Monaco v Martinelli

It is a feature of the Duty List that the urgency which attends some matters means that the Court must do the best it can on the information available, even when the outcome may have substantial and irreversible implications for one or other of the parties. This family dispute is an example of such a case. Without disrespect, I shall refer to the parties by their given names.

The first plaintiff (Domenic) is the adult son of the person listed in the Amended Summons as second plaintiff (Adelina). Why I describe her in that way is explained in [30] below. Domenic has cared for Adelina in the family home (the Property) for several years. Adelina is, by survivorship from her late husband, the sole proprietor of the Property.

The defendants are two of Domenic’s three siblings, Liliana (referred to as Lilian) and Eugenio. Lilian and Eugenio were appointed enduring guardians and attorneys pursuant to documents signed by Adelina on 13 October 2017 (the Powers). The defendants are selling the Property pursuant to the Powers. These proceedings were commenced two hours before an online auction of the Property was due to take place (the Auction).

The underlying dispute is one that is all too familiar to the Court: well-meaning family members unable to agree about the future care of an elderly parent. Domenic wishes to continue to care for Adelina at the Property and says that is also what Adelina wants. The defendants say that Adelina, who has been diagnosed with dementia, now requires a higher level of care than can be provided by Domenic, which must be funded by the sale of the Property at the Auction.

As the case was ultimately presented for the plaintiffs, it was accepted that they had no evidence either to impugn the circumstances in which the Powers had been granted, or to challenge the propriety of the impending Auction. The only equity upon which the plaintiffs could rely for the injunctive relief which they sought to restrain the Auction was what they submitted was Adelina’s right and wish to revoke the Powers with the intention that she would continue to live in the Property and be looked after by Domenic. In order to exercise that right, Adelina would have to be shown to have the legal capacity to revoke the Powers. If, as the defendants argued, she had already lost capacity, then it was common ground that according to their terms the Powers could not be revoked if Adelina did not have capacity to do so.

Relying on Domenic’s undertaking as to damages, the Court originally restrained the Auction for 24 hours to enable the parties to marshal some proper evidence. At the return of the injunction the next afternoon, the Court declined to continue the restraint, with the result that the Auction was to proceed at 5pm. These are the reasons for that decision.

In summary, those reasons were:

Mr K Tang of Counsel ultimately appeared for the plaintiffs. Ms T Catanzariti appeared for the defendants.

The matter first came before me in the Duty List at 3:00pm on Tuesday, 5 April 2023. Ms M Cairns of Counsel appeared for Domenic, who at that time was the only plaintiff. Ms R Gandha, solicitor, initially appeared for the defendants, but during the course of the short hearing, Ms T Catanzariti of Counsel announced her appearance for the defendants.

The summons filed in Court sought this relief:

It will be immediately noticed, and I pointed out to Ms Cairns, that the summons contained no prayer for final relief. I asked her what that final relief might be, which led to this exchange (Tcpt, 4 April 2023, p 2(20-36)):

Ms Cairns submitted that, at least at that point, Domenic’s application was made under Uniform Civil Procedure Rules 2005 (NSW), r 25.3 which provides that “in proceedings concerning property, … the Court may make orders for the detention, custody or preservation of the property”. She explained to me that Domenic had commenced proceedings in the New South Wales Civil and Administrative Tribunal (NCAT) for guardianship and financial management orders in his favour over Adelina. Those proceedings were listed for final hearing on 28 April 2023 and NCAT had already made clear that it could not interfere with an impending sale by the defendants of the Property. That sale had originally been scheduled to occur on 22 April 2023. What had especially excited Domenic’s concern was that the Auction had suddenly been brought forward to 5pm that evening, 4 April 2023, to be conducted online.

Insofar as the Auction was concerned, Ms Gandha, and then Ms Catanzariti, explained that three very interested purchasers had already made offers. The defendants had received advice from their real estate agent that, given the level of interest from those three purchasers, the best price was likely to be achieved by bringing forward the Auction immediately to be conducted online between those three parties.

After hearing the parties further, I was satisfied that a 24-hour delay in the Auction (i.e. to Wednesday 5 April 2023, being still one business day before the Easter long weekend) would not prejudice the possibility of an advantageous sale, but would provide the parties with an opportunity to consider their respective positions and for some more detailed evidence to be provided to the Court.

The following afternoon, Ms Catanzariti again appeared for the defendants. Mr K Tang of Counsel appeared for Domenic and, by an amended summons which I granted leave to be filed, for Adelina, now added as second plaintiff. The amended summons sought this relief:

Turning to the final relief sought in the amended summons, I asked Mr Tang what conditions in the Powers it would be contended had “not arisen”. The gravamen of his answer was not that conditions had not arisen, but rather that there was now evidence from Adelina that she did not wish the Auction to proceed. Mr Tang informed the Court that his instructions did not permit him to suggest that there was a basis on which either the granting of the Powers or the process of the sale itself could be impugned.

