FEDERAL COURT OF AUSTRALIA

Abriel v Australian Guarantee Corporation Ltd [2000] FCA 1198

TRADE PRACTICES – unconscionable conduct – application to avoid compromise – claims of unconscionable conduct not supported by the evidence

Trade Practices Act 1974 (Cth), s 51AA

RUDOLPH ABRIEL, VERA ABRIEL AND PREMIER KNITS PTY LIMITED ACN 005 879 920 v AUSTRALIAN GUARANTEE CORPORATION LIMITED ACN 000 015 485 AND WESTPAC BANKING CORPORATION ARBN 007 457 141

NG 1015 OF 1998

DOWSETT J

29 AUGUST 2000

BRISBANE (HEARD IN SYDNEY)

THE COURT ORDERS THAT:

1.         The application be dismissed.

2.         The parties may make further submissions as to the further findings of fact and as to costs.

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

REASONS FOR JUDGMENT

BACKGROUND

            The first and second applicants are married and, for all presently relevant purposes, control the third applicant.  The first respondent is a finance company.  The second respondent is a bank.  In the early 1990s companies associated with the first and second applicants, including the third applicant obtained finance from one or other of the respondents in circumstances which led to a legal dispute.  This dispute was purportedly resolved by a deed of release dated 5 April 1994.  In 1995 the applicants commenced fresh proceedings (G 338/95) to have the deed of release set aside and for other relief incidental to the causes of action which had been compromised by it.  Those proceedings were, in turn, purportedly compromised by a deed of settlement dated 28 April 1998 (the “deed”).  Pursuant to the terms of the deed, judgment was to be entered on the amended statement of claim in proceedings G 338/95 in favour of the first and second respondents.  The application and cross-claim were to be dismissed with no orders as to costs.  These proposed orders were made on 8 May 1998.

THIS APPLICATION

1                     The applicants now seek to set aside the deed and the consent orders made pursuant thereto, a declaration that the deed is no bar to their prosecuting the claims pleaded in proceedings G 338/95 and damages.  The bases for such relief are unclear but seem to involve allegations that the respondents were guilty of unconscionable conduct under the general law or pursuant to s 51AA of the Trade Practices Act 1974 (Cth) (the “Act”).  Alternatively, it is alleged that they were parties to undue influence exerted over the applicants by their counsel, such conduct having induced them to execute the deed.

2                     The thrust of the applicants’ allegations is that they were unable to afford legal representation in connection with proceedings G 338/95 and were, as the respondents knew, relying upon their legal advisers not requiring payment unless and until proceedings were concluded in the applicants’ favour.  It is said that by early 1998, the respondents were also aware that the applicants had retained Ms Bennett SC on this basis.  At that time, with the encouragement of Tamberlin J, the parties agreed to a mediation conference.  It is alleged that the respondents agreed to participate only upon the condition that Ms Bennett represented the applicants.  Mr Morling QC was appointed as mediator.  The conference took place on 31 March 1998.  The first and second applicants were present, represented by a solicitor, Mr Levitt and by Ms Bennett.  The respondents were represented by Mr Dowdy of counsel and his instructing solicitor, Mr Opperman.  Mr Curd, a solicitor employed by the first respondent, was also present.

3                     According to the first and second applicants, at some stage on that day, Ms Bennett and Mr Levitt told them that they would not take the action to trial.  They allege that Mr Dowdy, by his conduct, had caused Ms Bennett to withdraw from the case, and that the respondents, through Mr Dowdy, had deliberately acted to achieve that result and to cause Ms Bennett to persuade the applicants to accept terms of settlement offered by the respondents.  The applicants allege that they were thereafter unable to obtain other legal representation, and that Ms Bennett repeatedly advised them that they should accept the respondents’ offer.  In April 1998 the applicants executed the deed, which reflected that offer, and the proceedings were discontinued.  The applicants were paid $90,000.  They allege that in executing the deed, they relied upon Ms Bennett’s advice and were influenced by the fact that they were unable to obtain alternative legal representation in their prosecution of the proceedings.  The applicants claim that they executed the deed without knowledge of Mr Dowdy’s conduct or that such conduct had influenced Ms Bennett.  They discovered these “facts” at a later stage.

4                     It is said that the respondents “took advantage of the applicants’ special disadvantage”, thereby engaging in unconscionable conduct under the general law and/or contrary to the provisions of s 51AA of the Act.  Alternatively it is said that the applicants entered into the deed because of undue influence exerted by Ms Bennett and/or that the respondents knowingly caused her to breach her duty to the applicants to give legal advice free of any “conflicting or potentially conflicting interest of her own without first disclosing that interest to the applicants”.  In view of the seriousness of the allegations, it is necessary that they be dealt with carefully, whether or not, if proven, they would constitute a cause of action leading to the relief claimed by the applicants.

5                     It is appropriate to observe at this stage that at the commencement of the trial, the respondents submitted that pursuant to the agreement to mediate, the parties were not entitled to lead any evidence concerning events which took place pursuant thereto.  Nevertheless, in order to permit the efficient conduct of the trial, counsel for the respondents accepted that the question should be argued at the end of the trial and that evidence concerning the mediation should be received conditionally, subject to any ultimate ruling.  However, as I understand it, the respondents no longer require that I determine the question. 

