FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE – application for reopening of a case after reasons published but not entered – medical condition of witness said to have become apparent only after reasons published – whether adjournment should be granted to gather further medical evidence – whether that evidence could affect the findings made.

ANDREW CRAIG ASHTON v

MAXWELL WILLIAM PRENTICE & ORS

NG 8183 of 1997

HILL J

SYDNEY

20 NOVEMBER 1998

THE court ORDERS that:

1.                  The Application for adjournment of the motion be dismissed.

2.                  The motion be dismissed.

3.                  The Applicant pay the Respondent’s costs of the motion.

Note:  Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

REASONS FOR JUDGMENT

On 23 October 1998 I delivered reasons in these proceedings.   I indicated that I proposed to declare  a transfer  of the property at 4 Molloy Avenue, South Coogee from Mr Jury, the Bankrupt, to Mr Ashton to be void.  I ordered draft short minutes to be prepared to give effect to my reasons with a view to hearing later argument as to the form those short minutes should take.  I did so, inter alia, on the basis that I was aware that there was an issue between the parties as  to the status of   the lease which Mr Ashton purported to enter into in favour of Mr Jury which had not been the subject of argument.

The matter then came before me on 2 November 1998.  At that  time counsel for Mr Ashton sought to move the Court that I reopen the hearing on  the basis of certain medical evidence.  I ordered that any  evidence in  support of  that  motion be filed  on  or before 9 November and  stood over the motion until 16 November 1998 when I would hear argument on the question whether I would give leave to Mr Ashton to reopen his case.   I also indicated I would hear argument on that day as to the form of orders.

A formal  motion was filed with the Registry on 13 November, returnable on 16 November 1998.   In support of that motion there was filed an affidavit of Mr Ashton dated 5 November 1998, an affidavit of Mr Ashton’s solicitor and there  was  handed  up to me a medical  report from a neurogolist, Dr Darveniza.  There was  no objection taken to this material being read in support of the motion.

Counsel  for Mr Ashton seeks  to  have the motion itself adjourned until at the earliest around 2 December 1998 so that more evidence in support of the motion may be adduced, evidence itself which is said should then be taken as evidence in the proceedings.

The solicitor’s affidavit, which comes first  in time, says that he received  information on 28 October 1998 that Mr Ashton suffered from a medical  condition as the result of serious head injuries received some years ago.  It referred to treatment Mr Ashton had had from a specialist physician.  It is not clear to me from  whom the information came  to  the  solicitor, presumably, if not Mr Ashton, the Jury family.  What  is clear  is that it became known  to the  solicitor, presumably shortly after I had delivered reasons on 23 October  1998.

The next affidavit is that of Mr  Ashton.  Relevantly he says that he was physically attacked in December 1981 and received severe blows to the left side of his head.   He was apparently unconscious for approximately one hour and was found subsequently wandering in a street.   He was absent from work for about two weeks.

He noted,  he says, that his concentration was reduced.   He subsequently took leave for a couple of months, apparently blacked out whilst driving a vehicle the next year and was treated for epilepsy.  Thereafter he had some epileptic attacks and was prescribed medication which he continued to take  for some time.

In 1989 Mr Ashton consulted Dr Lake who prescribed an increased dosage of  the  medication Dilantin.  He was later prescribed another drug, Tegretol.  The epileptic attacks ceased in 1990 although he continued to be treated by Dr Lake  until 1992.  He says that during the  time of  the attack and when he was on medication his work suffered.  He noticed a loss of  memory, particularly for long-term events, and unreliable  short-term memory.  He said he forgot advice given to clients.

In 1994 he says he noticed  when under stress, working for Mr  Jury and his group of companies, that his memory loss affected his work.  He  often  had to go home and was unable  to  manage  the intensity of the  work and the  long  hours necessary.  I interpolate, although  the  matter is  not the subject  of any cross examination, that this seems somewhat  inconsistent with the long hours for which Mr Ashton actually charged Mr Jury, if the problem existed at that time.  Indeed, if the problem is so severe, it would raise questions as to his ability to practise.

Mr Ashton  says that he has some balance problems and that he has been  told by medical practitioners that he has some brain damage affecting the left side of his body.

The medical report  of  the neurologist narrates the circumstances of the assault and  the treatment by Dr Lake that continued until 1993.  Dr Darveniza says that since 1993 Mr Ashton  had remained fit though he had a prodroma of a seizure in 1996.   He referred also to lack of balance and an unawareness by Mr Ashton of any cognitive dysfunction.

