It occurs to me that the topic of my address might be a little misleading. As someone who has been a judge for only eight years, and was an advocate for twenty-seven years before that, my view from the bench is still very much framed or shaped by my experience as an advocate.

In the thirty-five year period that I have been involved in the practice of the law, large changes have taken place to the dynamics that drive the conduct of advocacy in our Courts.

Culturally and structurally, the example of the United States has affected the practices of the legal profession, and of the Courts, just as they have influenced our economic and social life more generally.

But while there has been great change, we have succeeded in retaining a central feature of our system of administration of justice which distinguishes us from the United States. That feature is the notion that lawyers are officers of the Court and that as such, their first duty is to the Court and, through the Court, to the administration of justice.

In the highly successful television program “Rake”, the protagonist Cleaver Green of Counsel, speaking of the work of a barrister, says: “It’s all bullshit, mate; it’s just smoke and mirrors.”

He sounds entirely like the cynical lawyers of American legal TV dramas. And I suppose we all know some hard-bitten cynics who do take this view of the administration of justice. But happily, I do not think that it is a view which characterises the Australian legal profession or the Bench.

Only someone who doesn’t actually practise law could think that Cleaver Green’s attitude is representative of the legal profession in Australia.

Producers of popular television programs and journalists, who wear their world weary cynicism as a badge of honour, are, of course, free to say what they like. In doing so, they are unconstrained by the discipline imposed uniquely on lawyers by the pressure of argument in open court where error and hyperbole are quickly corrected. Actually doing the business is important to an understanding of what it reveals about those who are doing the business.

There is a story about Talleyrand, the great survivor of the French Revolution, which illustrates my point.

One of the five-man Directory which ruled post-revolutionary France before the coup which brought Napoleon to power, was Louis-Marie de la Reveillière-Lépaux. He was an intellectual who had founded a new religion which he called “theophilanthropy”. He gave a public lecture on his new religion which was attended by Talleyrand. Afterwards, Talleyrand said to him:

“… I have just one observation to make to you. Jesus Christ, in order to found his religion, was crucified and rose from the dead. You should try to do the same.”

And so I am confident that you, as people who are actually trying to do the business, do think about what you do as something in which duty is more important than self-promotion and that you are not tempted to think that a failure to do your duty by the system does not really matter because the system “is all smoke and mirrors”. That, after all, is why you are at this conference.

Instead of the cynicism of Cleaver Green, I would commend to you the words of Sir Maurice Byers, who was one of the most successful advocates ever to appear in the High Court. He said of the role of the advocate:¹

“When we appear before the courts, we are engaged in the administration of justice and thus owe to the courts in this ministerial undertaking a duty which prevails over our duty to our client. The practice of the law is thus radically and essentially different from the practice of other professions or callings. We participate and they do not in the administration of justice to the same extent as the judge, though our function differs.”

Civility

While I was at the Bar, I acted on a number of occasions for and against litigants from the USA. On most occasions, the American client was represented by an in-house lawyer. Invariably, at the end of each case, the in-house lawyer for the client would comment that they were very impressed with the civility which prevailed in our courts, not because it was quaint and olde-worlde, but because it meant that the solution of the legal problem at hand was plainly the sole focus of the proceeding, and the civility of the debate meant that arriving at the best solution was more likely.

The civility which prevails in our courts is an enduring outward sign of the co-operative view of the administration of justice in which the advocates for each side act as officers of the Court, duty-bound to assist it. This is a radically different model from a system in which advocates may engage in any conduct, it seems, short of an actual crime, to advance the client’s interests.

Sir Nigel Bowen, at the foundation of the Federal Court in the mid-1970s, stated that his ambition for the Court was that it should be a Court of “excellence, innovation and courtesy”.

It must have struck many lay people at the time as odd that a judge would think to express the hope that a court should be courteous: surely it should go without saying that a court should be courteous.

While that might be so now, it was not necessarily so when Sir Nigel was speaking.

I can certainly vouch from my own experience as a fledgling lawyer in the 1970s that the Courts were sometimes unpleasant places to appear for advocates.

In those days, of course, they were universally presided over by men. These men were usually very angry — about something, which usually eluded everyone else. Those courts  were occasionally so unpleasant as to put one in mind of the Royal Navy of Nelson’s era, described by Winston Churchill as a place of “Rum, sodomy and the lash!”

That, happily, has certainly changed. The increasing numbers in which women have taken their place on the bench has obviously been an important influence for the good.

But even in those somewhat more fraught times, judges were conscious that the transparency and rationality of judicial decision-making processes were values of the highest importance. That judicial decisions are made by a disinterested person, on the basis of evidence and arguments fully and fairly ventilated in open court, is essential to the maintenance of public confidence.

And it is now almost universally acknowledged in the superior courts of the Commonwealth that civility on the part of the judges is good policy because the performance of the legal profession is unlikely to be at its best or most helpful if it is being hectored by the bench.

Judges know that skilled lawyers are the most important resource available to the courts in doing justice, and we need to help them to be heard, not to make their difficult and important job even harder.

The explosion of legislation and regulations has been another important change in the dynamics of the justice system over the last four decades. The predominance of legislation as the source of law means that statutory interpretation is more the focus of the judicial function now than the judicial development of the common law. One consequence of this development is that there is less scope for the emergence of judicial figures as dominant forces in legal development.

We are now less likely to see the emergence of a hero judge, such as an Atkin or a Denning or a Dixon. Even the most forceful judicial personalities are less likely to feel the need to demonstrate that they are the smartest person in the Courtroom and destined for a place in the history books with the great lawyers of past centuries.

At least, that is the case in Australia. I was surprised, recently, to see a newspaper report of a serving American judge making a speaking tour to promote her autobiography. In the course of this triumphal progress, her Honour expressed the modest hope that her judicial opinions would be regarded in future decades as among the best produced by any judge of her Court.

By and large, I think that it is fair to say that in Australia our judges’ feet have generally been kept firmly on the ground by the constraints of our egalitarian democracy and an ethos of judicial modesty.

As for the history books, the best any of our judges can hope for, in terms of what people might say about us in three or four decades into the future is: “Isn’t it remarkable that he’s still sexually active.”

This morning I will mention a number of aspects of advocacy which bear upon the maintenance of the relationship of mutual confidence between Bench and Bar which is central to our mechanism for the doing of justice. To the extent that there is a unifying theme to what I hope are helpful hints, it is the idea that we are all, judges and advocates, engaged in a mutually respectful cooperative enterprise which is not all “bullshit and smoke and mirrors”.

Trials

Thorough trial preparation has always been essential. It is even more so by reason of the technological revolution. The worst failure of which an advocate can be guilty is a lack of preparation.

From the point of view of the judge, the unprepared advocate is less than useless because of their potential to unwittingly mislead the court. That is especially so in trials where there is a large volume of documents. The greatest assistance an advocate can provide is to reduce and refine the evidence which the judge must digest to decide the case.

The abundance of documents to which critical human intelligence has not been applied before trial is one of the greatest problems for trial courts. The worst advocacy I have ever seen occurred in a long trial where the advocates opened the case by meandering through a bundle of documents — whether physically or electronically — with a view to seeing if there were any documents which the judge might think were interesting.

The process of discovery has become so burdensome that it has spawned a separate industry to help lawyers cope with it. The lawyer who can marshal the crucial documents is highly valued by the judges. The best advocate ensures that the force of the documents which most strongly support the client’s case is not hidden under bushels of dross.

The second worst thing I have seen in an advocate at a trial is a refusal by Counsel for the defendant or respondent of an invitation by the Court to open his side’s case immediately after, and in response to, the plaintiff’s opening. Such a refusal can only be explicable by poor preparation. No advocate worth his or her salt would pass up the opportunity to restore the balance which you must assume has been tilted, albeit provisionally, in favour of your opponent’s case.

Mediation

Can I return to mediation. The involvement of specialist advocates in mediation is a phenomenon of the last two and a half decades.

There are still advocates in practice who regard it as a badge of honour that they refuse to attend mediations. But the vast majority recognise that it is a great thing to help litigants resolve their disputes without the need for a trial. The clients get to keep their dignity and exercise their autonomy rather than have the solutions to life’s problems imposed on them by others. Just as importantly, they save time, money and distraction.

Once again, thorough preparation is essential if advice is to be clear, responsible and effective.

It may well be that some advocates, especially the younger ones, may feel that heavy involvement in mediation is dulling your forensic edge. If you do feel that your court craft needs some polishing because you aren’t getting to court as often as you would like, my advice would be to go and sit in on a criminal trial in the Supreme Court. And especially, if you are struggling with the discipline of being concise and relevant, go and watch some criminal appeals in the Court of Appeal. You will see masters of relevance in action.

Speaking parochially for a moment, it was my experience on the Court of Appeal that one of the glories of the Queensland Bar is the quality of the advocacy in criminal appeals.

Written Arguments

A great change in the dynamics of advocacy over the last three decades has been the shift towards written as opposed to oral argument, both at first instance and on appeals. When I commenced practice at the Bar in 1978, all appeals were argued entirely orally. It was only in 1979 that the Supreme Court formally advised the Bar that counsel might properly assume that the appeal judges had actually read the judgment under appeal.

The presentation of an entirely oral argument required a very special skill in identifying accurately, but concisely, the arguable errors in the decision below and then developing in a coherent way the arguments which were apt to make good the challenge to the judgment below.

For the advocate, trying to present an entirely oral argument could be a trying experience, even for experienced advocates, as they struggled to articulate their arguments coherently, and with precision.

Today, written outlines are essential to the ability of the court to cope with its workload. In this environment, an advocate who attempts to articulate an argument for the first time in oral submissions should expect an unpleasant reaction from the court. Coherence, which is obviously desirable, will be hard to achieve amidst all the shouting.

Many of us find it easier to follow and assess an argument on the written page than by listening to the spoken word. And, in any event, the process of question and answer which takes place at the oral hearing is much more focused by reason of the written outlines. Written outlines have seen an end to what I call the Jericho strategy of advocacy which was frequently used in the days of purely oral argument. This strategy involved counsel talking around and around the problem without committing to any particular proposition until a judge expressed enthusiasm for a particular sentence. Counsel would then exclaim how clever the judge was, that he had put the point much more clearly than he could ever do, and with that blast of the trumpet, the walls of judicial resistance tumbled and counsel triumphantly resumed his seat.

This strategy was employed by the more oleaginous advocates; but it was very successful. Happily it is no longer viable.

I will now make a few brief specific points about written arguments, both at first instance and on appeal.

Point 1

A good advocate will not regard the preparation of the written outlines of argument as a mere formality or a chore which has to be done, and which is of minor significance in comparison to the oral argument. Written submissions afford you a great opportunity to shape the judges’ view of the case. It is an opportunity to persuade: such opportunities are not to be wasted. The production of written argument means that a different form of preparation is necessary for the oral part of the argument. It requires that the advocate has mastered the factual material in the case, and the legal arguments involved, to such a degree that the advocate can respond concisely and precisely to questions from a Bench which has been “warmed up” by the written outlines.

In oral argument, against the background of written submissions, there is no room for the advocate to “build up speed” or to talk one’s way into the answer. But there is great scope for the counterpunch — which is the most effective form of argument — to go straight for the weak point in your opponent’s case as has been exposed in his or her written outlines.

The production of an effective written outline takes time: you must devote time to that work; you cannot hope to do it on the fly. You cannot hope to sit back in your chair and allow your eyes to roll back in your head and talk to your dictaphone.

Do not present the court with a written outline which has obviously been dictated and not revised with typos and gaps left for the solicitor to complete. The solicitor, of course, will not realise that he needs to complete the outline and will file it as you have sent it to him. In such a case, both the barrister and the solicitor should be ashamed of producing it. The lawyers should fairly expect to be ordered to pay the costs of a losing case which has been presented in this way.