EVIDENCE OF THE FIRST AND SECOND APPLICANTS

6                     The first and second applicants gave evidence to similar effect.  In 1994 they had retained Mr Stewart Levitt, a solicitor to act in connection with the 1994 compromise, presumably to have it set aside.  His retainer provided that he was to be paid $6,000, with the balance of his fees payable only if the applicants were successful.  Application G 338/95 was issued on 11 May 1995.  At some stage, as the result of intervention by one Rabbi Woolstone, Ms Bennett SC was recruited to represent the applicants without fee.  It should be said, I hope without causing offence, that the first and second applicants, Mr Levitt and Ms Bennett are all members of the Sydney Jewish community.  It seems that the first applicant had approached Rabbi Woolstone, seeking his assistance concerning the action.  Rabbi Woolstone understood that Ms Bennett was willing to offer legal assistance to members of the Jewish community.  At some stage, he and the first applicant met with Ms Bennett to discuss the matter although they did not then have the relevant papers.  The first applicant claimed that Ms Bennett said, “I will give eighteen hours of my time to the matter free of charge.  You should ask Stewart Levitt to send me a brief.”  A brief was subsequently delivered.  Thereafter, Ms Bennett became actively engaged in the matter and had numerous conversations with the first and second applicants.  There was also substantial correspondence between them.  She probably did very much more work than she initially offered to do.  It is clear that at some stage in 1997, the respondents became aware that Ms Bennett had been retained.  The first and second applicants allege that in or about October or November 1997 Ms Bennett said words to the following effect:

There are two distinct claims, one relating to Abriel Fabrics and one relating to Premier Knits.  To litigate both cases will take about 6 weeks of hearing time.  I’m not prepared to do that on a pro bono basis.  The Premier Knits case on its own will take about 3 weeks.  I am prepared to take that case to trial on a pro bono basis.

7                     It is said that the applicants accepted this advice, and that the proceedings were subsequently conducted accordingly.  In December 1997 there was a directions hearing before Tamberlin J at which his Honour indicated the desirability of mediation.  In subsequent discussion between the first and second applicants and Ms Bennett, she explained the function of mediation.  The first applicant asked, “What will happen if we can’t reach an agreement?”.  She is said to have replied, “We’ll go to trial.  The trial should take about three weeks.”  It is the applicants’ case that Ms Bennett was, prior to the mediation conference, willing to take their case to trial, either voluntarily or on a “speculative” or “contingency” basis, that is upon the basis that she would be paid only if the applicants were successful.  The first applicant claims to have offered her this latter arrangement in a telephone conversation in March 1998.

8                     On 21 January 1998 the solicitors for the respondents wrote to the solicitors for the applicants, setting out the arrangements for mediation and indicating that:

We are instructed that both AGC and the Bank are willing to enter into mediation with the applicants on the basis that:

1.         The parties are able to reach agreement on a time and date for the mediation and a suitable mediator;

2.         The applicants will be represented by Ms Bennett SC at the mediation;

3.         The mediator’s fees and the cost of the mediation facilities will be shared equally between the applicants and the respondents.

9                     The writer also indicated that Mr Morling was an acceptable mediator.  On 31 March the mediation conference took place.  In attendance were Mr Morling, the first and second applicants, Ms Bennett, Mr Levitt, Mr Moses (a chartered accountant who had prepared a report on behalf of the applicants), Mr Dowdy, Mr Opperman and Mr Curd.  During a preliminary session, all participants were in one room but thereafter, the two sides were accommodated in two separate rooms.  According to the first and second applicants, Mr Morling visited their room to ask them and their legal advisers how much they were expecting.  Ms Bennett replied, “$750,000”.  Mr Morling left the room and later returned, saying that the respondents were offering $50,000.  According to the first applicant, he was shocked and became very emotional.  There were subsequent negotiations between Ms Bennett and Mr Dowdy.  Late in the afternoon, Ms Bennett told the first and second applicants that the respondents’ final offer was $90,000, inclusive of costs.  At this stage she also indicated that she was not prepared to take the matter to trial and that she did not require any payment for her work to date.  Mr Levitt then said: “If Annabelle is not prepared to take the matter to trial, then neither am I.  I will only require payment of $20,000 of my $60,000 fees.”  Mr Moses said that he would not require any payment for his work.  The first applicant replied that the offer was outrageous, that he would prefer a bullet in the head and that he would find other lawyers who were prepared to take the matter to trial.  The first and second applicants said little in their evidence about subsequent events at the mediation conference. 

10                  Thereafter, they made efforts to find other legal representation on a “contingency” basis, but were unable to do so.  They also sought to raise money to fund the action, again without success.  On various occasions in the weeks following the mediation, the first applicant spoke to Ms Bennett by telephone and visited her in her chambers.  He told her that he was having difficulty finding alternative legal representation and that the respondents’ offer was outrageous.  On each occasion, she said that she was not prepared to take the matter to trial, that he had to decide whether or not to accept the offer, that she did not think it reflected his prospects of success, but that if he did not accept it, he would have difficulty in conducting the trial without legal representation.  She also said that in any event, even if he won, the respondents would appeal and that the matter would continue for another year.  She pointed out that he would be seventy-eight years of age before it was finalized and that he should consider the effects on his health.

11                  On 14 April 1998 the first applicant wrote to Ms Bennett, asking her to take the matter to trial.  He did not then allege any prior undertaking to do so.  The letter concluded:

In conclusion, if you can’t take the case to trial, I will have no choice but to accept the $70,000.  Vera and I will still be grateful for your efforts and remember you fondly.  You did your very best and were not even paid for your sterling work.  All over, it is a sad, tragic case.  Something like that should never have happened in Australia.

The difference between the offer of $90,000 and the figure mentioned in the letter presumably represents Mr Levitt’s fees.  The first applicant again wrote on 22 April, again making no reference to any undertaking to go to trial.  In late April or early May, the applicants executed the deed.  They claim that they had no choice as they had been unable to arrange alternative legal representation.  Nonetheless, after executing the deed, the first applicant asked Mr Levitt not to return it to the respondents’ solicitors for a few days as he intended to make further attempts to find alternative representation.  The first applicant claims that in June 1998, Mr Levitt told him for the first time of a conversation between Mr Dowdy and Ms Bennett on 31 March during which he showed her a letter (the “Grunstein letter”).  I will return to this matter at a later stage.