However, he developed the submission that because there was evidence that Adelina did not want the Auction to proceed, the equity which warranted the granting of an injunction was her entitlement to revoke the Powers. He accepted, entirely properly, that this relief in relation to any proposed revocation was not explicitly sought in the amended summons but could be the subject of further amendment, and that it raised as the fundamental factual question whether or not Adelina retained capacity to revoke the Powers. If she no longer had capacity, it was common ground that she could not revoke the Powers.

Mr Tang pressed the application for the continuation of the injunction on that basis.

There was no dispute that Adelina had lived in the Property as the family home for many years and that since 2018 Domenic had been her fulltime carer.

Adelina had gone into hospital for a minor operation in January 2023. From that time, the siblings had been in dispute about Adelina’s ongoing care and the relationship between them had seriously deteriorated.

In late January 2023, Domenic filed a guardianship application and financial management application in the guardianship division of NCAT. He sought orders to appoint him as the guardian and financial manager for Adelina. The final hearing of those applications was fixed for 28 April 2023.

After Adelina had been discharged from hospital in early February 2023, Lilian had assumed responsibility for Adelina’s care. In early March 2023, the defendants had arranged for Adelina to take up residence at an aged care facility known as Scenic Lodge.

Acting under the Powers, Lilian and Eugenio had engaged Mr Simon Wall, a licensed real estate agent, to sell the Property. That sale was originally scheduled to occur on 22 April 2023, but was brought forward to 4 April 2023 in circumstances which are set out in what follows.

At the forefront of the plaintiffs’ case was an affidavit made by Adelina (the options of oath/affirmed not being completed in the executed affidavit) on 5 April 2023 which stated in its entirety:

That affidavit was witnessed by the plaintiffs’ solicitor, Ms Thorne. Ms Thorne swore an affidavit about the circumstances surrounding Adelina’s affidavit which included:

Ms Thorne then goes on to set out a conversation she had with Adelina. That conversation included:

The effect of Adelina’s answers to Ms Thorne was that she did not want to remain at Scenic Lodge, that she wanted to go to her own home, that she wanted to be cared for by Domenic, and that she did not want the defendants to be in charge of her affairs.

The affidavit included the conclusion of the conversation and what followed:

It appears from Ms Thorne’s affidavit that she took the pre-prepared affidavit for Adelina to Scenic Lodge. Adelina did not appear to know who Ms Thorne was, nor did she appear to know (nor was it explained to her, assuming Ms Thorne’s account of the conversation was complete) that she was, or was to be made, a party to litigation. Adelina could not remember if she had given the defendants a power of attorney. As I develop further below, all of these matters were important in my ultimate assessment of the weight I could give to Adelina’s affidavit, including whether I could be satisfied that she had any real insight into her circumstances or what might be in her best interests.

Had the matter gone further, it is appropriate at this point to record that I would have inquired further as to how Adelina had come to be joined as a plaintiff, not least because of the evidence filed by the defendants on the topic of Adelina’s dementia diagnosis. Ms Thorne describes herself in her affidavit as acting for Domenic only. In his affidavit (to which I refer in the next paragraph), Domenic describes himself as “the Applicant”. The title pages of each of these affidavits lists only Domenic as the plaintiff. There was no suggestion that Ms Thorne had prepared Adelina’s affidavit after she had obtained instructions from Adelina. The impression I gained from the various documents filed on behalf of the plaintiffs was that the decision to join Adelina as the second plaintiff in the amended summons came after the affidavits to which I have referred in this section were made. In the events which happened, it was not necessary for me to have pursued further the circumstances of her joinder and whether she was capable of giving instructions, or even knew or had been consulted about becoming a party.

Domenic also swore an affidavit in which he set out everything he had done for Adelina when he was caring for her at the Property. He expressed his love for his mother and his determination to continue to care for her fulltime at the Property because that is what he said Adelina wanted. He also gave evidence, some of it undoubtedly contentious, about the particulars of the breakdown of the relationship between himself and his siblings about the care arrangements to be made for Adelina. He set out conversations with her in which she tells him that she wants to go home. His current observation of Adelina appears from this paragraph of his affidavit (but I disregard it for present purposes as not being from an independent witness):

The defendants relied on affidavits from Eugenio, Lilian and the real estate agent, Mr Wall.

Eugenio’s affidavit includes the Powers. There could be no issue that, provided they are acting jointly as their terms require, the Powers authorise Lilian and Eugenio to sell the Property and, as enduring guardians, to make decisions about her accommodation, healthcare and similar matters, including in relation to the continuation or suspension of medical care at the end of her life.

Eugenio’s affidavit also attached four documents to which the Court was taken and the contents of which I accept as independent and expert assessments.

First, there was an assessment dated 4 April 2022 of Adelina by a specialist geriatrician, Dr Padmakumar. That report includes (italics added; block print in original):

Second, there was a report written shortly after Adelina’s admission to John Hunter Hospital in January 2023 by a social worker from the hospital’s critical care team which included (emphases added):

Third, Eugenio’s affidavit exhibited a report from the residential care manager at Scenic Lodge dated 16 March 2023 which included (emphasis added):

Finally, there was a report from a consultant neurologist, Dr Caruana, about Adelina dated 28 March 2023 which included (emphases added):

Lilian’s affidavit included:

Lilian’s current observations of her mother (which, as with Domenic’s, I disregard for present purposes as not being from an independent witness) were:

Finally, Mr Wall, who has been practising as a real estate agent since February 2008, deposed:

I have redacted the figures in Mr Wall’s affidavit because I do not know the result of the Auction. The offers in paragraph 4 of Mr Wall’s affidavit were between $300,000 - $400,000 higher than the values set out in paragraph 5.