At the practical level, you should expect to do at least two drafts and then leave the final draft for a day or two to let it settle in your head and on the page. This kind of process of iteration is necessary to make your argument read as simply and coherently as possible.

You may even find that you need to do more than two drafts to articulate your points as crisply as they can be expressed. Remember, it is a piece of English prose. The compelling but relaxed prose of F. Scott Fitzgerald was usually the product of 18 or 19 drafts.

One way to ensure that sufficient rigour is brought to the task is to have the outline looked at by a fresh mind which has not been contaminated by previous attachment to the case. The best advocates use their time with the lawyers assisting them to anticipate the curial interrogation process and to adjust the outline accordingly. This, of course, was the skill which made John Roberts, now Chief Justice of the US Supreme Court, famous as the most able appellate advocate of his generation.

You must resist the temptation to try to avoid moving into what Sir Anthony Mason called the “critical grey area” in the case where the difficulties abide.² That is the area where the case will be decided. It is much better to recognize the difficulty in your case and say what you can about it when you are able to put your argument as well as it can be put, than to hope against hope that no-one else will notice.

The thing about the system is that the higher you go, the more different pairs of eyes look at the case and the less likely it is that no-one will notice the problem in your case. There is no nastier experience for an advocate than being chased around the court by several judges energized by the thrill of pursuing a problem which they think has not been identified.

Articulating your argument in writing is also a useful discipline. If you find it difficult to put your argument in writing, the most likely reason is that your side’s case is flawed. If you can’t articulate your case in two or three sentences, you will struggle to persuade others. And you should be advising your client that there is a problem.

If you have not drawn to your client’s attention a flaw in its case so as to afford the client the opportunity of resolving the case on the best available terms, your problems may not be limited to a day of less than the usual degree of job satisfaction.

Point 2

As to my second point, in cases where the issues depend on the operation of complicated legislative schemes, such as the WorkCover legislation or the Personal Injuries Proceeding Act 2002 (Qld), or taxation legislation of any kind, you should not assume that a precise elaboration of the legislative scheme for the benefit of the Court is unnecessary. You must set the context for the arguments you wish to agitate; you should not assume that the court does not need to be told of the context.

An allied point I would make here is that if the relevant statutory regime has inter-State analogues, you should not assume that the issue of present concern has not been addressed by the courts of that State.

You should make sure that you know whether or not your issue has been considered by another court. This may seem like such an elementary point that one should not have to mention it. Sadly, it is necessary to mention it.

Point 3

The efficacy of written submissions depends on each member of the court having read them before the oral argument begins. In the early days of the shift towards written submissions, barristers often formed the impression that some members of the court might not have actually read, much less comprehended, the written submissions.

Whether or not these suspicions might once have been justified, I can offer an assurance from my personal experience that this is certainly not now the case.

Nevertheless, you have to be able to provide context to your answers for those members of the Court who may be struggling to see how the answer you are making fits into the context of the case. The best way to do this is to begin your written outline with a precise and concise statement of the issue or issues on which the case turns.

Sir Owen Dixon said: “I have always thought that the clear definition of the exact question to be … decided is a most important factor.”³ Bear in mind in formulating the issues for determination on appeal the need for a precise identification of the issue. A precise identification of an issue does not necessarily mean a narrow statement of the issue.

Whether the issue should be put broadly or narrowly will depend on your assessment of the strengths and weaknesses of your case. If your strength is in a black letter legal proposition, your precise definition of the issues might be quite narrow, but if you need to appeal to broader discretionary considerations, your statement of the issues may need to be broader.

There is now a formal requirement in the Practice Directions of many courts that the issue said to arise on the appeal be identified with precision.

This requirement draws upon the greater experience with written argument in the courts of the United States. Bryan A Garner, in “A Dictionary of Modern Legal Usage”, 2nd Ed (1995) at 471, said: “[t]here is no more important point in persuasive and analytical writings — and certainly no point that is more commonly bungled – than framing the issue”. Garner says that the statement of the issue should be no more than 75 words in a format of “statement, statement, question”, or “premise, premise, conclusion”.

By way of example, one would write:

“The appellant was injured in the course of his employment. His injury was, however, suffered away from his place of work and was inflicted by a third party. Was the appellant obliged to comply with the procedural requirements of the Workers Compensation and Rehabilitation Act 2003 in order to bring an action against that third party?”

Point 4

So far as the formal presentation of written argument in a complex appeal is concerned, clarity of statement requires clarity of structure. The structure will vary depending on whether one is concerned with issues of fact or law.

Sir Owen Dixon offered an interesting insight in a letter to Lord Morton of Henryton. He said that the great risk of making a “very good argument very clearly, [is] that a critical mind reflecting upon it might get to the unexplored foundations of the case and then heaven [knows] how we should get on.”⁴

Of course, that also means that you and your client may be forced to confront the soft part of your case.

William of Occam, rather than St Rita, should be the patron saint of advocates. Simplicity of statement has a force all of its own.

The most frequent complaint of judges about advocates is that they run too many points.

No advocate I have seen wielded Occam’s razor with the skill of Murray Gleeson. He would always pare his case down to the propositions essential for his best argument; and he would not clutter his good argument by presenting it festooned with the distraction of less compelling arguments. This approach requires skill, courage and confidence.

Point 5

An allied problem is the excessive citation of cases, both at first instance and on appeal.

In relation to appeals the problem is particularly acute in appeals against the assessment of damages and in applications for leave to appeal against sentence. I have sat on hearings in these kinds of cases in which dozens of cases were cited as if multiple citations were a badge of merit.

It may impress solicitors and clients to show them outlines festooned with citations, but it is likely only to antagonise the bench. We are, by virtue of our self-flagellatory sense of judicial responsibility, burdened by the need to address the cases cited to us to explain why each case is unhelpful to the argument for which it is cited.

Any advocate worth his or her salt must be able to decide what is the best authority in support of a proposition of law which is part of his or her case. It is because you are expected to have that ability that you have been retained to argue the case.

Unless there is doubt as to whether that proposition is securely established, it should not be necessary to cite multiple cases. No-one should think that the argument gains force from the citation of other cases which are no more than examples of the application of the proposition.

Just as handing up ten copies of the Courier-Mail does not make the story more true.

As Lord Diplock said in Lambert v Lewis:⁵

“The citation of a plethora of illustrative authorities, apart from being time and cost-consuming, presents the danger of so blinding the court with case law that it has difficulty in seeing the wood of legal principle for the trees of paraphrase.”

Point 6

My next point is concerned with appeals against findings of fact. The controlling aspect of the presentation of a written outline on appeal is an appreciation of the constraints upon a successful challenge to a finding of fact by the trial court.

You must be thoroughly familiar with the constraints which limit the scope for an appellate court to overturn a finding of fact, especially if that finding depends on an assessment of the demeanour of the witnesses at trial.

You must understand the difference between seeking to persuade an appellate court to reach a different ultimate conclusion of fact from the primary facts and seeking to persuade the court to come to different findings of primary fact, especially where questions of credibility of witnesses are involved.

If you wish to persuade the appellate court to come to a different finding of fact, you should identify and articulate with precision the particular finding of fact you are seeking to challenge. Remember that, because of the constraints that apply, the narrower the finding you need to dislodge, the less your difficulty will be. On the other hand, your challenge must not be so narrow as to leave the ultimate conclusion adequately supported by other facts.

You should show that you understand and accept the discipline of the test you are trying to satisfy. You must then marshal the bits of the evidence on which you want to rely together with, if relevant, any statements from the reasons of the trial judge which show the judge’s misappreciation of facts that are common ground, or weak or inconsistent reasoning.

It is essential that you take the time and trouble to do this in your written outline: it is very difficult to do in oral argument unless the error is so obvious that it hardly needs any demonstration at all.

Point 7

Think about whether you need to put in a written submission in reply. Don’t put in a written submission in reply just because the timetable set by the Registrar contemplates that there may be submissions in reply.

Where the appeal involves an attack on findings of fact, it is likely that there will be a need to tidy up the state of play concerning the evidence. But otherwise you may think that the best course is to reserve your response for oral argument.

Point 8

More and more often you are likely to encounter an unrepresented litigant on the other side: usually the unrepresented litigant will be an appellant. When you are opposed to an unrepresented appellant, you may think that the argument sought to be pursued is hopeless.

But you should not assume that you do not need to make as full a response as you would if the other side had legal representation.

In fact, you may need to be even more on your guard than usual. The Court may be confused about some issue raised by the litigant in person. You should ensure you clarify the position, and bear in mind that you may need to be able to do that because the litigant in person may, even with the best will in the world, confuse the court.

You should expect that the court will look to you to bring order out of chaos. And you should expect that the Court will require you to display courtesy and calm in dealing with even the most exasperating of unrepresented litigants. Everyone before the Court is entitled to be treated with dignity even if they seem to be busily engaged in giving it away.

You should expect that the Court will look to you to state precisely and fairly the reason why the point sought to be agitated by the litigant in person is without substance.

Point 9

Where you seek to adduce new evidence on appeal, you must ensure that your outline makes that intention clear and addresses the criteria for the admission of new evidence on appeal.

And bear in mind that, practically speaking, once you take that course, you are flagging to the court your own appreciation that the best outcome you expect for your client is a retrial. If for some reason that is not so, then you need to articulate the reasons why.

Conclusion

It will, I hope, be apparent that what I have been talking about is a collaborative process between judge and advocate. As I have said, it is essential that it should be mutually respectful. Just as the process requires a degree of judicial restraint to allow the advocates to do their job, so it requires a level of self-effacing commitment to the task on the part of the advocate.

It has been a long time since the words “self-effacing” and “American lawyer” have appeared in the same sentence. But the problem of self-promotion has spread even to the English Bar.

For some years now profiles of barristers have been published by various sets of barristers’ chambers in London. One example, which is now a few years old, emanated from Essex Court Chambers. This set evidently contains some very superior barristers indeed. Let me read to you a short sample of what they say about themselves, or what their clerks let them say about themselves.

One paragon of the English Bar is the “fierce” Andrew Hochhauser QC who “comes across as prickly”, which is apparently only a “symptom of the fact that Andrew ‘takes great pride in his work'”. He is “one of the best cross-examiners around”. He comes across “as urbane and civilized until you unleash him – then he becomes a Rottweiler”. He is said, with scant respect for the function of the judge in the cases in which he appears, to be “good for cases where you want to rough up the opposition”.

In relation to banking law, Gordon Pollock QC is described as Chambers’ “Headline grabber” and “a contender for any huge case”.

In commercial litigation generally Mr Pollock’s blurb describes him as “the Bar’s most frightening barrister” – “revered as a formidable cross-examiner”, who “scares everyone rigid because he’s so aggressive and dominant”. He is, the PR machine guarantees, “a first rate gunslinger” who is “never afraid to take on the weakest cases” and “often turns the opposition’s spines to jelly”.

Imagine allowing people to publish this sort of rubbish about you to the world. Much worse, however, would be if you actually believed it to be true: because you might actually see your cases as being all about you, and your relationship to the headlines. That will become manifest in your dealings with your opponents and the Bench.

As it happens, Mr Pollock QC was leading Counsel for the plaintiffs in the infamous Three Rivers Case [2006] EWHC 816. That case went for many years. At the end, it turned out that the case Mr Pollock was presenting had no basis. Mr Pollock was, during all this time, it seems, true to the image conveyed in his chambers profile. Justice Tomlinson observed: “Mr Gordon Pollock QC was only occasionally rude to me …”

Of course, advocates can’t be expected to be shrinking violets.

Of the need for barristers to have a “well-padded vanity”, Sir Maurice Byers said:⁶

“What in other professions might be considered a blemish, even a disqualification, is in a barrister an essential attribute: lurking behind the diffident smile of the shyest junior is a conceit of Napoleonic proportions. Unless this was so, how could one survive in this most competitive, independent and gladiatorial of professions?”