12                  One other aspect of the first and second applicants’ evidence should be noted.  A letter dated 28 March 1998 is ex “C” to the first applicant’s affidavit filed on 11 June 1999.  It is headed “Costs Agreement between Solicitor and Clients”.  Another version is ex “E” to that affidavit, which version is also ex “A” to Mr Levitt’s affidavit filed on 15 June 1999.  This second version bears numerous hand-written interlineations which do not appear in ex “C”.  Mr Levitt asserted that after a heated argument, he and the applicants agreed to the terms set out in the letter, including the interlineations.  This occurred in a meeting at Ms Bennett’s chambers, a day or so before the mediation conference.  The first applicant said in par 22 of his affidavit filed on 11 June 1999 that he received the amended letter on 30 March 1998.  In cross-examination, he agreed that he had received it prior to the mediation.  (See TS p 60, ll 9-17.)  The second applicant appears to know nothing of the matter.  The importance of this issue arises from a hand-written interlineation on p 2 as follows:

Nothing in this agreement places any party under any obligation to continue in a solicitor-client relationship beyond 31 March, 1998. 

13                  When, in cross-examination, this was drawn to the first applicant’s attention, he became very evasive concerning the interlineations.  I find that he received the letter with interlineations prior to the mediation.  The respondents submit that if the first and second applicants were aware that Mr Levitt was taking this position prior to the mediation conference, they could hardly have been proceeding upon the basis that Ms Bennett was firmly committed to taking the matter to trial.

MR LEVITT’S EVIDENCE

14                  Mr Levitt said that Ms Bennet initially undertook to devote ten hours of her time to the matter but in fact devoted considerably more.  He said that in late 1997, there was discussion concerning possible amendment of the applicants’ statement of claim to widen the scope of the proceedings to include dealings over an additional ten year period involving the affairs of a company called Abriel Fabrics Pty Limited (in liquidation) and its dealings with the respondents.  At that stage Ms Bennett said to Mr Levitt:

If all those Abriel Fabrics issues stay in, the case will go on for months.  I am not prepared to do a case which could go on for months pro bono.  I couldn’t afford to do it, even if I wanted to.  If we can’t settle the Abriel Fabrics issue and dispose of the Cross-Claim and Defence, then I will not be able to take the case to trial.

15                  Mr Levitt said that as a result of this conversation, he obtained instructions to settle a number of aspects of the matter upon the basis set out in a letter of 23 October 1997 from the respondents’ solicitors to his firm.  Mr Levitt also asserted that prior to the mediation conference, he had dealings with Mr Dowdy in connection with another matter and that at that time, Mr Dowdy said to him:

I hope that you have Annabelle attending the mediation for the Abriels, because Westpac and AGC are not prepared to have the mediation unless she is representing them. 

16                  He told Ms Bennett about this conversation.  He recalls that at the mediation conference, shortly before lunch, Ms Bennett left the room in which he and the applicants were sitting in order to speak to Mr Dowdy.  She subsequently returned to the room, looking upset, and said:

Phillip [Dowdy] has just shown me a letter which Stewart sent to Gary Grunstein in which he talked about Rabbi Woolstone asking us to act for Rudi, as if there was some Jewish obligation to take on Westpac – bringing to bear Jewish pressure on AGC and Westpac – I don’t know – as part of some organized attack.  It is really quite embarrassing.  The suggestion that you and I have lent ourselves to some kind of Jewish attack on Westpac. 

17                  Mr Levitt replied:

There was nothing wrong with that letter.  It does not quite say that.  I was just making the point that he is in partnership with Leslie Caplan, who has been honoured for his services to the Jewish community and here are you and me, who are relative agnostics, slaving our guts out, virtually ‘on spec’, because some Orthodox Rabbi asked us to!  How did Dowdy get hold of that letter anyway?

18                  Ms Bennett replied:

I don’t know, I’ll ask him. 

19                  Mr Levitt suggested in his affidavit that during this conversation, the first and second applicants were some distance away and “looking teary-eyed”, perhaps implying that they may not have heard the conversation.  When asked in cross-examination why he had not, at the time, told them of this development, he said that he thought that they had heard the discussion.  Subsequently, Ms Bennett left the room and returned about fifteen minutes later, saying:

Phillip Dowdy said that Grunstein made a complaint to the Law Society and they got a copy of the letter from the Law Society. 

Mr Levitt replied:

That sounds like nonsense.  If Grunstein had made a written complaint to the Law Society, the Law Society would have contacted me, sent me a copy and asked me for my response to the complaint.  That is the procedure which the Law Society always follows.  Also, why would the Law Society give a copy of the complaint letter to Dowdy, his clients or his solicitors?  They weren’t the subject of the complaint.

20                  Ms Bennett said:

I don’t know but that’s what Phillip said.  This has confirmed in my mind the correctness of the decision I’ve made not to continue with this matter.

21                  Negotiations continued between the parties.  Ms Bennett eventually reported an offer of $90,000, inclusive of costs.  At that stage she again said that she was not prepared to take the matter to trial and that she would not require any payment for her work to date.  Mr Levitt said that if Ms Bennett was not prepared to go to trial, then nor was he.  He also said that he would require payment of only $20,000 of his estimated fees to date of $60,000.  He said in evidence that by this time, he was exhausted as a result of acting for the Abriels and was annoyed with their attitude to his proposed costs agreement, a reference to the discussion concerning the letter of 28 March 1998 with interlineations.  He believed that Ms Bennett’s participation had made the case manageable.  Subsequently, the respondents indicated that they would require a certificate of independent advice from Ms Bennett as part of the proposed settlement.  Ms Bennett said that she would provide such a certificate.  The applicants later signed the deed.  The first applicant asked that Mr Levitt delay its return to the respondents because he was still making last-ditch attempts to find alternative representation.

22                  Mr Levitt said that on 18 or 19 June 1998 he had a conversation with the first applicant in which the latter asked why Ms Bennett “didn’t … agree to go to trial”.  According to Mr Levitt, he replied:

What Dowdy did with the Grunstein letter was the last straw.  Annabelle was upset and embarrassed by the stigma of being characterised as a participant in a Jewish conspiracy against Westpac, especially since she was told that the Law Society was somehow involved in looking into it.  You should feel very grateful to her anyway.  She did a hell of a lot of work for you and charged you nothing for it.

