obeid at the hearing which is set down for 4 April 2011 for 3 days. The leave was sought on the basis that the Defendant consented to an order capping the costs which the Defendant might recover from the Plaintiff in the sum of $50,000.00 up to 6 December 2010, or such other sum as the Court considered appropriate, and from 7 December 2010 either the costs incurred by the Plaintiff or in such sum as the Court considered appropriate. 19The Motion came before me as the Trial Judge. On the morning it was heard I gave leave to the Defendant to file and move on an Amended Notice of Motion which sought i n the alternative that the Court rule on the admissibility of the affidavits of Dr Guthridge and Dr Clemensen. 20The issues to be determined on the Motion are these: (a) the bringing of a second application seeking the same relief; (b) delay in making the application; (c) the value of the estate and the implication for costs if the Defendant is given leave to adduce the expert evidence; (d) the admissibility of the Plaintiff's medical reports; (a) Second application 21The Plaintiff submits that the making of this second application raises issues discussed in Nominal Defendant v Manning (2000) 50 NSWLR 139 concerning abuse of process. The Court of Appeal decided in Manning that the bringing of a second application was not of itself an abuse of process but where the second application was made on the basis of the same evidence the party making the application risked the exercise of judicial discretion against the application. Remarks made in Fletcher v Besser [2010] NSWCA 30 by Allsop P at [2] and Sackville AJA at [17] cast some doubt on Manning in the light of the enactment of the Civil Procedure Act 2005 and particularly ss 56-60. Further, Manning must now be seen in the light of the decision in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175. 22In any event, the Defendant submits in the present case that there is a change in circumstances by reason of the agreement of the Defendant that her costs should be capped, an agreement that was not placed before Palmer J. The Plaintiff says that this is not a material change of circumstances but a forensic manoeuvring to get around Palmer J's ruling. This is because the issue of costs associated with the report had been raised as early as October 2010 in correspondence from the Plaintiff's solicitors to the solicitors for the Defendant. The Plaintiff says that it would always have been available to the Defendant's solicitors to have obtained instructions, by the time the application was made to Palmer J, to cap the costs. 23Mr Loofs of counsel who appeared for the Defendant submitted that a distinction should be made between the Defendant and the legal representatives acting for her. He said, quite frankly, that the solicitors had preferred their own interests in relation to costs and that the Defendant should not be held responsible for their actions in that regard. 24Despite the evidence provided in an affidavit filed in Court at the hearing of the Motion that the Defendant (who has now been independently advised on the issue) agrees to cap her costs, I do not think in the absence of evidence either from her or from her solicitors that I should infer that it was the solicitors preferring their own interests in the approach taken before Palmer J on 6 December. The objective evidence is that the solicitors for the Plaintiff had raised the issue of the costs associated with the obtaining of an expert report almost 2 months before the application was made to Palmer J. 25Nevertheless, I would not exercise my discretion to reject this present application solely on the basis that there had not been an offer to cap the costs before Palmer J. It is, however, a factor to be taken into account. (b) Delay 26There are 2 relevant periods of delay, being the period from the date of service of the affidavits of Dr Guthridge and Dr Clemensen to the time the application was made to Palmer J, and the period from the rejection by Palmer J of that application and the filing of the present Notice of Motion. From the point of view of delay, the second of these periods is the more significant. The hearing is due to commence on 4 April, a little over a week away from the hearing of this Motion. 27If the report of Dr Obeid was allowed to be adduced the most cost effective and time effective procedure would involve Dr Obeid conferring in advance with Dr Guthridge (in particular) and also Dr Clemensen to endeavour to narrow their differences, and for Dr Obeid at least to have Dr Guthridge explain to him the approach she took upon which he has commented. Ideally a joint report setting out their agreement and differences would be prepared (see Equity Practice Note SC Eq 1). That would be followed by the Doctors giving concurrent evidence on issues about which they still disagreed. 28In the time available that does not seem possible. Certainly, working within the times set out in the Practice Note is impossible. Moreover, bearing in mind that Dr Obeid viewed a large number of documents, said to be more than 1500 pages in number, it would not be fair if Dr Guthridge, at least, was not able to look at the same material to see if it changed or modified her opinion. Again, in the time available, that does not seem possible. 