But civility between the Bench and the Bar is the formal expression of this ethos of a selfconscious modesty and restraint, which is one of the hallmarks of true dedication to the administration of justice.

The willingness to spend unglamorous hours in preparation, organising the evidence and sifting out the irrelevant, minimising the time spent in court and focusing on the client’s case and not one’s self, are all really no more than an appropriate respect for one’s craft and for the doing of justice to which that craft is essential.

And it is because of that that the judges continue to wish you well.

Thank you for your attention.

The Hon Chief Justice Pat Keane

Footnotes

• The Byers Lectures 2000-2012 Eds Perram and Pepper 2012, The Federation Press, at p 9.
• Mason AF “Vale Sir Maurice”. Eulogy delivered at the Memorial Service for Sir Maurice Byers, St Mary’s Cathedral, Sydney, 8 February 1999. See The Byers Lectures 2000-2012, Eds Perram and Pepper (2012) The Federation Press at p 302.

1. 1. Ayres, “Owen Dixon”, 2003 The Miegunyah Press, p 49.
   2. Ayres, “Owen Dixon”, 2003 The Miegunyah Press, p 44.
   3. [1982] AC 255 at 274.
   4. Perram and Pepper at 298.

News, views, Practice Directions, events, forthcoming national and international conferences, CPD seminars and more …

Invitation to Participate in Evaluation of Civil Dispute Resolution Act 2011

The Civil Dispute Resolution Act 2011 commenced on 1 August 2011. The Act requires parties commencing certain proceedings in the Federal Court or Federal Magistrates Court to file a genuine steps statement saying what genuine steps they have taken to try and resolve their dispute, or if they have not, the reasons why.

The Attorney-General’s Department of the Australian Government is evaluating the operation of the Act. The Department has engaged Australian Survey Research to conduct a survey on our behalf of key stakeholder groups’ interaction with the Act. The survey provides an opportunity for you to provide feedback on the operation of the Act. For more details about the Act and the evaluation, please click here.

The survey will take at most 10 minutes to complete and your answers will remain completely confidential. If you wish to participate in the survey, please send the following details to ken.menz@ag.gov.au:

• First name *
• Last name *
• Email address *
• Phone number
• Employer
• State
• Association/body/society through which you heard of this survey

 * Mandatory field

We are also asking clients and litigants to give feedback about the Act. Please encourage your clients to go to www.cdract.com.au to participate in the survey.

If you have any questions about the conduct and content of the survey, please contact Ken Menz on (02) 6141 2674 or ken.menz@ag.gov.au or Allison Wood on (02) 6141 3106 or allison.wood@ag.gov.au.

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Call for Volunteers

Dear Hearsay readers,

No doubt, you will have been impressed by the way your fellow members of the Bar have brought you news of new and interesting books coming on the market.

You, too, can be part of Hearsay’s great team of book reviewers.

What happens is that publishers send review copies of the books to your much loved editor. From time to time, an email is sent to our team of volunteers advising of the books available to be reviewed. A mad scramble of emails takes place as would be reviewers scramble for their best books. Then, over days, weeks, months and sometimes even years, a trickle of beautiful reviews find their way back to eventual publication and fame for their author.

When the review has been completed, you get to rightfully retain the book you have earned instead of feeling terribly guilty every time you take it down from the shelf for research purposes.

So, if you want to be part of this best game in town, send an email to k.edwards@higginschambers.com.au expressing your interest.

You won’t regret it.

Stephen Keim S.C.

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2013 Voiceless Animal Law Lecture Series

9, 10 and 13 May – various locations

In its seventh year, the 2013 Voiceless Animal Law Lecture Series will present the nation’s leading legal minds to discuss different approaches of animal law including constitutions and treaties that provide protection for animals, regulatory issues, standing, property status and ethics.

Exploring these legal considerations for the Lecture Series, Voiceless is proud to present our international keynote speaker, Antoine F. Goetschel.

Antoine is a Swiss lawyer based in Zurich with a career focus on animal law. Currently partner at law firm Krepper Knecht Partner, Antoine was previously the animal welfare lawyer for the Canton of Zurich. The first position of its kind worldwide, Antoine represented the interests of animals in criminal cases as a public official.

As the founder and former Director of the Foundation for the Animal and a specialist in human-animal-relationships in Swiss and international law, Antoine has represented animal interests in cruelty cases and played a prominent role in Swiss animal law referendums. He fought successfully for having the “dignity of living beings” protected by the Swiss Constitution and for animals being recognised as non-objects in legislation.

As one of the world’s leading animal rights lawyers and a pioneer in this field, Antoine Goetschel will undoubtedly deliver an inspiring and insightful presentation on the potential future of animal law. Antoine is the keynote speaker for the 2013 Animal Law Lecture Series and will be presenting at all locations.

Details:

9 May at Griffith University, Brisbane – register here.

10 May at Clayton Utz, Brisbane – register here.

13 May at Bond University, Robina – register here.

For further information visit www.voiceless.org.au .

CPD accreditation:

1 CPD point per hour of attendance.

Strand: Non-allocated

Accreditation codes:

9 May at Griffith University, Brisbane: VALLS130509

10 May at Clayton Utz, Brisbane:VALLS130510

13 May at Bond University, Robina:VALLS130513

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32nd Annual ALAANZ Conference: 50 Shades of Aviation

5-7 May 2013, Sheraton on the Park Hotel, Sydney

• • Keynote speaker: The Honourable T. F. Bathurst – Chief Justice NSW
  • Airports / Security /DNA analysis (bird strike) – Stephen Byron, Managing Director, Canberra Airport; Dr Rebecca Johnson, Head Australian Centre for Wildlife Genomics, Research & Collections Division, Australia Museum; Barry Peach, Corporate Risk and Compliance Manager, Brisbane Airport Corporation Pty Ltd
  • Insurance Session: Greg Rector, Managing Director, Aerosure Asia Pacific Pty Ltd; David Johnston, Partner, Gates and Partners, Singapore

• UAV Session and Panel discussion: James Coyne, Manager, Future Technology and Regulatory Trends, Civil Aviation Safety Authority (CASA); Professor Duncan Campbell, Director of the Australian Research Centre for Aerospace Automation (ARCAA), School of Electrical Engineering and Computer Science, Queensland University of Technology; Dr Reece Clothier, Senior Lecturer, School of Aerospace, Mechanical and Manufacturing Engineering, RMIT University
• International/Domestic Update Session: Nick Humphrey, Legal Advisor, Emirates; Kevin Sutherland, Partner, Clyde & Co LLP US; Richard Davis, Partner, HWL Ebsworth Lawyers

• Passenger Rights: Michael Gill, Senior Legal Counsel, International Air Transport Association (IATA); Louise-Hélène Senecal, Assistant General Counsel, Air Canada; Kate Eastman SC, Barrister, St James Hall Chambers 
• Aircraft Causality – Mock Mediation:  James Chaplin (Panel Mediator), James Chaplin Mediation Inc, Florida; Stuart Fraenkel, Partner, Kreindler & Kreindler LLP, California; Charles Coleman, Partner, Holland & Knight, San Francisco; Mert Hifzi, Holman Fenwick Willan Singapore LLP, Singapore; Marko Nincovic, QBE, London; Gerard Forlin QC, Barrister, Cornerstone Barristers, London 

For further information visit the ALAANZ website or access the registration form here.

An executor’s duty

The relationship between an executor and beneficiary of an estate is similar to the relationship between a trustee and beneficiary. In Lee’s Manual of Queensland Succession Law [1] the learned author states:

“… [i]n addition to the fact that the Trusts Act 1973 defines the word “trustee” as including personal representatives, there can be no doubt that personal representatives’ obligations are quite as compelling as trustees’ obligations. There is property and there are persons entitled to it, namely the creditors of the deceased and those entitled to benefit under the will or intestacy. It may well be that a particular beneficiary cannot claim a proprietary right to any given property during the administration period and has only personal rights of action. However, that does not differ markedly from the case of a beneficiary under a discretionary trust, who likewise has no proprietary rights, but merely personal rights against the trustee.”

As such, the relationship between executor and beneficiary is one of the archetypal fiduciary relationships. [2] While Australian Courts generally agree on the nature of fiduciary duties, a comprehensive and accepted statement of those hallmarks or indicia of a relationship that attracts fiduciary duties has proven so elusive that the former Chief Justice of the High Court, Sir Anthony Mason, described the fiduciary relationship as “a concept in search of a principle”. [3] There is no doubt that the relationship between the executor and the beneficiary is nevertheless one which attracts the broadly described duties of trust and confidence.

CONFLICT OF DUTY AND INTEREST OF THE EXECUTOR / BENEFICIARY

Collett v Knox [2010] QSC 132

Recent cases evidence that the conflict of duty and interest for an executor who is also a beneficiary, is becoming an increasing source of litigation. The examples are numerous, but a particularly good example is found in the decision of Justice McMeekin in Collett v Knox [2010] QSC 132.

The applicant [4] made a claim for further and better provision out of the estate of his deceased’s defacto. At the time of trial he was wheelchair bound, partially blind and deaf, and aged 100 years. Essentially the point of dispute was whether the applicant was the defacto partner of the deceased. The estate was extremely modest comprising effectively of $1,100 in cash and otherwise a property valued at about $500,000 where the deceased and her defacto had lived for about 34 years prior to the deceased’s death. The applicant was seeking to be given a life interest in that property.

The issue of whether the applicant was the deceased’s defacto comprised a significant amount of evidence at the trial. Ultimately his Honour concluded that the applicant was a defacto.

The respondent executors to the application were the deceased’s son and his wife. They were also the remainder beneficiaries of the estate.

The executors contended that the applicant was merely a boarder in the deceased’s home throughout the course of the 34 years during which they lived together. The respondents forcefully advanced a case to demonstrate that the applicant was not the deceased’s de facto.

Having found that the applicant was in fact the deceased’s defacto spouse, the court turned to consider the executors conduct in the defence of the proceedings. The legal fees incurred by the executors was said to total over $70,000 whilst the applicants own costs were estimated at between $25,000 and $30,000.

The executors maintained at the hearing that irrespective of the outcome of the proceedings, the property (being the one in which the applicant sought a life interest) would need to be sold to meet the estate’s legal costs and outlays.

Underlying that proposition, the court concluded, was the assumption by the executors that they had the right to tie the courts hands by incurring whatever costs they desired in the defence of the litigation, and in doing so, they were able to defeat the very order which the applicant sought, being the life interest in the house.

In considering this position his Honour reiterated the guiding principles that applied to executors in this context:

1. The executors had a duty to preserve the estate until the claim was resolved; [5]
2. Resort to generalisations that executors are entitled or obligated to uphold the will provide no guidance at all in some cases; [6]
3. Before embarking on expensive litigation the executors need to give careful consideration to what amounts they will expend and how best they should discharge their duties; [7]
4. Executors have a fiduciary duty to which they must have regard in conducting litigation affecting the estate; [8]
5. Executors have an obligation to objectively assess the evidence, impartially assess the merits of that application, and if necessary compromise the suit; [9]
6. Where executors are not disinterested bystanders (ie where self interest and duty potentially conflict) then there needs to be careful consideration of the options available and the wisdom of pursuing litigation regardless of the impact on the estate; [10]
7. The principle that ordinarily a trustee or executor is entitled as of right to be indemnified for expenses incurred before paying out the trust funds to anyone else only applies where the expenses have been reasonably and properly incurred; [11]
8. A trustee who, without the sanction of the Court [12] , commences an action or defends an action unsuccessfully, does so at his own risk as regards costs; [13]
9. Executors are not entitled to hide behind their appointment and claim that they have no choice but to litigate as hard as they can, incurring whatever expense they desire, and force their opponent to do the same, in an effort to defeat his claim and preserve their own interest. [14]

The important principle which is to be remembered from Collett’s case is that executors must be careful not to simply argue a case that propounds their own interests, but rather they must consider the interests of the estate as a whole. In other words, executors who find themselves in the position of defending an application for further and better provision which also affects their own personal interests because they are residuary beneficiaries cannot simply defend an applicant’s case on the thinly disguised basis that their own interests will be affected. Rather they must carefully weigh an applicant’s prospect of success when considering the reasonableness of their defence to the claim.