23                  It should be noted that Mr Abriel did not ask why Ms Bennett had resiled from an earlier agreement to go to trial, but rather why she had not agreed to go to trial.  According to the applicants, this was the occasion upon which they first heard that the Grunstein letter had been shown to Ms Bennett.  It is appropriate that I now record its effect.  The letter is dated 8 December 1995 and is from Mr Levitt to Mr Gary Grunstein of the firm of Leslie Caplan and Grunstein.  It is headed “Abriel” and apparently had attached to it a draft affidavit prepared following “our recent discussion”, presumably a discussion between Mr Grunstein and Mr Levitt.  The writer invited Mr Grunstein to swear the affidavit and indicated that Mr Abriel was to swear an affidavit to similar effect.  He referred to various aspects of the litigation in question and its conduct and then continued:

The draft Affidavit, submitted herewith, reflects Mr Abriel’s instructions to me and is entirely consistent with your account of what occurred, which I have discussed with you on two occasions now, both on 9 November, 1995, by telephone and on 7 December, 1995, on a conference call, at which Mr Abriel sat in audience.

Please let me know if there are any amendments which you would like to make to the proposed draft Affidavit.  Inevitably, the solicitors for AGC will issue a Subpoena to you, if you do not file an Affidavit.

It is quite possible for you tell the truth in this matter and at the same time, lock the Abriels into a position where they commit themselves, not to join you as a Respondent.

24                  The writer then referred to other dealings between the Abriels and their advisers and to Rabbi Woolstone’s involvement in the matter and concluded:

It would be a strange thing indeed if a firm so well regarded in the Jewish community as yours, were to act against the interests of the Abriels, in circumstances where the Jewish House is committing itself to their full support and enlisting the services of dedicated practitioners to come to the aid of his family, in their hour of need.

It is not a case where Mr Abriel is culpable in any respect.  The AGC Deed itself sought exculpation for fraud committed by AGC and Westpac against the Abriels.  If a young Jewish professional does not come to the aid of an elderly Jew (especially in circumstances where you would not be sacrificing anything yourself and even gaining protection in the process) then do we not have to ask ourselves what Rabbi Akiba asked himself, “If I am not for myself, who will be for me?”  This is a collective question, which we must confront as Rabbi Woolstone has done.

25                  In the course of the trial, there have been numerous suggestions as to the propriety or otherwise of this letter.  It has been suggested that the letter was, in effect, an attempt to coerce Mr Grunstein into swearing an affidavit which he may have been reluctant to swear, partly by appealing to his own self-interest, by way of a veiled threat of proceedings against him personally, and partly by an appeal to such loyalty as he might have to the Jewish community.  It has also been suggested that the letter was inappropriate because it created the impression that the Jewish community was uniting against one or other of the respondents.  Thirdly, it was suggested that the letter invited a “collective” approach to determining the truth of the content of the proposed affidavit, in other words, that it invited Mr Grunstein to adopt a view of events which coincided with the views of others.  In the absence of a more detailed knowledge of the circumstances in which the letter was written, including the relationships between Mr Grunstein and Mr Levitt, and between each of them and the applicants, I am unable to decide whether any of these views is correct.  The applicants’ case is that the production of this letter to Ms Bennett by Mr Dowdy and comments made by him at the time were likely to, and were intended to cause embarrassment to Ms Bennett, precipitating her withdrawal from the proceedings and her advice to the applicants to accept the respondents’ offer of settlement.  Any meaning possibly attributed to the letter by Ms Bennett may be relevant for present purposes.  For that reason, it is not necessary that I form any concluded view as to its meaning or as to its propriety.

26                  Mr Levitt said that the initial offer made on behalf of the applicants at the mediation conference was $750,000.  The respondents made a counter-offer of $50,000.  The applicants subsequently offered $130,000, apparently on the advice of Ms Bennett.  Mr Levitt said that these instructions were received late in the afternoon, after Ms Bennett and he had told the applicants that they were not prepared to take the matter to trial.  He said that on 30 March Ms Bennett had told him that she was reluctant to take the matter to trial although he suspected that she felt obliged to do so.  He said that she had always been reluctant to take the matter to trial because it was “a long drawn-out complicated matter with a very demanding client …”.

27                  To this point, I have omitted reference to some passages in the evidence of the first and second applicants and Mr Levitt which consist of opinions concerning the events which allegedly transpired between Ms Bennett and Mr Dowdy, the motives of Mr Dowdy and the respondents in saying and doing certain things, and their effects upon Ms Bennett.  I have taken this course because of the need to distinguish these opinions from the evidence in the case.  Because the applicants appeared without legal representation, that distinction was not always strictly observed at the trial.

OTHER WITNESSES CALLED BY THE APPLICANTS

28                  Mr Moses, an accountant advising the applicants, was also present at the mediation conference.  He said that Ms Bennett said words to the effect:

Dowdy just showed me the letter which Stewart wrote to Gary Grunstein.  I am very embarrassed by the letter.  I don’t know how they got hold of it but somehow they did.

29                  Mr Morling was called by the applicants.  It is fair to say that he has no recollection whatsoever of any relevant aspect of the mediation.  This is entirely understandable.  Mr Johns, a solicitor, was previously employed by the first respondent.  He said that in the period prior to the mediation conference, the applicants had made it clear to him that they wanted $500,000 from the respondents, and that if such an offer was not forthcoming, they would take the matter to trial.  At some stage after the applicants had indicated their willingness to accept the respondents’ offer of $90,000, Mr Johns expressed surprise at this in view of their previous attitude.  The applicants also relied upon an affidavit from Mr Bryce Courtenay, however it is of no relevance for present purposes.  They also called Ms Bennett, but it will be more convenient to consider her evidence in conjunction with Mr Dowdy’s.

