Kukuy v Holden [No 2] [2024] VSCA 116 (30 May 2024)

Last Updated: 30 May 2024

SUPREME COURT OF VICTORIA COURT OF APPEAL

S EAPCI 2023 0026

JULIA KUKUY	Applicant
v
TIMOTHY MARK SHUTTLEWORTH HOLDEN (in his capacity as liquidator of Jay Invest Property Pty Ltd (in liquidation) (ACN 609 003 296)	First Respondent
and
JAY INVEST PROPERTY PTY LTD (in liquidation) (ACN 609 003 296) [No 2]	Second Respondent

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JUDGE:	NIALL JA
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers (submissions filed 24 May 2024)
DATE OF JUDGMENT:	30 May 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 116
JUDGMENT APPEALED FROM:	[2023] VSC 54 (Elliott J)

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PRACTICE AND PROCEDURE – Where issue as to whether applicant lacks capacity in relation to proceeding has arisen – Whether necessary to appoint litigation guardian – Whether to refer issue to VCAT for determination – Issue referred to VCAT.

Guardianship and Administration Act 2019, s 179.

Goddard Elliott v Fritsch [2012] VSC 87; Sangen v Sangen [2021] VSC 590; Slaveski v State of Victoria [2009] VSC 596; (2009) 25 VR 160, considered.

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Counsel for written submissions
Applicant:			--
Respondents:			Ms CG Rome-Sievers with Mr L Freckelton
Solicitors
Applicant:			In person
Respondents:			Baker Jones

NIALL JA:

1. On 19 December 2023, I directed the applicant to file and serve any medical reports or evidence concerning her capacity to conduct the application for leave to appeal which she has commenced in this Court. My reasons for making that direction set out some of the history of this matter.^[1]
2. The applicant did not file any material in answer to the direction. She did, however, send a number of emails to the Registry which do not allay my concern that she is presently labouring under a disability that affects her capacity to conduct the litigation on her own behalf.
3. In light of my concerns, the Court wrote to the parties asking for any submissions on whether the Court should refer the issue of whether a guardian ought be appointed in relation to the proceeding to the Victorian Civil and Administrative Tribunal (‘VCAT’) under s 179(1) of the Guardianship and Administration Act 2019.^[2]
4. In an email that the applicant sent to pro bono counsel, to which the Registry was copied, the applicant did not meaningfully address the question of referral and her position remains unclear. The applicant says that she is under a disability and does not have the legal capacity to participate in any legal matters and procedures in this Court. She says that she is a vulnerable person protected under the Guardianship and Administration Act, which she contends is the exclusive jurisdiction of VCAT. She also claims to be under application for ‘Office of Public Advocate guardianship’.
5. The respondents oppose the referral of the issue to VCAT. The respondents submit that there is no evidence before the Court that the applicant lacks capacity to prosecute the application for leave to appeal and note that the applicant has not provided any material in support of that conclusion. The respondents note that the most recent order of VCAT made on 31 October 2023 continues the operation of its earlier supportive guardian order (made with the applicant’s consent on 24 November 2022) based on VCAT being satisfied that ‘with appropriate support, Julia Kukuy will have capacity to make decisions about the personal and financial matters covered by [the] order’.
6. The respondents further contend that there is no reason to believe that a referral to VCAT will fare any better than the existing VCAT proceeding or the other prior proceedings and may enable the applicant to further delay the hearing and determination of her application for leave to appeal.
7. In the event that the Court makes a referral to VCAT, the respondents seek liberty to apply with respect to the extant stay in this proceeding in the event that there has been no determination made by VCAT by 30 June 2024.
8. Questions of the applicant’s capacity should, I consider, be assessed though the rule governing the appointment of a litigation guardian, being rule 15.03 of the Supreme Court (General Civil Procedure) Rules 2015. In Slaveski v State of Victoria, Kyrou J said:

The question of incapacity in relation to litigation must be examined against the facts and subject matter of the particular litigation, the number and complexity of the issues involved and the identity, number and interests of the other parties, particularly opposing parties. A person can have the requisite capacity for one proceeding and lack it for another.