The final piece of evidence in the defendants’ case was an extract from the National Personal Insolvency Index. This demonstrated that Domenic (who in his affidavit described himself as a “carer”) is an undischarged bankrupt, having been made bankrupt in December 2015 and is not due to be discharged from bankruptcy until December 2023.

Mr Tang’s submissions may be summarised as:

Ms Catanzariti’s submissions may be summarised as:

The contest between the plaintiffs’ evidence of the circumstances surrounding the execution of Adelina’s affidavit and the expert geriatrician’s evidence advanced on behalf of the defendants demonstrated that there was a serious question to be tried as to whether or not Adelina still retained sufficient capacity to validly revoke the Powers. However, I was of the firm view that the plaintiffs’ case that Adelina still retained capacity was very weak.

I placed no weight on Domenic’s observations of Adelina given his lack of expertise and obvious interest in and affection for his mother. Similarly, Ms Thorne is a solicitor and not an expert geriatrician.

The defendants’ independent evidence set out in [35] to [38] above, while (unsurprisingly) it did not expressly address the specific issue, strongly supported the conclusion that Adelina lacked the requisite capacity to revoke the Powers.

Insofar as Adelina’s stated wish to go home and be cared for by Domenic is concerned, the combined effect of the matters referred to in [29] above and the evidence referred to in the preceding paragraph meant that I was not satisfied that Adelina has the insight or capacity to know what is in her own best interests. While I do not doubt that she told Ms Thorne what the latter recorded in her (Ms Thorne) affidavit, I do not accept they were the statements of a person competent to make significant life decisions in their own best interest.

In approaching this question, I did not overlook Mr Tang’s submission that, for all practical purposes, if the Court did not restrain the Auction, that would amount to the Court finally determining the substance of the matter in issue, being whether or not Adelina could return home. As such, and doing the best I could on the material available, I also took into account my view of the ultimate result of the case: Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 per McLelland J (as his Honour then was). Given the defendants’ evidence referred to in [48] above, my view was that the plaintiffs’ ultimate prospects of success were very low.

Notwithstanding that pessimistic assessment of the plaintiffs’ prospects of success, the Court might still grant an injunction if it was satisfied that the balance of convenience nevertheless strongly favoured the plaintiffs’ application or would not cause prejudice to the respondents to the application. That was not this case. It was common ground that, in assessing the balance of convenience, it was not the position of the defendants that mattered, but rather what was in Adelina’s best interests because it was on her behalf that they were acting. On that basis, the balance of convenience strongly favoured the Auction being permitted to proceed immediately for the following reasons.

The defendants’ evidence which I have set out above amply demonstrated that Adelina now requires 24 hour care. The Property is no longer suitable for her to live in and it is not possible to see how Domenic, despite his good will and commendable desire to care for his mother, could possibly himself provide the around the clock care that his mother now requires. In order to fund the care which Adelina does now require, and noting how well she appears to have settled in at Scenic Lodge, the Property must be sold. All of these matters firmly pointed to the conclusion that it was in Adelina’s best interests for the Auction to proceed that afternoon among the three interested bidders.

To this must be added the effect of Mr Wall’s evidence that, given the presence of three interested parties who had all made offers at a level appreciably higher than that at which others had expressed interest in the Property, there was a very real risk that if the Auction were postponed, a lower price would be the result at any delayed auction. That consideration also clearly pointed in favour of the Auction proceeding immediately.

Finally, and related to the preceding paragraph, was the question of the utility of any undertaking as to damages proffered by Domenic. The failure to disclose that he was an undischarged bankrupt at the initial hearing before me would have provided a sufficient reason to discharge the injunction immediately on the next occasion.

However, quite apart from that point, as a matter of the Court’s discretion the Court would have required an undertaking as to damages and satisfaction that the undertaking was of substance in order to restrain the Auction any further. This is because Mr Wall’s evidence demonstrates that there was a real risk that any subsequent sale would achieve a lower price than that which could have been achieved at the Auction. This meant there was a real, and not merely theoretical, prospect that the undertaking would be called upon to make good the difference in price. Based on the values referred to in paragraphs 4 and 5 of Mr Wall’s affidavit (see [41] above) that difference would have been a six figure sum which, quite apart from his status as an undischarged bankrupt, there was no evidence that Domenic would have been able to meet.

For the foregoing reasons, the Court declined to continue the injunction restraining the Auction from proceeding on the evening of the hearing. While no order as to costs was sought or made, the parties accepted that the defendants were entitled to be indemnified for their costs of the proceedings as an incident of their role under the Powers, to be paid on the indemnity basis out of the proceeds of sale of the Property.