Costs consequences of executor’s breach of duty and interest

The determination of the question of costs in Collett’s case is particularly telling. The costs argument proceeded on the papers [15] . His Honour’s criticism of the executors’ conduct did not diminish with the passage of time. The evidence demonstrated that the applicant had made numerous offers of settlement which involved him receiving a life interest in the deceased’s property, all of which the executors rejected.

In finding that the executors had acted unreasonably in their defence of the proceedings, his Honour said:

1. The executors had failed to properly consider independent material which ought have influenced the decision to settle the applicant’s claim; [16]
2. That by the time of the mediation the executor’s ought to have formed a decision to compromise the claim, but it did not necessarily follow that all costs that the executors incurred up to that point in time were reasonably incurred; [17]
3. The executors had a fiduciary duty to discharge, and in dealing with such a small estate, they must have been conscious that they were substantially eroding that estate. [18]
4. Where executors effectively seek to protect their own interests by litigation it was “entirely appropriate” that the costs they incur come from their own share of the estate and not the other beneficiaries. [19]

Ultimately his Honour ordered:

1. That the applicant de facto have his indemnity costs out of the estate;
2. To the extent that those costs exceed $30,000, the payment of them be deferred until the expiration of the life interest;
3. The executors personally reimburse the estate for the moneys expended by them on litigation costs to the extent necessary to meet the cost order in favour of the applicant and to meet the administration costs;
4. The executors recovered their costs to the extent of $10,000 (their actual costs estimated at $70,000), payment of such indemnity recoverable only after the expiration of the life interest;
5. Otherwise the executors to bear their own costs.

Collett v Knox is a classic example of an executor faced with a conflict of duty and interest when he or she is both executor and beneficiary. As executors, they failed to:

1. Properly place all relevant material before the court both in support of the claim and against it;
2. Objectively asses the applicant’s prospects of success; and
3. Take reasonable steps to minimize the costs incurred by reaching a timely and proper settlement of the claim.

The executors’ defence of the proceeding appeared to be influenced by the executor’s interest as a beneficiary, and premised on the widely held misconception in estate matters that costs will always come out of the estate. It is simply not the law that whenever there is an argument about a will that the estate must pay everyone’s costs, including the executors’ own. Collett’s case demonstrates the incorrectness of this approach.

A similar view was more recently expressed by Peter Lyons J in Richards v Augustine (No 2) [2012] QSC 278 where in respect of an executors’ conduct of the defence of their sisters’ family provision application against their deceased’s father’s estate his Honour said:

“It is sometimes said that the primary duty of the person or representative is to uphold the will. [20] However, it has also been said over many years that it is the duty of executors either to compromise a claim for further provision out of an estate, or to contest it and to seek to uphold the provisions of the will. [21] In the present case, the respondents went well beyond what they were required to do by their duty to uphold the will. They had an obvious personal interest in opposing the applicant’s application. They appeared quite unwilling to recognise any merit in the applicant’s claim, though there seems to me to have been obvious reason for them to have done so. The fact that the costs of the proceedings have eaten up so much of the estate seems to me to be in no small part due to the approach taken by them to these proceedings. …”

Herrod & Ors v Johnston & Anor [22]

The Queensland Court of Appeal recently upheld an award of equitable compensation and compound interest [23] against executors in a case of an executor’s conflict of duty and interest in Herrod & Ors v Johnston & Anor. [24]

The deceased owned a leasehold interest in a property at Moonoomoo and ran a cattle business in partnership with the first and second defendants which comprised cattle, plant and equipment.

By the deceased’s will his sons, Harel and Robert, were to receive certain land as tenants in common in equal shares and daughters Harella, Leah and Rachael, were to receive deceased’s interest in partnership, together with residue of estate, as tenants in common in equal shares.

Harel and Rachael were appointed executors of will.

The plaintiffs, Harella and Leah, claimed that shortly after the death of the deceased, their brothers told them (incorrectly) that their interest in the partnership was worth $50,000 and pressed them to enter agreements surrendering interests for $55,000. Both plaintiffs agreed to the proposal after significant pressure was exerted over them by their brothers, however only one plaintiff entered into a formal written agreement.

In addition, funds that ought to have been treated as residue in which the plaintiffs were entitled to share were instead paid out to the widow. The brothers transferred the deceased’s share in the partnership to themselves in 1999 for payment of a specified sum, without complying with the notice requirements of the partnership agreement, and without actually paying any money to the estate for the value of the land. The brothers, after dissolving the partnership sold the property for a significant profit ($2.7M).

The plaintiffs alleged that the defendants acted in breach of trust and breach of fiduciary duty by engaging in self-dealing and a conflict transaction; engaging in transactions in order to benefit themselves to the detriment of the plaintiffs; misleading the plaintiffs by failing to account properly to them as trustees or fiduciaries; receiving trust property in breach of trust; and profiting from that property.

The defendants claimed that the plaintiffs were bound by their earlier agreements, which they contended were not vitiated or rendered unenforceable by any misrepresentation, undue influence or unconscionability. They contend that the agreements amounted to no more than a convenient way of administering the estate.

After a trial of the matter [25] which appears to have been primarily concerned with valuation evidence, the Chief Justice found that the value of the share of each of the plaintiffs in the estate was actually $159,475.54.

As to the agreement by the plaintiffs to forgo their interest in the estate for $55,000, his Honour the Chief Justice found the agreements were unenforceable on the grounds of both unconscionability and misrepresentation.

Specifically, His Honour found that each of the plaintiffs was in a special position of disadvantage vis-à-vis the defendants throughout the dealings which preceded the making of the agreements and the defendants acted unconscionably. This was because, amongst other things:

• The brothers were the only ones with the means to fully ascertain the value of the estate/partnership (eg number of cattle etc);
• The brothers stood to benefit financially and failed to advise the plaintiffs to seek independent advice;
• The parties religion (they were Jehovah’s Witness) meant men were the primary decision makers and in a position of dominance;
• The plaintiffs were still grieving;
• The brothers pressured that the matters had to be resolved urgently as they had to return to running the business.

His Honour also found that the brothers had misrepresented the value of the estate (namely number and value of cattle) and knew the information to be false.

It was held that the first and third defendants owed fiduciary duties in their capacities as executors of estate and the first and second defendants owed fiduciary duties to the estate and plaintiffs as partners and that all defendants had breached their fiduciary duties.

The first defendant breached his fiduciary duty:

• by purporting to transfer trust property to himself in the absence of fully informed consent of the beneficiaries (being the estate’s share of the partnership). That is, he failed to inform the plaintiffs of the value of the estate, give them a copy of the will or partnership agreement and they were not counselled to seek, and did not have, independent legal advice.
• (as executor) paying funds to the widow which ought to have been paid to the estate, not making payment to the plaintiffs under the agreement, and not meeting reasonable requests for information.

The second defendant breached his fiduciary duty by joining in with the first defendant in misrepresenting the value of the partnership assets and knowingly receiving trust property.

The third defendant breached her fiduciary duty as executor by joining with the first defendant in paying funds to the widow which ought to have been paid to the estate, acquiescing in her brothers’ taking the partnership interest; not making payment to the plaintiffs under the agreement, and not meeting reasonable requests for information.

The plaintiffs were found to be entitled to by election, to equitable compensation assessed in amount of $433,709.67 or account of profits.

Each of the plaintiffs swore to the use that she would have made of the monies had they been distributed to her properly from the estate by the executors. The chief Justice found that each of the plaintiffs would have put those monies to the best profitable use. Each had led a particularly frugal life with no inclination to waste financial resources when they became available. The intended uses were not advanced by the plaintiffs to found a claim for a loss of profits in particular ventures which were intended but not pursued, but as the basis for a computation of compensation in equity on a basis which surpasses the nominal.

His Honour held that the court had a discretion in computing equitable compensation to allow compound interest on the primary loss. That was on the basis of the default of the defendants as fiduciaries in improperly generating profits utilizing trust property to the detriment of the plaintiffs as beneficiaries.

His Honour considered the case was a prime one for an award of compound interest because the defendants invoked, as justification for their failure to discharge their fiduciary duties as executors or trustees, an agreement induced by fraudulent misrepresentation and tainted by unconscionability.

His Honour found that the brothers transferred the deceased ’ s interest in the partnership to themselves, without return to the estate, and Rachael (the sister executor) at the very least acquiesced in that. The brothers effectively took the benefits intended by the testator for his daughters and used them as a springboard for the acquisition of assets now of substantial worth.

The plaintiffs were entitled to elect therefore either equitable compensation with compound interest in a sum of over $430,000 or an account of profits. They elected equitable compensation.

The defendants appealed. Although there were a number of grounds of appeal, for the purpose of this paper, I propose only to deal with those that arise from the conflict of duty and interest of the executor beneficiary.

Muir JA [26] held that the strong findings of breach of duty and contumelious disregard of the interests of the beneficiaries supported an award of compound interest against the executors personally. His Honour observed that the orders for compound interest which were made by the primary judge were not imposed as a penalty, but with a view to ensuring that the respondent/plaintiffs were properly compensated and that no profit from the executors’ gross breach of trust remained in their hands [27] .

The Court of Appeal rejected the appellant’s contention that the primary judge has misapplied relevant principles by basing the award on what the respondents would have done with the subject monies had the estate been fully administered instead of focusing on the profits that the respondents made or were assumed to have made. Whilst the Court recognised that there were limited bases on which compound interest was traditionally awarded [28] the Court rejected that the authorities did not support the conclusion that the power to award compound interest was restricted, citing Hungerfords v Walker [29] where Mason CJ and Wilson observed:

“Equity has adopted a broad approach to the award of interest. It has long been accepted that the equitable right to interest exists independently of statute: Wallersteiner v. Moir [No. 2]. Equity courts have regularly awarded interest, including not only simple interest but also compound interest, when justice so demanded, e.g., money obtained and retained by fraud and money withheld or misapplied by a trustee or fiduciary: La Pintada. In admiralty, simple interest has been awarded in a variety of cases standing outside the authority conferred by statute. As Sir Robert Phillimore said in The Northumbria:

‘The principle adopted by the Admiralty Court has been that of the civil law, that interest was always due to the obligee when payment was not made, ex mora of the obligor; and that, whether the obligation arose ex contractu or ex delicto.’” ‖ (citations omitted)

Further, the Court referred to The Commonwealth v SCI Operations Pty Ltd [30] where McHugh and Gummow JJ referred to the passage in Hungerfords and said:

“It is true that in the administration of its remedies, equity followed a different path to the common law with respect to the award of interest. In cases of money obtained and retained by fraud and money withheld or misapplied by a trustee or fiduciary, the decree might require payment of compound interest.”

The judgment is a thorough consideration of the principles in relation to an award of compound interest. In the present context the important implication arising from executors who breach their fiduciary duties is the finding that the executors acting in breach of their fiduciary duty to the beneficiaries can be liable for both equitable compensation and compound interest. The appellants had a small win insofar as the Court of Appeal varied the rate of compound interest of 8% applied by his Honour the Chief Justice to 5%. [31]

Practice Point

What are the practical implications of the failure of the executor beneficiary, or even the executor who is aligned by blood, marriage or financial interest, to one of the beneficiaries, in failing to place all relevant evidence before the Court, both positive and negative? It is a rare case indeed to see an executor place all relevant evidence in their affidavit material in defence of a family provision application, let alone the evidence that it is positively in support of the applicant’s case. Rather it is the common circumstances in practice to find the executor who deliberately withholds information which he or she knows is favourable to the applicant’s case. Collett’s case provides a good basis for arguing against an executor’s entitlement to indemnity costs out of an estate in circumstances where it can be demonstrated that the executor has failed to faithfully discharge that obligation to place all relevant information before the court.