EVIDENCE OF MESSRS DOWDY, OPPERMAN AND CURD AND MS BENNETT

30                  Messrs Dowdy, Opperman and Curd, who were called by the respondents, and Ms Bennett, who was called by the applicants, are critical witnesses in this case because they were involved in the conversations which are central to the applicants’ complaints.  

Mr Opperman

31                  Mr Opperman said that he first became aware of Ms Bennett’s involvement in the matter on 25 July 1997 when Mr Mitchell, who was either a member or an employee of Mr Levitt’s firm, informed him of it.  Ms Bennett first appeared on behalf of the applicants on 25 September 1997 when the first respondent applied to strike out paragraphs of the applicants’ defence to its cross-claim.  Ms Bennett again appeared at a directions hearing on 2 December 1997 which was adjourned to 11 December.  On 10 December Mr Dowdy suggested to Mr Opperman that it might be worthwhile for them to try to settle the matter and that Ms Bennett’s involvement might assist in this process because of the personal qualities which she would bring to it.  The first respondent had previously refused to enter into any mediation process, apparently because of perceptions concerning the motives of the applicants and Mr Levitt.  Mr Opperman considered that the applicants had no prospects of success in the action.

32                  On 11 December 1997, at the hearing before Tamberlin J, his Honour suggested that the parties consider mediation.  Indeed, his Honour made it fairly clear that he would not assign trial dates until mediation had occurred.  The directions hearing was adjourned to 13 February 1998.  There is no doubt that Messrs Dowdy and Opperman advised the respondents to consider mediation, largely because of Ms Bennett’s likely involvement.  They apparently considered that she would induce the applicants to take a more reasonable approach to their prospects.  The respondents considered that the applicants and their other advisers had not demonstrated such an approach to date.  The respondents agreed to mediation provided that Ms Bennett was involved.  The applicants claim that the respondents’ enthusiasm for Ms Bennett’s involvement was part of a plan to provoke her withdrawal at a later stage. 

33                  Mr Opperman participated in the mediation.  After a preliminary session in which both sides and their advisers conferred with the mediator, they withdrew to separate rooms and thereafter, during the morning at least, Mr Morling was the primary means of communication between them, although Mr Dowdy and Ms Bennett also met on two or three occasions.  Mr Opperman had very little contact with Ms Bennett or Mr Levitt.  He said that initially, the respondents offered to write off all amounts owing and “walk away”, presumably with no order as to costs.  A counter-offer was received in the amount of $750,000.  This was rejected.  The respondents then offered $50,000.  This was rejected by the applicants.  They made a counter-offer of $130,000.  Mr Opperman thought that the respondents’ offer of $50,000 was made before lunch.  He could not remember whether the counter-offer of $130,000 was made before or after lunch.  It was rejected, and the respondents then offered $75,000, probably after lunch.  That offer was rejected by the applicants who offered $115,000.  Mr Opperman’s recollection was that this occurred at about 4 pm.  The respondents then offered $90,000.

34                  Mr Opperman recalls Mr Morling saying at some stage that:

There was an expectation in the Abriel camp that the Abriels would receive a substantial sum of money to settle this matter.  I think they now realize that AGC won’t pay what they expected, but AGC will need to pay more than what is being offered.

35                  Mr Opperman thought that this had occurred after the applicants had offered $130,000 and before the respondents had offered $75,000.  There was then discussion as to the reasons for the respondents’ unwillingness to pay any more, in the course of which there was reference to advice which the applicants had received in the earlier litigation.  Mr Morling said that he had been told that the solicitor who gave that advice was merely a tennis acquaintance of the first and second applicants, implying that it had been unreliable.  He also referred to an affidavit from the solicitor in question.  Mr Opperman, apparently correctly, identified this solicitor as Mr Grunstein and observed: “The circumstances in which that affidavit was obtained are dubious”.  He then referred to the Grunstein letter.  He told Mr Morling that the letter had been exhibited to an affidavit filed on behalf of the applicants.  Mr Dowdy suggested to Mr Morling that it demonstrated “the type of people we are dealing with”.  Mr Morling asked to see a copy.  Mr Opperman did not have the letter with him and  had to fetch it from his office.  There was also some mention of Mr Levitt’s involvement in other cases against the second respondent which the latter saw as unmeritorious.  Mr Morling was subsequently shown the Grunstein letter and said that he thought that Mr Dowdy should show it to Ms Bennett.  Mr Dowdy subsequently did so and reported that she had not previously seen the letter and was surprised by it.

36                  Thereafter, negotiations continued, culminating in the offer of $90,000.  Discussion ensued concerning a form of release and appropriate consent orders and the need for a certificate as to independent advice from Ms Bennett.  The mediation conference concluded late in the afternoon, with the respondents undertaking not to revoke the outstanding offer of $90,000 before 4 pm on the following day.  Mr Opperman was to prepare a draft deed of release and send it to Mr Levitt.  Mr Opperman denied knowledge of any ulterior purpose on the part of the respondents or Mr Dowdy in the disclosure of the Grunstein letter to Ms Bennett or any such purpose on his own part.

MR CURD

37                  Mr Curd was told by Mr Opperman that Mr Dowdy had raised the Grunstein letter with Ms Bennett.  Otherwise, his evidence, although not identical with Mr Opperman’s, was broadly supportive of it.  He also excluded the possibility of any deliberate attempt by the first respondent or anybody else at the mediation conference to provoke Ms Bennett’s withdrawal from the matter.  He said that the first respondent was encouraged by Ms Bennett’s involvement in the case to expect a more rational approach on the part of the applicants.