The neurologist then  says that  on examination Mr  Ashton was alert and orientated but “but quite a vague  and desultory historian and at times, tangential”.  He says  that Mr Ashton had a good knowledge of current events although answered  in a rambling manner but, after referring to some tests, he says:

“Clinically,   this  gentleman suffered a significant closed  head injury complicated by port-traumatic epilepsy, loss of balance and mild clumsiness in the right limbs.  In my view,  there is also evidence of cognitive dysfunction with  an expressive dysphasia and some difficulty in thought processing.

This may well adversely impact on his demeanour and  reliability as a witness under cross examination in court.”

Dr Darveniza indicates that further tests are to be carried out and recommends formal neuropsychometric assessment.  He suggests that a Mr Rawling at St Vincent’s Clinic be contacted.  He says there  is a risk of  further seizures.

The further tests which Dr Darveniza suggests, including a psychiatric assessment, are apparently now being arranged.

It  is accepted by counsel for the Trustee that I should accept the evidence so far adduced at the highest it can be taken but  should not permit an adjournment to allow other evidence to be adduced.

In determining the  question whether I should permit an adjournment, it seems to  me  that I should really proceed  on  the basis that that further evidence will confirm in all respects the view which the neurologist has suggested might well be the case, namely that the injury and subsequent condition and medication would adversely impact on Mr Ashton’s demeanour and reliability as a witness  under cross examination.  Assuming  this to be  the case, the question is both whether the additional evidence would make a difference and, more importantly, whether if that evidence were adduced at a reopened hearing, if such were ordered, it would make any difference to  the outcome.

I am of  the  view it would  not.  To explain that position,  it is necessary to return to my reasons for  judgment. 

In  those reasons I noted that much turned upon the credit of  Mr Ashton.  I dealt then with  his credit, a matter on which I formed an adverse view.  The reason that I  did  so is dealt with in my earlier reasons and need  not be repeated.  It was for  the reasons that I gave that I took the view  that  I would not accept his evidence unless corroborated or against interest.   I proceeded then to set out the  findings which brought me to  the  conclusion that the transfer of  the house by Mr Jury to Mr Ashton for other  than full consideration with Mr Jury remaining in  possession and a subsequent lease with long-term options fell both within s 120 and s 121 of the Bankruptcy Act 1966 as amended (“the Act”).

It seems to me that the medical evidence either presently before  me or as envisaged in tests which would either confirm the medical report or even demonstrate a worse picture could do no more than permit me to reach the conclusion that Mr Ashton’s evidence was unreliable not because he was prevaricating but because  his medical condition was such that, for this reason, he is a vague and desultory historian, at times tangential, rambling, having difficulty in solving simple problems, cognitively dysfunctional with difficulty in thought processing and therefore unreliable.

In my view, accepting the  medical evidence at its highest would make no difference to the outcome were I to decide the case by reference to the objective facts but without knowing what part of Mr Ashton’s evidence was dysfunctional  and what part was not.  Let me  illustrate by reference  to the various findings I made:

1.                  I held that Mr Ashton knew at various times that Mr Jury was not in a position to meet pressing immediate commitments.   Mr Ashton was Mr Jury’s accountant and the accountant for various members  of  the  group of companies which Mr Jury at that  time had.  The conclusion that this is so would overwhelming be right whether I rejected Mr Jury’s evidence on credit or otherwise.

2.                  I found that Mr Ashton knew there was a reasonable chance that Mr Jury would lose  the proceedings and become  bankrupt with his house  in jeopardy.   If Mr Ashton had given no evidence at all, that conclusion inferentially was highly likely.   It must be borne in mind that Mr Jury himself never sought to go into the  witness box and give evidence and the open inference was clearly more readily drawn on  this account.

3.         I then found that Mr Ashton knew that, in  the  event that Mr Jury lost, he would be  hopelessly insolvent.  Objectively,  that is obvious.

4.                  I then found that  Mr Ashton together with  Mr Jury devised a  plan involving the contract of purchase.  Pausing at that point, it perhaps does not matter whether Mr Ashton or  Mr Jury devised the plan.  Ultimately the  question is more relevant to Mr Jury than it is to Mr Ashton.  What is painfully obvious is that Mr Ashton participated in it.  Whether he did so dysfunctionally does not matter.

5.                  I then reached the  conclusion that Mr Jury’s main purpose of transferring the home to Mr Ashton was to ensure that it not be available to creditors.  That  inference was open whether or not I accepted Mr Ashton’s evidence.  Again, Mr Jury’s failure to go into the witness box enabled that inference more  readily to be drawn.  Having regard to the structure of s 121 of the Act, however, this question was not itself of any significance.