EXECUTOR’S DUTY TO INFANTS AND THE UNBORN

According to the learned authors de Groot and Nickel ^[32] it is appropriate in all cases where persons under a disability are beneficiaries that a litigation guardian be appointed to protect their interests. The authors express the opinion that during the period before appointment of litigation guardian, the personal representative has the responsibility which would otherwise repose in the litigation guardian themselves ^[33] .

Further, the learned authors at para 7.28 say:

“Where there is no one willing and capable of acting as a litigation guardian/guardian ad litem or tutor, it may be that the personal representative is under a duty to do so. There is no doubt that, where the personal representative cannot obtain effective direction, it is his or her responsibility to protect the interests of the infant to the full and a court should not put the personal representative in a position where he or she cannot do so.”

Respectfully, this must be the correct position, but it is surprising the frequency with which a personal representative not only does not seek to appoint a litigation guardian to protect the interests of infants, those under some other disability, or the unborn, let alone purport to protect those interests themselves.

An example which I encountered in recent years was the case of a man who died leaving behind his de facto spouse and a child only a few weeks old. The deceased had made a will in favour of his siblings and parents shortly before he knew his de facto was pregnant, and did not get around to changing it before his death. The executors were members of the deceased’s family so knew of the birth of his child only weeks before his death. Despite this, and knowing that no provision was made for the de facto or the child in the will, the executors commenced transmitting the deceased’s assets to his siblings and parents immediately after the expiration of the six month period from the deceased’s death [34] but before the expiration of the nine month period within which a family provision application might be brought [35] on behalf of the infant.

The solicitors acting for the executors sought to justify the executors’ actions on the basis that they had waited until six months after the date of death before commencing to transfer assets out of the deceased’s estate, and that they were under no obligation to protect the interests of the infant.

Plainly in my view, and consistently with the views of the learned authors de Groot and Nickel, the personal representative was under a duty to act in the interests of the infant and, knowing of the infant’s existence, and that no provision had been made for the child, it was incumbent upon them to have appointed a person to act as litigation guardian on the infant’s behalf for the purpose of bringing a claim or, at the very least, sought a direction from the Court as to whether they should or should not appoint someone to represent the infant’s interests. I have little doubt that in all but the most unusual cases, a Court would order an executor to appoint someone to represent the infant’s interest.

This of course is but one example; there are many such examples where executors, often motivated by self-interest, choose to ignore the rights of disabled beneficiaries, infants, the unborn or those without capacity so as to proceed to administer the estate in the interests of other beneficiaries, often the executors themselves.

Counsel’s role in being alert to the possible existence and rights of such a beneficiary as without capacity is important. The executor is in a fiduciary relationship with these beneficiaries without capacity and it is incumbent upon Counsel acting for executors to understand their professional responsibility in giving advice to those executors.

The other related area of concern in relation to the protection of infants and the unborn is in the question of proper construction of the terms of the will. Often it is the case that a will is capable of a number of different constructions, some of which would then benefit the interests of infants and the unborn while an alternative construction would be against their interests. The proper procedure in relation to those cases is again to ensure that a litigation guardian is appointed on behalf of all of the infants or unborns (assuming that their interests are the same), and that party then appears on the construction application to advance arguments of construction that would favour the infants. Ordinarily, this procedure is best served by the appointment of a specialist independent solicitor as the litigation guardian.

As a matter of course the litigation guardian so appointed is indemnified out of the estate for the costs of so appearing on behalf of the infants. [36]

EXECUTORS DEALING WITH DISAGREEMENTS WITH OR AMONGST BENEFICIARIES

It is not infrequently the case that executors have to deal with disagreements with beneficiaries. The classic circumstance is where the executor is a disinterested third party, often a solicitor, accountant or family friend, and the beneficiaries are the members of the deceased’s family. An executor may wish, for example, to compromise an applicant’s claim for further and better provision out of the deceased’s estate against the wishes of the beneficiaries. Alternatively, the executors may have a certain view about the proper construction of the will and the beneficiaries do not share that view. The executor however has a fiduciary duty to which they must have regard in conducting litigation affecting the estate [37] and they must act in accordance with that duty.

Two recent cases highlight the importance of taking steps early to protect the position of the executor who finds him or herself in disagreement with beneficiaries by applying to the Court pursuant to section 96 of the Trusts Act 1973 or pursuant to section 6 of the Succession Act 1981 for directions.

Section 96 of the Trusts Act provides:

“96 Right of trustee to apply to court for directions

(1) Any trustee may apply upon a written statement of facts to the court for directions concerning any property subject to a trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee.

(2) Every application made under this section shall be served upon, and the hearing thereof may be attended by, all persons interested in the application or such of them as the court thinks expedient.”

Section 6 of the Succession Act provides:

6 Jurisdiction

(1) Subject to this Act, the court has jurisdiction in every respect as may be convenient to grant and revoke probate of the will or letters of administration of the estate of any deceased person, to hear and determine all testamentary matters and to hear and determine all matters relating to the estate and the administration of the estate of any deceased person; and has jurisdiction to make all such declarations and to make and enforce all such orders as may be necessary or convenient in every such respect.

(2) The court may in its discretion grant probate of the will or letters of administration of the estate of a deceased person notwithstanding that the deceased person left no estate in Queensland or elsewhere or that the person to whom the grant is made is not resident or domiciled in Queensland.

(3) A grant may be made to such person and subject to such provisions, including conditions or limitations, as the court may think fit.

(4) Without restricting the generality of subsections (1) to (3) the court has jurisdiction to make, for the more convenient administration of any property comprised in the estate of a deceased person, any order which it has jurisdiction to make in relation to the administration of trust property under the provisions of the Trusts Act 1973.

(5) This section applies whether the death has occurred before or after the commencement of this Act.”

Effectively both section 6 of the Succession Act and section 96 of the Trusts Act provides the executor/trustee with an opportunity to make an application for directions concerning any property subject to a trust, or respecting the management or administration of the property, or respecting the exercise of any power or discretion invested in the trustee [38] .

The legislative scheme is founded on the premise that it is desirable that a trustee (or executor) in doubt as to a course of action should not proceed with it and seek relief later, but should seek advice first. [39]

Two such examples came before McMeekin J in Rockhampton in 2011.

In Public Trustee of Queensland v MacPherson [2011] QSC 169 the Public Trustee was the administrator of the estate of the deceased and he applied pursuant to section 134 of the Public Trustee Act 1978 for the opinion and direction of the Court as to whether he should settle family provision proceedings which were pending in the District Court.

The deceased had died leaving three adult children Eric, Pamela and David. Pamela and David brought family provision applications which were opposed by their brother Eric. The evidence demonstrated that the Public Trustee was having difficulty in obtaining instructions from Eric to enable it to file an affidavit or to comprise the proceedings.

The Public Trustee convened a settlement conference in which agreement was reached, in principle, to settle the family provision applications subject to the advice of the Court as to whether he ought to compromise the applications on the terms offered or whether he should require the proceedings to be tried. The estate was a very modest one, worth a little over half a million dollars at the date of death and comprising, substantially, the value of a house property gifted to Eric in the deceased’s will. The costs incurred had been substantial and the Public Trustee’s concern was that the costs were eroding the estate. Furthermore, the compromise which had been reached was very modest. David was prepared to withdraw his application whilst Pamela was to receive a 15% increase in her entitlement which amounted to about $15,000.00. This would have had the effect of reducing the respondent’s share of the residue by the similar sum.

His Honour accepted that the Public Trustee was right to be concerned about the ongoing litigation. He observed that in circumstances where the compromise suggested was eminently reasonable then it was likely that the Court would make an order altering the terms of the deceased’s will and, if that occurred, then it was unlikely that the respondent’s position could be any better than the terms proposed and was likely to be considerably worse given the probable costs of a trial. [40]

Referring to section 134 of the Public Trustee Act 1978 (Qld) his Honour observed that the High Court had emphasised that the provision:

“operates as ‘an exception to the Court’s ordinary function of deciding disputes between competing litigants’; it affords the facility for giving ‘private advice’. It is private advice because it’s function is to give personal protection to the trustee.” [41]

The Court therefore was not balancing two competing arguments of litigating parties but rather was being asked to provide advice and direction to enable the Public Trustee to properly discharge the duties of his office including the duty to protect the interests of Eric as best as could be done in the circumstances. His Honour went on:

“[21] A further point made by the High Court in Macedonian Orthodox Community Church is relevant here. While the Public Trustee seeks to be personally protected he also seeks to protect the estate which he has the task of administering. The plurality said:

“Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee’s fear of personal liability for costs.

It is, therefore, not right to see a trustee’s application for judicial advice about whether to sue or defend proceedings as directed only to the personal protection of the trustee. Proceedings for judicial advice have another and no less important purpose of protecting the interests of the trust.” [42]

In the circumstances, McMeekin J concluded that there was “little doubt” that the interests of the estate were protected by proceeding with the proposed compromise. That approach accorded with the statement of the High Court and the fundamental principle identified by the Privy Council in Marley v Mutual Security Merchant Bank and Trust Co Ltd [1991] 3 All ER 198 at 201:

“In exercising its jurisdiction to give directions on a trustee’s application the Court is essentially engaged solely in determining what ought to be done in the best interests of the trust estate and not in determining the rights of adversarial parties.”

A further similar such application was heard by McMeekin J in Kowalski v Public Trustee & Ors [2011] QSC 323.

Naturally the application for directions can, and should, be brought in a range of other different factual circumstances such as whether to prosecute or defend a proceeding. [43]

However the procedure is an important one to remember in the context of estate litigation, particularly family provision applications, where it is commonly seen that there is a beneficiary who brings an intransigent and unreasonable approach to settlement negotiations and who cannot be encouraged to reach a reasonable compromise in circumstances where it is the interests of the estate as a whole.

R.M.TRESTON

Footnotes

1. Sixth Edition at [9.20].
2. Equity and Trusts in Australia, Dal Pont and Chalmers (Third Edition) at [4.65].
3. Themes and Prospects in Finn (Ed, Essays in Equity, Law Book Company, 1985) page 246.
4. There were in fact two applicants, but this paper focuses solely on the defacto husband
5. Per McMeekin J at [165].
6. Per McMeekin J at [166].
7. Per McMeekin J at [166].
8. Per McMeekin J at [166].
9. Per McMeekin J at [167].
10. Per McMeekin J at [170].
11. Per McMeekin J at [174].
12. Section 96 Trusts Act direction of the court.
13. Per McMeekin J at [175].
14. Per McMeekin J at [180].
15. Collettt v Knox (No 2) [2010] QSC unreported, delivered 29 June 2010.
16. Collettt v Knox (No 2) p er McMeekin at [33].
17. Collettt v Knox (No 2) p er McMeekin at [38].
18. Collettt v Knox (No 2) p er McMeekin at [40].
19. Collettt v Knox (No 2) p er McMeekin at [40].
20. See for example De Groot and Nickel Family Provision in Australia (4th ed) para 6.6.
21. Re Lanfear (1940) 57 WN (NSW) 181, 183; Re Hall (1959) 59 SRNSW 219, 226-227; Vasiljev v Public Trustee [1974] 2 NSWLR 497, 503; see also Szlazko v Travini [2004] NSWSC 610 at [11]; Re Scali [2010] NSWSC 1254 at [10].
22.  [2012] QCA 360, decision of Muir, Gotterson JJA and Applegarth J.
23. Although the rate of interest was reduced from 8% to 5%.
24. [2012] QCA 360.
25.   [2010] QSC 98 per de Jersey CJ.
26.   At [50].
27. At [50] .
28. Per Muir JA at [29] and the authorities referred to therein.
29. (1989) 171 CLR 125 at 148.
30. (1998) 192 CLR 285 at 316.
31. Per Muir JA at [55].
32. “Family Provision in Australia” Third Edition para 6.13.
33. Vasiljev v Public Trustee [1974] 2 NSWLR 497 at 504, where this duty is implied at line D.
34. Section 44(3) Succession Act.
35. Section 41(8) Succession Act.
36. For examples see Trust Company Ltd v Zdilar [2011] QSC 5; Simpson v Simpson & Ors [2011] QSC 196.
37. Underwood v Sheppard [2010] QCA 76 per Holmes JA at [16].
38. Macedonian Orthodox Community Church St Petkainc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66.
39. In re Beddoe; Downes v Cottam [1893] 1 Ch 547.
40. Per McMeekin J at [8].
41. Macedonian Community Church case per Gummow ACJ, Kirby, Hayne and Heydon JJ at [64].
42. At [71]-[72].
43. Loughnan v McConnell [2006] QSC 359 ; Thomas Nominees Pty Ltd v Thomas and Ors [2010] QSC 417; Glassock v The Trust Company (Australia) Pty Ltd [2012] QSC 15.