MR DOWDY

38                  Mr Dowdy said that he first became aware of Ms Bennett’s involvement in September 1997.  He regarded her as professionally competent and as a sensible and reasonable person.  On 25 September 1997 they appeared before Tamberlin J on the application to strike out, on which occasion Ms Bennett raised the possibility of mediation.  Mr Dowdy enquired as to her connection with the case and as to whether she was briefed for the trial.  He also asked whether she would attend any such mediation.  Ms Bennett said that she had not given any commitment as to the trial and was involved on a pro bono basis for the purposes of the motion only.  She indicated that she would be prepared to attend at any mediation without fee.  Mr Dowdy then raised the possibility of mediation with Mr Curd and Mr Opperman.  Ultimately, the motion was disposed of by consent.  Mr Dowdy and Ms Bennett had several subsequent conversations by telephone concerning the matter.  They both again appeared before Tamberlin J on 24 October.  At some stage, his Honour indicated that he might direct mediation if the parties did not undertake such a process voluntarily.  It was later agreed that the parties would participate in mediation.

39                  In preparation for the mediation, Mr Dowdy formed the opinion that it would be worthwhile, from the respondents’ point of view, to settle the matter.  This opinion was based upon an expectation that any trial would be protracted and involve adverse publicity, rather than upon any perceived merit in the applicants’ case.  He concluded that settlement in the range $50 - $100,000 would be appropriate.  At the mediation, he was initially instructed to offer nothing.  He communicated this point of view to Mr Morling.  Mr Morling subsequently returned with an offer of $750,000 which Mr Dowdy said was laughable.  He then received instructions to offer $50,000, which he did.  Mr Morling returned with an offer of $130,000 to which a counter-offer of $75,000 was made. 

40                  Subsequently, and before any response was received to that offer, Ms Bennett spoke to him, asking why the respondents were offering such a small amount.  Mr Dowdy told her that the first applicant had “made the lives of individual officers of AGC hell”.  He said that they did not believe that he was acting in good faith, they did not trust him, nor did they believe that he would adhere to any agreement which might be reached.  Mr Dowdy said that he had experienced difficulty in convincing the respondents to mediate at all, or to make any offer.  He said that he did not consider that the applicants had any prospects of success and that he had advised his clients accordingly.  He further said that the respondents did not want to encourage Mr Levitt to think that claims could be brought against the bank and then mediated for large sums by way of settlement.  He said that Mr Levitt was regularly litigating against the second respondent and had a number of cases outstanding at that time.  He then said that they were “far from impressed with” the Grunstein letter.  Ms Bennett said that she would take further instructions and left. 

41                  She subsequently returned, either just before, or just after lunch and asked if she could see the letter.  Mr Dowdy said that he saw no problem in showing it to her, but that he did not have a copy.  He said that it was an annexure to an affidavit by Mr Levitt.  Ms Bennett said that she had not seen it.  Mr Dowdy said that he would take instructions.  Mr Dowdy reported this to Mr Opperman.  Subsequently, Mr Morling also raised the question of the letter, apparently as a result of something that Ms Bennett had said to him.  Mr Opperman then went to obtain a copy.  Mr Morling, having read it, said words to the effect of “I see what you mean.  It’s an amazing letter.  I think that you should show this to Annabelle.”  Mr Dowdy showed the letter to Ms Bennett, although she did not read it in his presence.  There was no further reference to it in the course of the day.

42                  The applicants’ offer of $115,000 and the respondents’ counter-offer of $90,000 were then made, the latter with a stipulation that if it were not accepted quickly, the mediation would be concluded.  Ms Bennett said that the applicants would accept the offer and asked if a document could be drafted.  Mr Dowdy replied:

Annabelle, because of the special circumstances of this case, there will be no final deal done today.  I want your client to have an opportunity to consider his position at least overnight.  He has already done one deal with my client and then gone back on it.  I do not want him to be able to suggest at any time that he was under particular pressure at this mediation and to put up another claim of duress or that he entered into a settlement of this case under improper pressure.  I am afraid we do not trust your client and no final deal can be done today although I realize that it is usually highly desirable to conclude a final deal at a mediation before it breaks up.

43                  At some stage Ms Bennett was told that a certificate of independent advice would also be necessary.  The applicants (presumably through Ms Bennett) asked that the offer not be revoked before 4 pm on the following day, apparently in the expectation that the deed of settlement would be executed by that time. 

44                  Mr Dowdy had no further substantial involvement in the matter until 17 June when he received a telephone call from Ms Bennett.  She told him that she had seen a draft letter from the first applicant to him, accusing him of racial discrimination and of using improper, racially-motivated tactics in the mediation.  She assured Mr Dowdy that this had nothing to do with her and that she rejected any such allegation.  She said that she considered his tactics and the respondents’ to have been fair and reasonable, “if hard-nosed” and that she intended to write to the first applicant to tell him that his letter was misconceived.  Mr Dowdy said that he accepted that she was not responsible for any such letter and that the first applicant was clearly unstable.  Following this conversation, Mr Dowdy spoke to Mr Opperman and on 21 June, wrote to him recording the substance of his conversation with Ms Bennett.  In the following months he spoke to Ms Bennett on at least one other occasion.  She told him that Mr Levitt was telling the applicants that she was responsible for their having accepted the respondents’ offer.  Mr Dowdy told her that he considered that she had done everything she could for them, and that if any complaint was made about her conduct, he would give evidence to that effect.  I doubt whether this evidence of events following the mediation is of any relevance.

45                  On 19 June Mr Dowdy received a fax from the first applicant, apparently dated 15 June, in which the latter complained of the former’s conduct at the mediation.  In particular he said:

My solicitor, Stewart Levitt, told me that you waved in the face of Ms. Bennett, S.C., my legal representative, a copy of a letter which Levitt had sent on the 8th of December 1995 to the solicitor Gary Grunstein.  In this letter, a copy of which I attach, Levitt did not ask for anything untoward, unfair, unethical or for any legal favours, but, he did suggest that a fellow Jew should sympathise and “come to the aid of an elderly Jew in a case where the AGC Deed of Release sought exculpation for fraud committed by AGC and Westpac against the Abriels”.