6.                  I rejected Mr Ashton’s evidence of the market value of  the home.  I  did  so because there  was  an expert valuation available.   Mr Ashton was far less qualified to give that evidence, if qualified at all.  That has nothing to do really with Mr Ashton’s credit. 

7.         I rejected his evidence that the figure of $550,000 was selected as the amount he was prepared to pay.  Given that Mr Ashton’s recollection may now be affected by his medical condition, I would likewise reject that conclusion.

8.         I did hold that  Mr Ashton acted as a tool for Mr Jury.   However,  I indicated that that was probably not relevant anyway.  It would be an inference open irrespective of the reasons for the unreliability of Mr Ashton’s evidence.

9.         I  then found  there was no contra arrangement between  Mr Ashton  and Mr Jury and  that this arose as an afterthought.  There was no evidence apart from  Mr Ashton’s own evidence from which any conclusion could be drawn that there was a contra deal at any relevant time.  I do not see how Mr Ashton’s medical condition could possibly alter that finding.  Again Mr Jury gave no evidence.

10.       I found  it open to find  that the arrangement was that  Mr Ashton would  be paid only after litigation concluded.  I did so not because of any evidence of Mr Ashton’s accepted or rejected but because of objective circumstances.   The finding that  invoices were never given  to Mr Jury by Mr Ashton seems objectively to be  the case particularly if Mr Ashton’s evidence is unreliable.

11.              Favourably to Mr Ashton I found he did  work  for Mr Jury of a substantial quantity.   I would  not imagine that the medical evidence would alter that conclusion.  

12.       I found that the arrangement under which Mr Jury was to reside in the house was not  formalised until October 1997.  If Mr Jury’s evidence is unreliable that conclusion still follows because  it  is the first time that any suggestion of a documentary lease arose.

Having made these findings, I concluded that s 121 was satisfied.   I did so not merely because of my finding of  the  main purpose of  the  transfer as entered into by Mr Jury, a finding not relevant directly to Mr Ashton, but also because alternatively the transfer was given for an  inadequate consideration, a matter which then makes it unnecessary to draw a conclusion as to Mr Jury’s purpose.

13.       I found that Mr Ashton could reasonably have inferred that, at  the  time of  the transfer, Mr Jury was or was about to become insolvent, a matter which is clearly likely whatever one thinks  of  Mr Ashton’s own evidence.

The provisions  of s 121(4) I found did not protect Mr Ashton.  The provisions  of  that subsection are cumulative, not alternative.  It avails Mr Ashton nothing even  if I  were to accept his evidence that he did not know Mr Jury’s main purpose or could not  have reasonably inferred that Mr Jury was about to become insolvent for  the simple reason that  the consideration he gave was  not at least as valuable as the market value  of the property.

The only remaining matter to which consideration needs to be given is whether  the medical evidence either presently before me or which presumably  is to be obtained could relate to whether Mr Ashton acquired the home as a  transferee in good faith and for at least  the market value.  Since  he  did  not acquire the property for at  least the market value the question of  good faith does not arise.

These conclusions show ultimately, that for whatever reason I fail to accept Mr Ashton’s evidence, the Trustee must succeed.  For this reason it seems  to me totally pointless either to adjourn the motion so that more medical evidence can be obtained or, for that matter, to permit that evidence  to be adduced at  a hearing.  It will make no difference.  The outcome will be the same.

I should say that counsel  for  Mr Ashton suggested that, if the evidence were admitted on hearing, a doctor might be able  to say what evidence was more consistent with Mr Ashton’s medical condition  and  so presumably could  not be believed or perhaps could be believed.   With  respect, it  is hard  to see how a medical doctor could  indicate what evidence I should accept or what evidence I  should reject.   I  can accept that medical evidence  will indicate that a person’s recollection or, for that matter, cognitive performance is impaired.  That undoubtedly requires the evidence to be looked  at with great care and perhaps rejected, whether  it be favourable or adverse to the witness, but it is  difficult  to  see how anyone could possibly take a view why a certain kind of evidence, presumably that favourable  to  Mr Ashton, might be accepted while  another kind  of evidence, presumably that adverse to Mr Ashton, might be rejected.

I accordingly would refuse to adjourn the motion and dismiss it on the grounds that, irrespective of matters such as the prejudice of the parties or the general overall interest in finality  of  litigation or  justice, the evidence sought to be now admitted could make no difference to the outcome.

I will shortly give judgment related to the form of  orders once written  submissions are received from counsel for Mr Ashton.

Mr Ashton must pay the costs  of  the motion.

Associate:

Dated:              20 November 1998