Accounting evidence can be either:

(a) Factual evidence; and/or

(b) Opinion evidence.

Evidence which is not opinion evidence

In Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd [2011] FCAFC 55 (20.04.11), a unanimous decision of the Federal Court consisting of Keane CJ, Lander and Besanko JJ stated that:

“203. The exercise carried out by Mr Acton is often carried out by expert forensic accountants who identify the financial documents which are relevant to the inquiry. To the extent necessary, the documents are explained including their contents in order that the Court can understand the company’s business. They are often explained to establish some trend in the company’s business activities both before and after the cause of action arose. The Court could carry out the inquiry for itself. It could have regard to the underlying source documents and construct for itself the trends upon which reliance is put. However, the practice is to have forensic experts carry out the exercise in advance of the hearing in order to save the Court the time and trouble of the exercise. It is an appropriate way of presenting evidence relating to the financial affairs of a company which claims to have suffered a loss. Their evidence assists a Court in understanding transactions which involve complex accounting treatments. The evidence is a summary of the financial records of the company and admissible: Potts v Miller [1940] HCA 43 ; (1940) 64 CLR 282 per Dixon J at 302-303. It is not opinion evidence at all. It is a summary of the company’s financial records.

204. In Australian Securities and Investments Commission v Rich [2005] NSWSC 149 ; (2005) 53 ACSR 110 , Austin J when speaking of forensic accountants said at [272]:

‘It seems to me that some of the work of a forensic accountant is to be treated as admissible in the same fashion as scientific facts. Suppose the report of a forensic accountant contains a complex financial calculation. The result of the calculation is not an opinion because, if the calculation is done correctly and the financial records from which it has been derived are proven, it is true as an analytic mathematical proposition without reliance on any inferences or questions of judgment. The expert’s work is mathematical and analytical rather than based on scientific observation, but in both cases there is a factual conclusion, admissible as evidence of fact, derived from the application of specialised knowledge.’”

In Potts v Miller (1940) 64 CLR 282 at 303, Dixon J states that when:

“Books are allowed in evidence or their production is not insisted upon, an accountant’s statement of the result of his examination is receivable as the evidence of a person of skill”.

In ASIC v Rich [2005] NSWSC 149, Austin J stated that:

“What the accountant is permitted to do, according to Street CJ in Lakeman v Finlay (1959) 59 SR(NSW) 5, at 7, is to ‘summarise and give his opinion as to the trading results or financial results disclosed by the figures contained in the books which are in evidence’. In R v Hally [1962] Qd R 214, at 228, Gibbs J said the accountant who has examined ‘books and accounts’ could give evidence of ‘the effect of their contents’. In Re Montecantini’s Patent (1973) 47 ALJR 161, at 169, he said that when books are produced, the accountant may ‘state their general effect’.”

Austin J in ASIC v Rich referred to the requirement of “specialised knowledge”. The Common Law and s.79 of the Uniform Evidence Legislation which is applicable to the Commonwealth and New South Wales, Tasmania, Victoria and the Australian Capital Territory and Norfolk Island has adopted a test of whether “the subject matter of inquiry is such that inexperienced persons are unlikely to prove capable of forming a correct judgement upon it without such assistance. (Refer Clark v Ryan (1960) 103 CLR 486 at 491)

At paragraphs 277 and 278 of ASIC v Rich, Austin J stated that:

“277. Obviously accountancy and auditing are fields of expertise (cf S Adrogue and A Ratcliff, ‘Kicking the Tires after Kumho: The Bottom Line on Admitting Financial Expert Testimony’ (2000) 37 Houston Law Rev 431, at 477), but there is also, in my opinion, a field of expertise that extends further into the interpretation and analysis of complex financial information, going beyond the preparation and auditing of financial statements. It is a broader field of expertise, relating to the assessment of the financial health of a business enterprise. Thus, in Quick v Stoland, Branson J recognised that a qualified accountant who is also an insolvency practitioner may have a field of specialised knowledge which goes beyond accountancy. She said (at 375):

‘Corporate accounts, and corporate accounting practices, have become increasingly complex. I consider that it is generally recognised that persons with training, study and experience of the kinds enjoyed by Mr Madden possess peculiar skills in an area in which ‘inexperienced persons are unlikely to prove capable of forming a correct judgment upon it without such assistance’ [citing JW Smith’s notes to Carter v Boehm].’

278. This broader field of expertise, generally relating to understanding the financial health of a business enterprise, is the realm of forensic accountants. It has been said that ‘their role is really to assist the court to understand the financial information, using their skills to organise, display and communicate financial information’ (J Gibson, ‘Forensic Accountants Getting the Scent’ (1993) 28 Australian Lawyer 40, at 41), or to ‘help explain complex financial and accounting issues raised in criminal and civil proceedings’ (D van Homrigh and M Garnett, ‘Forensics’ New Bloodless Hounds’ (2001) 21 Proctor 16, at 17). Thus, in modern litigation forensic accounting evidence is admitted to assist, not only in determining the state of insolvency of the company at the particular time as in Quick v Stoland, but in a variety of other broadly similar financial tasks, exemplified from Australian cases decided in the recent past as follows:· calculation of present or future economic loss (eg Rigney v Browne [2004] QSC 265, Dallas v P & M Denton Building and Constructions Pty Ltd [2003] NSWSC 833);· quantification of loss of earning capacity (eg Fail v Hutton [2004] QCA 61);· quantifying profit or calculating loss of profit (eg Fidgeon v Westpac Banking Corporation [2002] VSC 85, Hartglen Pty Ltd v Geoff Mitchell & Associates Pty Ltd [2004] QSC 67);· business valuation or the calculation of a partnership share (South Australian River Fishery Association v South Australia [2003] SASC 38; (2003) 84 SASR 507, Fagenblat v FGT Custodians Pty Ltd [2004] VSC 196); and· a variety of other financial work such as calculating an amount owing (Magill v National Australia Bank Ltd [2001] NSWCA 221), or quantifying amounts allegedly stolen (Idea Technology Services Pty Ltd v Nguyen [2002] QSC 432), or quantifying unexplained income (R v Donovan Kimball Christie [2003] QCA 413).

…

310. These observations seem to envisage a straightforward summary of the financial evidence, rather than an elaborate analysis. Thus, Young J, writing extra-curially, referred to an ‘expert summary of books and financial records’ [emphasis supplied]: ‘Practical Evidence — Affidavits – Part II’ (1982) 66 ALJ 298. In Spassked Pty Ltd v Federal Commissioner of Taxation (No 2) [2002] FCA 489; (2002) 49 ATR 642, at [13]-[14] Lindgren J referred to Potts v Miller as permitting the accountant who has inspected financial records to ‘summarise their effect’ in evidence. So far as one can tell from the law reports, the evidence to which the older cases was directed was not the kind of elaborate analytical report that is under consideration the present case.

311. One can understand that where the accountant’s evidence is understood to be merely a summary of books and records which have been produced or identified, elaborate reasoning will be unnecessary and there will be no practical issue as to the identification of the assumed facts, because it’s books and records will be identified. It is therefore not surprising that the older cases assert, without qualification, that the accountant’s summary of the books and records is admissible. That is not to say that accountants’ reports are exempt from the general principles as to admissible expert opinion evidence. Rather, the point is that compliance with the general principles will be obvious or can be readily established. As Giles JA said in Adler v ASIC (2003) 179 FLR 1, at [631], what is required by way of the explanation of which Heydon JA in Makita will depend on the circumstances. Thus (at [632]):

‘A solicitor shown to have specialised knowledge of conveyancing practice can give opinion evidence of general conveyancing practice without spelling out links between his training, study and experience and his opinion. The links are apparent from the nature of the specialised knowledge.’

Similarly an accountant can give evidence summarising books and records of a business enterprise without having to spell out the link between his or her opinions and specialised knowledge.”

Specialised knowledge is not normally required for a judge to read financial statements. Refer ASIC v Rich para 280; Quick v Stoland 87 FCR 379 per Emmett J and Switz Pty Ltd v Glowbind Pty Ltd (1999) NSWSC 1296 at 35. In ASIC v Rich, Austin J stated at para 284:

“284. In Switz Pty Ltd v Glowbind Pty Ltd [1999] NSWSC 1296, at [35], I drew from Quick v Stoland the proposition that if there is evidence in the form of financial statements which the court can read for itself, the opinion of an accountant based solely on those statements is not based on specialised knowledge for the purposes of s 79; but if the accountant’s report contains some financial analysis based on financial statements or accounting records, the accountant’s opinion is to that extent admissible as expert opinion evidence.”

In Quick v Stoland, Emmett J at 379 stated in relation to accounting evidence that:

“… could bring his or her specialised knowledge to bear on the analysis of accounting records, expected cash flows, liquid and realisable assets such as debtors and the like.”

Cross on evidence at (29020) states that:

“An expert can be called to carry out complex mathematical calculations.”

Many accountancy reports which are provided in actions for damages for personal injuries which purport to calculate past and future economic loss fall within this first category i.e. it is not opinion evidence. The reports usually provide a summary of past earnings, a calculation of tax rates, and assumptions are usually stated upon which an increase in earnings are based and various calculations performed.

Opinion evidence

“Opinion” means any inference drawn from observed facts (cross on evidence 29010); Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 5)(1996) 64 FCR 73 at 75 per Lindgren J; Quick v Stoland [1998] FCA 1200; Lithgow City Council v Jackson [2011] HCA 36.

The following conditions exist for the admissibility of expert evidence:

(a) There must be a field of specialised knowledge;

(b) There must be an identified aspect of that field in which the witness demonstrates that, by reason of specified training, study or experience, the witness has become an expert;

(c) The opinion proffered must be wholly or substantially based on the witness’s expert knowledge;

(d) So far as the opinion is based on facts “observed” by the expert, they must be identified and admissibly proved by the expert;

(e) So far as the opinion is based on assumed facts, they must be identified and proved in some other way;

(f) It must be established that the facts on which the opinion is based form a proper foundation for it;

(g) The opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached. That is, the expert’s evidence must explain how the field of specialised knowledge in which the witness is expert by reason of training, study or experience, and on which the opinion is wholly or substantially based, applies to the facts assumed or observed so as to produce the opinion propounded (refer cross on evidence at 29045 and Makita (Australia) Pty Ltd v Sprowles (2001) NSWCA 305 at [85]).