According to Levitt, Ms. Bennett was very upset over the provocation of Westpac/AGC to bring into the trial religious and racial undertones.  In the end, she decided not to carry on.  I readily believe it, because in December, after the last appearance in the Federal Court, Ms. Bennett had assured me that if the mediation failed, she would go to trial for Premier Knits Pty. Ltd., which she estimated would take three weeks and was acceptable to her.  Her unexpected withdrawal had catastrophic implications for me.  Without legal representation at the trial, I obviously could not proceed, and was forced to accept the sham Deed of Settlement, whereby my legal costs exceeded the Agreed Sum.  You can say that it is costing me $3.5 million because, by the look of things you had no defence in court to our claim of damages.

I am satisfied that Gary Grunstein never gave you the above letter.  He went as far as to swear that he did not.  I know Gary quite well and I am sure that he is telling the truth.  So how did you come into possession of this letter?

Gary Grunstein admits that he sent the letter to the NSW Law Society as a precaution because of the implied threat by Levitt in his letter to him.  Under the circumstances, did you obtain the letter from the Law Society illegally, and did they illegally hand it over to you?

If not for the letter, Ms. Bennett would be pleading my case at the trial, and I would be looking to a fully warranted, multi-million dollar award handed down by the Federal Court.

46                  Mr Dowdy said that this was the first suggestion of which he was aware that the Grunstein letter had been referred to the Law Society.  The first applicant sent another fax on 21 June 1998 in which he encouraged Mr Dowdy to explain how he had obtained the “Levitt to Grunston (sic) letter legally …”.  There was a further letter on 16 July 1998 but it is not necessary to say anything about it.

47                  Mr Dowdy denied having said that the respondents would not mediate unless Ms Bennett was present.  He agreed, however, that he would not have recommended mediation if Mr Levitt were to be the applicants’ only legal representative because he believed that such an exercise would be a waste of time.  He denied ever saying to Ms Bennett that Mr Grunstein had made a complaint to the Law Society or that the Law Society was the source of the respondents’ copy of the Grunstein letter.  He said that he knew of it because it was annexed to an affidavit of Mr Levitt filed on 22 December 1995.  Mr Opperman had drawn it to his attention.  He denied ever suggesting to Ms Bennett that she was “part of a Jewish conspiracy against the Bank”.  He said that he would have been equally happy if other competent counsel had been involved in the case on behalf of the applicants.  He, of course, denied any ulterior motive in showing the letter to Ms Bennett or otherwise in his conduct at the mediation conference.

MS BENNETT

48                  Ms Bennett gave oral evidence.  She said that she had originally agreed to perform up to about twenty hours of advice work to assist Mr Levitt in the case.  She told the applicants that the previous compromise posed difficulties for them.  She recalled that at the mediation, she initially offered $750,000 on the first applicant’s instructions.  She had not formed any view about the “moral or ethical implications” of the case but considered that in respect of at least one aspect, there were reasonable prospects of success on “liability” but grave difficulties on “damages”.  At no time did she agree to take the matter to trial.  She made it clear to Mr Levitt and, she thought, on at least one occasion to the first applicant, that if the case was not resolved at mediation, she would take it no further.  She said that immediately prior to the mediation, Mr Levitt rang and asked her to charge a fee in the event that the matter settled.  He said that it would be difficult for him to do so if she did not.  She told him that she was unhappy about doing so, but nonetheless said that if the matter settled on a favourable basis, she would accept $20,000.  She had probably done about $40,000 worth of work.  She said that she was careful at all times not to commit herself to taking the matter to trial.  She agreed that she may well have estimated the likely duration of the trial at three weeks.

49                  Ms Bennett recalled being shown the Grunstein letter at some stage during the mediation.  She thought Mr Levitt was present at the time.  She scanned it but did not read it carefully.  She did not pay a great deal of attention to it at the time as it had nothing to do with her or the mediation.  She thought that the letter had been mentioned at the mediation whilst the first applicant was in the room.  She did not recall any specific discussion concerning it.  She recalled asking Mr Levitt how the other side had obtained it.  She thought that he had said something about the Law Society.  She may have said to him that it was embarrassing because of the suggestion that influence could be exerted within the Jewish community.  She considered it to be inappropriate and embarrassing from Mr Levitt’s point of view.  She did not find it personally embarrassing, although it was embarrassing in a general way because it raised a question about attitudes in the Jewish community. 

50                  At the time, she thought that the Grunstein letter was raised to unbalance the applicants’ camp in the mediation process although it was not directly concerned with, or likely to influence the outcome of the case should it go to trial.  I suspect that she had in mind the comment by Mr Dowdy to which he attested in evidence, that the Grunstein letter was a factor influencing the respondents against generosity at the mediation.  She did not consider that it had any impact upon the course of negotiations. Ms Bennett said that she had not been overborne by Mr Dowdy and that the mediation was “normal”, involving discussion “backwards and forwards”.  She had no complaint about Mr Dowdy’s conduct but considered that the respondents had been somewhat unreasonable in initially offering nothing.

LETTER OF 27 JUNE 1998

51                  It is necessary that I say something about a letter dated 27 June 1998 from Mr Levitt to the first and second applicants.  It appears from the first paragraph of the letter that Mr Levitt was aware that the applicants regretted their acceptance of the respondents’ offer.  By the time the letter was written, Mr Levitt had told the first applicant that Mr Dowdy had shown the Grunstein letter to Ms Bennett.  The letter of 27 June appears to have been a response by Mr Levitt to concerns expressed by the applicants, or at least the first applicant, about that matter.  It is necessary to quote from the letter at some length.  The third, fourth and fifth paragraphs are as follows:

I do, however, share your concern at one aspect of what occurred, which visibly had a material effect on Annabelle Bennett’s S.C. willingness to continue to be involved in in [sic] taking the matter to trial for you, I recall, however, that she did express to me other reasons as well, relevant to her assessment of her feelings toward you, Rudi, for being reluctant to continue with the matter to trial on a speculative basis.  I had noticed that in the week prior to the Mediation, she became increasingly reluctant to continue to represent you at trial, should the matter have not been successfully mediated.