29The only explanation given for the delay after service of the Plaintiff's Doctor's reports was that a mediation was planned for and took place in about September 2010. That scarcely seems an adequate explanation for the time it then took to bring the matter before Palmer J. No explanation has been given for the delay between December and the filing of the present Motion. Had either application been made at an earlier time, and particularly the present Motion then, subject to what follows, the matters which I have mentioned may well have been able to be accommodated. (c) Value of the estate, and costs 30It is clear from the remarks made by Palmer J on 6 December 2010 that his main concern was the issue of costs associated with any leave given to adduce the evidence of Dr Obeid. The Defendant now suggests that that concern is met by the offer to cap the costs in the way I have set out. 31However, the capping of costs by the Defendant does not solve all of the costs implications of adducing the evidence of Dr Obeid. If the procedures I have mentioned in paras [27] and [28] above were followed considerable extra costs would be incurred on both sides. Further, and particularly if those procedures could not be followed, there is no doubt that the hearing time will be increased as a result of the evidence of Dr Obeid. Again, in fairness to the Plaintiff and her witness Dr Guthridge, Dr Guthridge would need to be afforded the time to examine the material that I have referred to in para [28] above. That only seems possible if the present hearing date was vacated with all the costs involved in doing that. That matter, in particular, has been directly caused by the delay in the Defendant making the application to rely on Dr Obeid's report. But even if the application had been made at an earlier time, it would be necessary to consider the extra costs involved as a result of permitting Dr Obeid's evidence. Palmer J's concern about the costs given the size of the estate and the principle of proportionality enshrined in s 60 of the Act are concerns which I also share. 32The Defendant suggests that problems associated with cost and delay could be met by confining Dr Obeid's evidence to the issue of the diagnosis of dementia. Mr Loofs directs attention to section 2 of Dr Obeid's report and in particular to his conclusions about the conduct of the MMSE by Dr Guthridge in paragraph 2.4 of the report. Mr Loofs suggests that if the only issue to be determined by the experts was the approach to the MMSE matters of delay and costs could be adequately dealt with. 33I do not agree. A determination on the issue of dementia will not, one way or the other, determine whether the deceased had or lacked testamentary capacity. There is no doubt that the dementia is a significant matter associated with testamentary capacity but there is not a necessary correlation between the 2 matters either as to their presence or their absence. When the real issue in the case is testamentary capacity it does not seem appropriate to limit the issue in dispute between the experts to what must be regarded as a subsidiary issue, albeit one of some importance. 34In any event, it is apparent from the first report of Dr Guthridge that the MMSE was not the only reason she determined the deceased had dementia. It is also apparent from the report of Dr Obeid that his conclusion that the deceased may not have had dementia was based also on his examination of the large quantity of documents including the medical records of the Aged Care Assessment Team. It would not be fair to Dr Guthridge for her not to have access to all of those documents and time for examination of them so that she could be in a position to deal with Dr Obeid's opinion and conclusions about the way she conducted her test and about her own conclusions. 35Mr Loofs points out that the Plaintiff and her lawyers have had a copy of Dr Obeid's report since 22 November 2010. He accepts that until leave was granted the Plaintiff and her representatives could have worked on the assumption that the report would not be in evidence. However, he said that her lawyers could have worked on the assumption that Dr Obeid's report would at least have provided the basis for cross-examination of Dr Guthridge with the preparation that that would involve. 36Whilst one can reasonably assume a measure of preparation associated with potential cross-examination of Dr Guthridge this does not really provide an answer to the matters that I have dealt with in paras [27] and [28] above, particularly the matters that are directed towards shortening any hearing time and narrowing issues in the case. 37Bearing in mind the value of this estate and the legal costs incurred to date, even allowing for the capping proposed by the Defendant and taking into account a 3 day hearing based on the present evidence, permitting the adducing of Dr Obeid's evidence is not justifiable in terms of ss 56 and 60 of the Act. 38When there is added to that matter the delay involved in making the applications, but particularly the present application with the delay from December to March being unexplained, I would not permit the adducing of the evidence of Dr Obeid. (d) Plaintiff's medical reports 39The Defendant submitted that neither of the reports of Dr Guthridge nor the report of Dr Clemensen should be admitted into evidence because none of them complied with the Expert Witness Code nor the principles in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705. It is necessary to consider each report separately. (i) Report of Dr Guthridge of 14 February 2007 40This report was prepared for the Guardianship Board. At the time it was prepared, not only was the deceased alive, but he had not made the will of November 2007. Needless to say, the report does not address the deceased's will making capacity because it was not prepared for that purpose. 