In ASIC v Rich, Austin J stated:

“312. The question of compliance with the general Makita requirements will come to prominence where the accountant’s evidence is more than a mere summary, and where the subject matter extends beyond a contained set of books and records. In such cases compliance with the general requirements will involve ‘questions of degree, requiring the exercise of judgment’ (Makita, at [87] per Heydon JA), remembering that the question under s 79 is whether the opinion is substantially based on the specialised knowledge and ‘absolute certainty … is not required’ (Adler, at [632] per Giles JA).”

In Quick v Stoland, Branson J at 375 stated that a statement by an accountant and insolvency practitioner made on the basis of an examination of financial accounts and other company records, that a particular company is or is not insolvent, is an expression of opinion rather than a statement of fact.

Does the factual basis of the accountancy report have to be proven?

There is difference in the approach by some of the State jurisdictions and the Federal Court.

In Makita (Australia) Pty Ltd v Sprowles, Heydon JA interpreted s.79 to require identification and proof of the factual basis of an opinion, and the exposure of the expert’s reasoning process in order to demonstrate that an opinion is based on specialised knowledge.

Other jurisdictions have held that the basis of an opinion is an issue which affects the opinion’s weight as distinct from its admissibility.

The High Court recently referred to but specially did not decide the applicability of the Common Law rule that opinion evidence is excluded unless the factual bases upon which the opinion is proffered are established by other evidence. (Refer Dasreef Pty Ltd v Hawchar [2011] 277 ALR 611, 622 [41] French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ.) This is known as the “basis rule”. However, the Court stated at paras 41 and 42:

“41. Contrary to submissions on behalf of Mr Hawchar, this analysis does not seek to introduce what has been called ‘the basis rule’: a rule by which opinion evidence is to be excluded unless the factual bases upon which the opinion is proffered are established by other evidence. Whether that rule formed part of the common law of evidence need not be examined. It may be accepted that the Law Reform Commission’s interim report on evidence denied the existence of such a common law rule and expressed the intention to refrain from including a basis rule in the legislation the Commission proposed and which was later enacted as the Evidence Act 1995 (Cth) and the Evidence Act 1995 (NSW). What has been called the basis rule is a rule directed to the facts of the particular case about which an expert is asked to proffer an opinion and the facts upon which the expert relies to form the opinion expressed. The point which is now made is a point about connecting the opinion expressed by a witness with the witness’s specialised knowledge based on training, study or experience.

42. A failure to demonstrate that an opinion expressed by a witness is based on the witness’s specialised knowledge based on training, study or experience is a matter that goes to the admissibility of the evidence, not its weight. …”

Experts can base their opinions on sources. (Refer Bodney v Bennell (2008) 167 FCR 84, 92-93.)

In an article titled “Admissibility of Expert Evidence: Proving the basis for an expert’s opinion”, Sydney Law Review 2011 Vol 33 427 at 432 the author lists several authorities which support the proposition that the basis rule exists as a rule of admissibility and other authorities which state that it is a matter of weight p.433.

The Australian Law Reform Commission (“the ALRC”) in recommending the Uniform Evidence Legislation noted that there was uncertainty whether the Common Law basis rule operated as a criterion of admissibility or merely of weight. The ALRC concluded that the better view was that there was no basis rule which operated as a rule of admissibility. The ALRC stated that:

“It is proposed to refrain from including a basis rule in the legislation, thus allowing opinion evidence whose basis is not proved by admitted evidence prima facie to be brought before the court. Under these circumstances the weight to be accorded to it will be left to be determined by the tribunal of fact.”

The Federal Court has not embraced Makita. Refer Sydneywide Distributors v Red Bull Australia (2002) 55 IPR 354 where the Court concluded that s.79 did not require the identification of the assumptions for an opinion, proof of the factual assumptions or the reasoning process to be exposed. Refer also Neowarra v Western Australia (2003) 134 FCR 208.

In Dasreef Pty Ltd v Hawchar (2011) 277 ALR 611 to 628 [62] the majority stated that:

“In order for Dr Basden to proffer an admissible opinion about the numerical or quantitative level of Mr Hawchar’s exposure to silica dust it would have been necessary for the party tendering his evidence to demonstrate first that Dr Basden had specialised knowledge based on his training, study or experience that permitted him to measure or estimate the amount of respirable silica to which a worker undertaking the relevant work would be exposed in the conditions in which the worker was undertaking the work. Secondly, it would have been necessary for the party tendering the evidence to demonstrate that the opinion which Dr Basden expressed about Mr Hawchar’s exposure was wholly or substantially based on that knowledge.”

At paragraph 32 the majority stated that s.79 required the two criteria, i.e.:

“The first is that the witness who gives the evidence ‘has specialised knowledge based on the person’s training, study or experience’; the second is that the opinion expressed in evidence by the witness ‘is wholly or substantially based on that knowledge’.”

Disclosure by the expert of his or her reasoning process

It is necessary for the expert to disclose the reasoning which led to the expert’s opinion. (Refer Makita at para 85.)

In Clowyn v Tameside Health Authority [1998] 2 ALL EN971 at 976-7, Bracewell J expressed the view that the information supplied to the expert should be disclosed “in order to ascertain whether all appropriate information was supplied and how the expert dealt with it”.

If the opinion is based on inadmissible evidence

In ASIC v Rich, Austin J stated:

“320. In its Interim Report No 26 (1985), Evidence (vol 1, para 161), the Australian Law Reform Commission described the status, at common law, of opinion evidence based on material that has not been admitted into evidence as ‘a matter of some controversy’. On one view of the common law, evidence of an expert’s opinions is inadmissible unless the assumed or accepted facts on which the opinions are based are proven, or at least are sufficiently like the proven or admitted facts (without precise correspondence) to make the opinions relevant and probative: Paric v John Holland Constructions Pty Ltd [1985] HCA 58; (1985) 59 ALJR 844, at 846 per Mason CJ, Wilson, Brennan, Deane and Dawson JJ. Another view is that proof of the assumed or accepted facts, or facts sufficiently like them, is not a prerequisite to admissibility but goes only to weight: Ramsay v Watson [1961] HCA 65; (1961) 108 CLR 642, at 649; see also Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141. The Commission described the former alternative as ‘the basis rule’.

321. The Commission concluded that the better view was that the basis rule does not exist, and the fact, if it be so, that the expert’s opinions do not have their basis in admitted evidence, goes to weight rather than admissibility: Report 26, vol 1, para 760. The focus of the Commission’s attention seems to have been the problem that if there is a basis rule, expert opinion evidence will be impossible where the basis of the opinion is the views and assistance given by other experts in the field: see Report 26, paras 362-3, 750. In other words, the problem upon which the Commission concentrated was the case where the basis for the expert’s opinion is hearsay. The Commission decided not to include a basis rule in its draft legislation, because such a rule would be too inflexible to take into account ‘the normal means by which experts generally form their opinion – by means of reports of technicians and assistants, consultation with colleagues and reliance on a host of extrinsic material and information that it would be an endless and unfruitful task with which to burden the courts’. The Commission decided to leave it to the courts to exercise a ‘relevance discretion’ to control the admissibility of expert opinion evidence based on hearsay material.”

In ASIC v Rich, Austin J stated:

“326. Where an expert’s opinion is based on a number of facts, some of which may be proven only by inadmissible evidence while others are amenable to proof in the ordinary manner, the position is more difficult. In Pownall v Conlan Management Pty Ltd, 16 ACSR at 233, Ipp J contemplated that in some cases it will be possible for the evidence to be trimmed, with the objectionable material being discarded so that the legitimate evidence remains. He added:

‘But there may be cases where the inadmissible and the admissible evidence is so intertwined that they cannot readily be separated. In such an event, the entire body of evidence will be rejected. The same result follows where it is not possible to say which of the evidence is admissible in which is not, or to what degree the witness has relied on inadmissible evidence.’”

John Kimmins

Disclosure

In pre court proceedings the rules relating to disclosure are covered under the Motor Accident Insurance Act 1994.

Once proceedings have commenced the obligations continue. It is important to note that parties must also comply with the disclosure obligations under the Uniform Civil Procedure Rules 1999.

The obligations under the Motor Accident Insurance Act continue even after proceedings have issued.

In the matter of Angus and Cornelius & Suncorp Metway¹ the Court of Appeal held that S45(3) expressly states that the obligation to provide information continues until the claim is resolved.

Definition of a ‘Document’

Section 36 of the Acts Interpretation Act 1954 provides that a document includes:

• Any paper or other material on which there is writing;
• Any paper or other material on which there are marks, figures, symbols or perforations having a meaning for a person qualified to interpret them;
• Any disc, tape or other article or any material from which sounds, images, writings or messages are capable of being produced or reproduced (with or without the aid of another article or device).

Also, the increasingly widespread usage of social media sites such as Facebook, Twitter and Instagram have caused litigation practitioners to reconsider the extent of their disclosure obligations.

Motor Accident Insurance Act 1994

Section 45 — Duty of claimant to cooperate with insurer

“(1) A claimant must cooperate with the insurer and, in particular—

(a) must provide the insurer with copies of reports and other documentary material (including written statements made by the claimant or by witnesses) in the claimant’s possession about the circumstances of the accident or the claimant’s medical condition or prospects of rehabilitation; and

(b) must give information reasonably requested by the insurer about—

(i) the circumstances of the accident out of which the claim arose; and

(ii) the nature of the injuries resulting from the accident and of any consequent disabilities and financial loss; and

(iii) if applicable—the medical treatment and rehabilitation services the claimant has sought or obtained; and

(iv) the claimant’s medical history (as far as it is relevant to the claim), and any other claims for compensation for personal injury made by the claimant.

(2) The claimant must—

(a) provide the copies of reports and other documentary materials within 1 month after giving notice of the motor vehicle accident claim or, if the reports or material come into the claimant’s possession later, within 1 month after they come into the claimant’s possession; and

(b) respond to a request under subsection (1)(b) within 1 month after receiving it.

(3) If, after notice of a claim is given to the insurer but before the claim is resolved, the claimant becomes aware of a significant change in the claimant’s medical condition, or in other circumstances, relevant to the extent of the claimant’s disabilities or financial loss, the claimant must, within 1 month after becoming aware of the change, inform the insurer of the change.

(4) Any information provided by a claimant under this section must be verified by statutory declaration if the insurer requires it to be verified by statutory declaration.”

Section 47 — Duty of insurer to cooperate with claimant

“(1) The insurer must cooperate with a claimant and, in particular—

(a) must provide the claimant with copies of reports and other documentary material in the insurer’s possession about the circumstances of the accident or the claimant’s medical condition or prospects of rehabilitation; and

(b) must, at the claimant’s request, give the claimant information that is in the insurer’s possession, or can be found out from the insured person, about the circumstances of, or the reasons for, the accident.

(2) The insurer must—

(a) provide the claimant with copies of reports and other documentary materials within 1 month after receiving the notice of claim under division 3 or, if the reports or materials come into the insurer’s possession later, within 1 month after they come into the insurer’s possession; and

(b) respond to a request under subsection (1)(b) within 1 month after receiving it.

(3) If the claimant requires information provided by an insurer under this section to be verified by statutory declaration, the information must be verified by statutory declaration.

(4) If an insurer fails, without proper reason, to comply fully with a request under this section, the insurer is liable for costs to the claimant resulting from the failure.”

Section 48 of the Motor Accident Insurance Act states the grounds for non disclosure includes legal professional privilege, investigative reports, medical reports and reports relevant to rehabilitation must be disclosed but may have passages omitted relating to statements of opinion.

If there are reasonable grounds of fraud — the insurer may withhold any information or material which alerts the claimant to grounds of suspicion or could help in furtherance of the fraud.

Pursuant to Section 23(3) of the Motor Accident Insurance Regulations — if an insurer withholds information from a claimant, the insurer must inform the Motor Accident Insurance Commission of the decision, and of the grounds on which it was made, within 1 month after deciding to withhold the information.