Where a person is a party to a proceeding and is legally represented, he or she will be incapable of managing his or her affairs in relation to the proceeding if he or she does not have the mental capacity to understand the nature of the acts or transactions in respect of which he or she needs to give instructions to the lawyer.^[3]

9. The issues in the application for leave to appeal are complex in that they involve the principles relevant to the construction of a trust deed, their application and the circumstances in which an administrator ought be appointed to manage the assets of a trust in aid of debts owed by a corporate trustee in liquidation. It is not insignificant that the respondents accept that the primary judge made an error in the construction of the deed but submit that the same order made by the judge ought nevertheless be made.
10. I am of the view that an issue as to the applicant’s capacity is raised on the material and I am not persuaded that the failure of the applicant to adduce medical evidence on that question is indicative of a desire to delay or frustrate the proceeding. Her responses, and the lack thereof, are equally likely to be a product of incapacity.
11. It would be unfair in the circumstances to proceed with the application without resolving this issue. I agree with the observation of Bell J in Goddard Elliott v Fritsch that, where an issue in relation to the mental capacity of a litigant is properly raised, ‘it is the duty of the court at the earliest opportunity to examine whether the person has the mental capacity which is required’.^[4]
12. This Court has the power to appoint a litigation guardian on its own motion,^[5] and although that power would, in the context of medical incapacity, generally only be exercised in circumstances where there was clear expert evidence of incapacity, the provision of such evidence is not an essential precondition for the exercise of the power.^[6] There may be, for example, cases in which the relevant party’s lack of capacity is manifest and incontrovertible.
13. With that said, s 179 of the Guardianship and Administration Act relevantly provides:

Matters before a Court

(1) If in any civil proceeding before a Court the Court considers that a party may be in need of a guardian, a supportive guardian, an administrator or a supportive administrator, the Court may refer the issue to VCAT for determination.

(2) If a Court refers an issue to VCAT under subsection (1)—

(a) the referral is to be treated as if it were an application to VCAT for the making of the relevant order under this Act; and

(b) the prothonotary (in the case of a referral by the Supreme Court) or the principal registrar of the Court (in any other case) is to be taken to be the applicant.

14. The operation of this section was helpfully considered by Moore J in Sangen v Sangen.^[7]
15. I have come to the view that referral to VCAT under s 179(1) is appropriate for the following reasons.
16. First, there is an extant application in VCAT concerning the capacity of the applicant. The application for leave to appeal in this Court was adjourned for some time pending the resolution of that application. It appears that the proceeding in VCAT has to an extent stalled and, without forming a view about the matter, it appears that the applicant has not prosecuted that application with appropriate rigour.
17. Second, VCAT has specialist jurisdiction in guardianship and administration matters with established procedures and expertise.
18. Third, I am of the view that the question of capacity is likely to be determined more efficiently and at less cost in VCAT than in this Court. As already noted, there is no up-to-date medical evidence as to the capacity of the applicant and, although this Court has the power to order a medical examination, the process of determining her capacity is, in my estimation, better addressed in VCAT.
19. I note that the applicant has been the subject of an order appointing a supportive guardian but I am not convinced that this is adequate to address the needs of the applicant in the conduct of the litigation in this Court. It seems to me that the appropriate course is for VCAT to determine whether a guardian ought be appointed for the purpose of conducting the litigation and, if so, the identity of a suitable guardian.
20. In her correspondence, the applicant has raised the possibility of the Public Advocate being appointed as her guardian and it appears that her father was appointed as a supportive guardian by VCAT.^[8] Again, VCAT is best placed to determine the identity of a suitable guardian in the event that a guardian needs to be appointed in respect of the proceeding.
21. For these reasons, a referral to VCAT under s 179(1) will be made.
22. I am conscious that there is a stay of the judge’s orders in place. It is hoped that VCAT may be able to determine the matter referred to it as quickly as it can, having regard to the other significant pressures on VCAT. The respondents have asked for liberty to apply with respect to the extant stay. A formal reservation of liberty is not required, the stay being an interlocutory order that is capable of being varied.

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^[1] Kukuy v Holden [2023] VSCA 331.

^[2] See Bahonko v Moorfields Community [2008] VSCA 6, [37] (Nettle JA, with whom Buchanan and Redlich JJA agreed).

^[3] [2009] VSC 596; (2009) 25 VR 160, 183 [28]; [2009] VSC 596 (‘Slaveski’) (citations omitted).

^[4] [2012] VSC 87, [563].

^[5] Slaveski [2009] VSC 596; (2009) 25 VR 160, 182 [24] (Kyrou J); Pistorino v Connell [2012] VSC 438, [8] (Dixon J) (‘Pistorino’).

^[6] Pistorino v Connell [2012] VSC 438, [17] (Dixon J).

^[7] [2021] VSC 590.

^[8] Holden v Kukuy (No 2); Re Jay Invest Property Pty Ltd (in liq) [2023] VSC 54, [30] n 11.