41There is no doubt that it is relevant to the question of will making capacity because if the deceased suffered from dementia as the report asserts, that would be a factor to be considered in relation to the deceased's will making capacity. The dementia would not necessarily mean that he lacked that capacity but it would provide a basis for enquiry. Similarly, Dr Guthridge's conclusion that the deceased was vulnerable to financial misappropriation would not of itself determine his will making capacity but would also give rise to any enquiry in that regard. 42The report is an expert's report with the meaning of r 31.18 although, because of the date it was prepared, there must be doubt that Dr Guthridge is an expert witness within the meaning of that rule, although she might later have become an expert witness. If that is correct the report is not admissible without an order of the Court under r 31.23(3): Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 49 at [14]. Whilst it does not comply with the Expert Witness Code in that no acknowledgement of that Code appears on it, that is because of the time and circumstances of its preparation. The report generally complies with the principles in Makita. I would otherwise order under r 31.23(3) UCPR to admit the report. The report is a business record within the meaning of s 69 Evidence Act 1995 and r 31.28 has been complied with. Accordingly, there is no need to find exceptional circumstances for the granting of leave. (ii) Report of Dr Guthridge of 8 April 2009 43This report predates the commencement of litigation by about 8 months. Nevertheless, it was requested by the Plaintiff's solicitors and it can be clearly inferred from the contents of the report that it was requested because by that stage there was a dispute over which will should be admitted to probate. 44As is apparent from the report itself (set out at para [11] above) Dr Guthridge does not set out the findings on which she bases the conclusions in this report. Further, in the absence of the letter that asks her the questions, it is not easy to determine precisely what she was being asked. Further, there is no subsequent statement by Dr Guthridge that the report was prepared in accordance with what is required under the Expert Witness Code. 45I do not consider this report should be admitted in its present form. The report ought to comply with the principles in Makita , and it ought to contain an acknowledgement that it was prepared in accordance with the Expert Witness Code. 46The Defendant submits that "the price" of permitting the Plaintiff to cure any problem with this report should be the admission of Dr Obeid's report. The 2 matters seem to me to be qualitatively different. The issue of the report of Dr Guthridge is a matter of form whereas the admission of Dr Obeid's report is one of substance. Any further report of Dr Guthridge will merely expose her reasoning for the conclusions now contained in the report which I have said should not be admitted in its present form. It can reasonably be inferred that that reasoning will be based on the matters identified in Dr Guthridge's earlier report. Dr Guthridge will not, in that regard, be entitled to rely on fresh material. The admissibility and reliance on the further report of Dr Guthridge will not necessarily be a cost that the estate must bear. I propose to give leave to the Plaintiff to serve a further report in that regard by no later than 5pm on Wednesday, 30 March 2011. (iii) Report of Dr Clemensen 47This report is dated 21 April 2010 and was prepared after the litigation commenced. It does not comply with the principles in Makita , nor is there any acknowledgement of the Expert Witness Code. 48However, I will otherwise order under r 31.23(3) that it may be admitted into evidence. This is because, not only was it prepared at the request of the Defendant's solicitors, it was also put into evidence by the Defendant as an annexure to her affidavit of 6 May 2010. In those circumstances, where the report is otherwise relevant, I can see no prejudice to the Defendant in permitting the Plaintiff to adduce the report as part of the Plaintiff's case. The Defendant will indeed have the advantage of being able to cross-examine the Doctor whom the Defendant initially engaged. Conclusion 49For the reasons I have given, the Defendant will not be permitted to adduce the evidence of Dr Obeid. I agree with Palmer J that direct observation of a patient while living is preferable to an extrapolated opinion, particularly based on the multitude of records, after the patient's death. 50There is abundant evidence of observations made of the deceased at about the relevant time by a number of witnesses on either side. There are assessments by 2 Doctors who the Defendant will be able to cross-examine. In addition, the Defendant will have the advantage of Dr Obeid's opinion to them to assist in their cross-examination. On any exercise of balancing the size of the estate and the costs on the one hand with any prejudice to the Defendant in not being able to adduce Dr Obeid's evidence, the balance comes down heavily in favour of refusing the application. 51I therefore make the following orders: (1) The applications contained in paragraphs 2 and 3 of the Defendant's Amended Notice of Motion filed 23 March 2011 are refused. (2) The Plaintiff is not permitted to rely on the report of Dr Guthridge of 8 April 2009. (3) Leave to the Plaintiff to serve a further report of Dr Guthridge in accordance with my reasons by 5pm 30 March 2011. (4) Reserve the costs of the Notice of Motion to be dealt with at the trial. ********** 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. Decision last updated: 28 March 2011