The effect of this section is obviously limited to information obtained pursuant to Section 19 of the Motor Accident Insurance Regulations — which is information obtained by way of the Section 37 Motor Accident Insurance Act authority.

This does not require an insurer to divulge what the ‘reasonable grounds’ the insurer had to suspect the claimant of fraud but rather to divulge to the Commission the grounds on which the decision was made to withhold the information. There are instances where insurers have reasonable grounds to suspect a claimant of fraud but may chose to disclose the information notwithstanding those suspicions. This may be where the claimant cannot depart from the fraud that has already been committed.

Uniform Civil Procedure Rules 1999

Rule 211 establishes a party’s duty of disclosure. Stating:

“(1) A party to a proceeding has a duty to disclose to each other party each document—

(a) in the possession or under the control of the first party; and

(b) directly relevant to an allegation in issue in the pleadings; and

(c) if there are no pleadings—directly relevant to a matter in issue in the proceeding.

(2) The duty of disclosure continues until the proceeding is decided.

(3) An allegation remains in issue until it is admitted, withdrawn, struck out or otherwise disposed of.”

Rule 212 relates to documents which are not required to be disclosed. Stating:

“(1) The duty of disclosure does not apply to the following documents—

(a) a document in relation to which there is a valid claim to privilege from disclosure;

(b) a document relevant only to credit;

(c) an additional copy of a document already disclosed, if it is reasonable to suppose the additional copy contains no change, obliteration or other mark or feature likely to affect the outcome of the proceeding.

(2) A document consisting of a statement or report of an expert is not privileged from disclosure.”

Rule 213 states that if a party claims privilege from disclosure of a document and another party challenges the claim the party making the claim must within 7 days of the challenge, file and serve on the other party an affidavit stating the claim.

The Court Orders relating to disclosure are found in Rule 223.

Legal professional privilege protects the confidentiality of certain communications made in connection with giving or obtaining legal advice or the provision of legal services.

When it is successfully claimed, it protects the communication from any disclosure to third parties, including the Court.

In the matter of Grant and Downs² in 1976 the High Court appeared to have resolved the issue of when a communication is privileged. It was held that a communication will be privileged if it is created for the sole purpose of obtaining or giving legal advice or assistance or use in legal proceedings.

This decision was overturned by the High Court in Esso Australia and Commissioner of Taxation [3] when it was found the dominant purpose test should be preferred to the sole purpose test as the dominant purpose test “strikes a just balance, and suffices to rule out claims of the kind considered in Grant v Downs and it brings the common law of Australia into conformity with other common law jurisdictions.”

The test for whether a communication is privileged focuses on the purpose for which the communication was made, not the information in the communication.

A document or other confidential communication will be protected by legal professional privilege if it has been created for the dominant purpose of obtaining legal advice or preparing for, or in the conduct of court proceedings.

If the communication was created for more than one purpose, then the person claiming privilege must establish that the dominant purpose was to seek or give legal advice or to conduct litigation.

In the Queensland Court of Appeal decision of State of Queensland and Allen⁴ the respondent who was nine years of age at the time of judgement, underwent an operative procedure when he was 16 months old at the Prince Charles Hospital. The respondent had been born with multiple congenital defects. After the procedure, he developed a complete heart block while being anaesthetised and ventilated, resulting in severe brain damage. The respondent’s litigation guardian (his father) had never been given any formal explanation for the unexpected outcome of the treatment.

The litigation guardian sought access to all appropriate documentation from the hospital so that his solicitors could have a full factual background of the medical treatment his son had been provided, so that it may be provided to any expert who might be instructed to give a report supporting the Part 1 Notice of Claim.

In the documents disclosed by the hospital, there were documents that had been disclosed inadvertently including versions by the treating doctors which had been brought into existence shortly after the incident and placed on the medical file, rather than the administrative file (which was a separately held file). This was the first the litigation guardian knew that the hospital had conducted an investigation. The solicitors sought other documents however, the hospital refused on the basis that they were protected from disclosure by legal professional privilege.

At the time of Appeal, there were only 3 documents in contention. These included two file notes made by the Respondent’s solicitors relating to conferences with each of the 2 doctors involved in the incident. The third was a letter to the Acting Executive Director Medical Services at the hospital prepared by one of the doctors involved in the incident and was the doctor’s contemporaneous statement in relation to the matter.

The Court of Appeal held that the documents were not “investigative reports”, and that the file notes were not reports at all. However, the Court of Appeal also held that the document prepared by the doctor should be characterised as a “medical report” and must be disclosed on that basis.

It was ordered that the Appellant give the Respondent the statement but not the file notes.

Video tapes and surveillance reports

Prima facie under Section 47(1) of the Motor Accident Insurance Act the insurer must disclose “reports and other documentary material about the circumstances of the accident, the claimant’s medical condition and the claimant’s prospects of rehabilitation”.

Video tapes and surveillance reports are unlikely to be about the circumstances of the accident, although, it is certainly possible that video tapes come into existence for the purposes of a report about the circumstances of the accident.

The words “other documentary material” are deliberately wide and in my opinion are capable of being construed to be wide enough to encompass video tapes and surveillance reports “about the claimant’s medical condition” or “prospects of rehabilitation” in that the claimant’s medical condition is or may not be as claimed. If these words are construed widely, then in my opinion video tapes and surveillance reports must, prima facie be disclosed pursuant to Section 47.

Such a broad construction is consistent with the words of Section 48(2) which provides that investigative reports even if otherwise protected by legal professional privilege are subject to disclosure.

Investigative reports might be about the circumstances of the accident and they equally might be about the medical conditions of the claimant.

Surveillance reports whether ordinarily privileged or not however, may often contain expressions of opinion. These expressions of opinion may be excluded.

Section 48(3) provides that the insurer may withhold disclosure of information (including video tapes and surveillance reports) if such disclosure would alert the claimant to the discovery of the grounds of suspicion or help the furtherance of fraud. For this protection from disclosure to apply the insurer must have reasonable grounds to suspect the claimant of fraud.

In conclusion and in my opinion, prima facie, video tapes and surveillance reports whether ordinarily protected by legal professional privilege or not which might be relevant to the circumstances of the accident or the claimant’s medical condition or the Claimant’s prospects of rehabilitation are required to be disclosed pursuant to Section 47 of the Motor Accident Insurance Act 1994.

Social Media

Another topical area is social media sites including Facebook, Twitter and Instagram. Investigations and monitoring of Claimant’s social media is becoming increasingly common. These sites are particularly relevant in ascertaining an accurate picture of a claimant’s injuries and disabilities. In the past Defendant insurers were at the mercy of self reported and subjective complaints from the claimant.

In Queensland, most relevantly and closely related to disclosure of seemingly personal and private records, is a judgement of Justice Cullinane of the Supreme Court in Riggs and Germanotta & QBE Insurance Australia Limited.⁵ In that case the Defendant sought orders that the Plaintiff disclose a copy of her wedding video.

The Plaintiff, whose marriage took place ten days following the accident, alleged she was bed ridden, at least until her wedding, she was unable to recall her wedding and could not go on her planned honeymoon. The Court held that “having regard to what is alleged by the Respondent in the Statement of Claim and in the Statement of Loss and Damage and in the report of Helen Coles, a video showing the Plaintiff… is likely to contain relevant information about the Plaintiff at an important time”. The Court ordered the video be disclosed.

The further cautionary tale for practitioners and Plaintiffs alike is in making material changes to the availability of their social media pages and postings, even in the absence of a request for disclosure.

The Queensland Law Society recently published an article entitled “Dirty Laundry Online”⁶, written by Mr Stafford Sheppard, in which it was noted legal practitioners should not advise their clients to “clean up” their Facebook or other social media pages where there is a likelihood such material may be required in legal proceedings.

The potential criminal consequences associated with the destruction of evidence are set out in sections 129 and 140 of the Queensland Criminal Code 1899 that is, damaging evidence with intent and attempting to pervert justice.

Yet it remains to be seen whether Australian courts will be persuaded that these social media pages are either:

• “Information” about “the nature of the injuries resulting from the accident and if any disabilities”
• A “document” “directly relevant to an issue in the pleadings”; and/or
• “Documents that are or contain a contemporaneous record, account or description of the Plaintiff’s injury, disability, pain and suffering, loss of amenities ”.

One view is that with close reference to the terms used by a claimant in defining the scope of their claim that is, their injuries, incapacity and loss of amenities, there may well be a proper basis to call for the disclosure and to pursue that request for disclosure to effect.

Making an application for non disclosure

The application is made ex-parte seeking relief of obligations to disclose and or to provide to any other party to the action an opportunity to inspect documents or surveillance footage under Section 47(1) of the Motor Accident Insurance Act and Sections 224 and 393(2) of the Uniform Civil Procedure Rules.

The application should specifically list the documents that relief is being sought.

An Order should be sought that the originating application, affidavits and all supporting material be placed in a sealed envelope and marked “not to be open without the order of the Court or Judge”.

A further Order should also be sought that, the originating application, affidavits, all supporting material and Orders made in the application not be listed in, and if they have been so listed, removed from the E Courts Index or other searchable court index in relation to the application.

Fraud

Offences of dishonesty in respect of claims under the Motor Accident Insurance Act 1999 are contained in part 5(A), division 5 of the Act.

Section 87T deals with offences involving fraud.

Section 87U deals with false or misleading information or documents.

The manner in which proceedings are to be commenced and dealt with is contained in Section 87W.

Section 87Q deals with the costs of investigation recoverable by the Commission.

Section 59 deals with the recovery by insurers in cases of fraud.

Importantly, it is the Commission that brings the prosecution not the insurer. The insurer advises the Commission of the alleged fraud.

The Commission is required in a prosecution under the Act to prove guilt beyond a reasonable doubt unlike claims under the Act where the Plaintiff is required to prove their case on the balance of probabilities.

The elements of the offence include:

• The date of the offence;
• The identity of the person who committed the offence;
• That the offence was committed against an insurer under the Act in respect of a claim under the Act; and
• The substance of the offence. That is, fraud or attempt to defraud, deliberately mislead or attempt to deliberately mislead, false or misleading documents or statements).

The date, identity, insurer and claim are easily provable. Of importance, is the substance of the offence itself.

Contained in Section 87T are the terms “defraud” and “deliberately mislead”, both of which involve a degree of deception. To deliberately mislead there would need to be intent on the part of the Claimant to deceive.

Under Section 87T there are four parts of an attempt:

(a) A person must have an intention to commit an offence;

(b) A person must put his or her intention into execution by means adopted to its fulfilment;

(c) A person must manifest an intention by some overt action;

(d) But a person must not have fulfilled the intention to such an extent as to commit the offence.

The prosecution must prove the first three parts. The fourth part is not one which must be proved beyond reasonable doubt.

Section 87T(1)(c) states that a person must not in any way connive at conduct by another that contravenes 1(a) and 1(b) of Section 87T. This relates to conspiracy or collusion and deals with other individuals who are involved in the perpetuation of the offence.

With respect to the providing of documents and statements that are false and misleading, there needs to be an unequivocal consciousness of guilt. There needs to be knowledge.

Proceedings for offences against the Act are dealt with in the Magistrates Court under the Justices Act. Proceedings are commenced by way of a Complaint and Summons.

The person who usually makes the complaint is the Insurance Commissioner. (Could also be the Attorney General or a person authorised by the Insurance Commissioner or Attorney General).

A proceeding must be commenced within 2 years of the commission of the offence or within 6 months after the commission of the offence comes to the knowledge of the complainant.

In some instances matters may be referred to the Police for investigation and prosecution.

When looking at the decision to prosecute, there needs to be a sufficiency of evidence and whether the prosecution is in the public interest.

Dina Thompson

Footnotes

1. [2008] 1 Gd R 101
2. [1976] HCA 63
3. [1999] HCA 67
4. [2011] QCA 311
5. [2003] QSC
6. Proctor — March 2012