However, it is also true to say that even before the Mediation conference, Ms Bennett adverted to her reluctance to continue acting in the matter if the matter were not successfully mediated.  I had indicated that I would not continue to carry the matter for you without Annabelle Bennett’s S.C. participation, before she announced that she would not remain acting for you if the matter were not mediated to a settlement.

On 31 March, 1998, one incident at the Mediation, appeared to represent the last straw for Annabelle Bennett S.C., confirming her inclination to withdraw if the matter were not settled at or shortly after, the Mediation.

52                  Mr Levitt then set out his version of the conversation with Ms Bennett concerning the Grunstein letter, that version being more or less in accordance with his evidence.  The writer continued on p 2:

During the last 10 days, you have told me that you telephoned Phillip Dowdy and in turn, Jason Opperman of Henry Davis York, the latter who informed you that their copy of the Grunstein letter actually emanated, not from the Law Society at all but from among the documents which you had discovered in the proceedings.

This gives rise to two very serious questions:

1.         Why, would Annabelle Bennett S.C. have been misled by Mr Dowdy of Counsel that the Grunstein letter had been produced to him, somehow via the Law Society?

2.         What was the purpose of producing my letter to Grunstein to Annabelle Bennett S.C. at the Mediation if not, in some way, to attempt to embarrass her out of continuing to represent you?

I must say, there is a compelling inference which arises that the use made of my letter to Grunstein by Westpac/AGC’s legal Counsel, in the context in which it occurred (according to what was disclosed by Ms Bennett at the time), smacks of improper pressure being brought to bear on Ms Bennett – and I do not suggest that Ms Bennett S.C. succumbed to that pressure, as I would not know what actuated her in finally resolving to withdraw from acting for you, if the matter were not settled through mediation – to back out of acting for you.

It was only the support which you had received from Ms Bennett S.C., Greene Moses, Chartered Accountants and my firm, which had allowed you to maintain the proceedings.  By virtue of their possession of the Grunstein letter, AGC/Westpac’s lawyers were clearly apprised of the fact that our generosity was effectively sustaining your legal campaign.  The method in seeking to undermine that support and generosity is obvious.  It would not involve a quantum leap of the imagination to infer that Mr Dowdy’s action in “using” my letter to Grunstein, in his representations to Ms Bennett S.C., was calculated to undermine the support of your lawyers for your cause – as if we, Jewish lawyers, had entered into an unseemly combination to take-on Westpac/AGC, at the request of a Rabbi.

I believe that it is quite open to you to feel aggrieved at the conduct of Westpac’s principal legal representative at the Mediation in respect of the matters which I have recounted, as I do believe that they were instrumental in Ms Bennett’s S.C. decision, which she confirmed during the Mediation, that she would not take your matter to trial: This is not to suggest that what transpired with respect to my letter to Grunstein was the only significant matter which she weighed in the balance in making her decision, as she had told me of other material factors as well, which appeared to me to be entirely reasonable and proper.

Clearly though, the use of my letter to Grunstein, must have been calculated to harm your commercial interest in retaining the representation by Ms Bennett S.C. and my firm on extremely favourable terms.  I believe that it constituted an unfair tactic to seek to undermine the willingness of your advocates to continue to represent you, through embarrassment and that this had the foreseeable consequence of bringing inappropriate pressure to bear on you to accept the settlement offer i.e. the prospect of desertion by your “contingency fee” legal team.

I note that you looked in vain, for substitute representation during the interregnum, between the proffering of the Deed of Release and finally deciding to sign.

Please do not publish the contents of this letter to any other person.

53                  It is, I think, reasonable to infer that this letter was the source of the applicants’ theory concerning Ms Bennett’s withdrawal from the case, which theory has been ventilated in these proceedings.  In effect Mr Levitt suggested that it was an inescapable inference from the circumstances as he understood them that Mr Dowdy, on behalf of the respondents, had deliberately sought to induce Ms Bennett and Mr Levitt to cease acting on behalf of the applicants.  That the alleged conduct was directed at achieving the withdrawal of both solicitor and barrister appears from the first sentence of the paragraph commencing “Clearly though …”.  It is somewhat difficult to see how Mr Levitt could have been so embarrassed by his own letter as to withdraw.  There is, in any event, a fundamental inconsistency in the approach taken by the applicants and Mr Levitt to the Grunstein letter.  On the one hand they assert that its production was designed to, and had the effect of inducing Ms Bennett to withdraw.  On the other, they assert that there was nothing improper about it.  One is tempted to ask rhetorically how, then, it could have had the effect of inducing Ms Bennett to withdraw.  Mr Levitt offered an answer to this rhetorical question in his evidence.  He claimed that Ms Bennett and himself are what he called “humanistic” Jews, by which I took him to mean that they see themselves as members of the wider, secular society rather than some narrower, Jewish society.  He suggested that in those circumstances, Ms Bennett would be particularly sensitive to any assertion that she was party to a Jewish conspiracy.

54                  There is, of course, a degree of presumptuousness surrounding Mr Levitt’s assessment of Ms Bennett but in any event, it does not really offer an answer to the question which I have posed.  Although the letter arguably attempts to persuade Mr Grunstein to support the Abriels on account of their shared Jewishness, it was written in late 1995, more than two years before the mediation.  There was no basis for believing that Ms Bennett was in any way associated with it.  Whilst I can see potential for embarrassment of the general kind to which Ms Bennett herself referred, I cannot see how the letter could provoke a barrister who had voluntarily undertaken substantial work on behalf of the applicants, to abandon them.  I have even more difficulty in accepting that the respondents or their legal advisers could have imagined that disclosure of the letter to Ms Bennett would have that effect, let alone that they would have planned their strategy on that basis.  It is true that the respondents made their participation in mediation conditional upon her involvement, but that was entirely understandable in the circumstances.  They were dealing with people who had departed from an earlier compromise and, rightly or wrongly, they had reservations about Mr Levitt.  Ms Bennett’s involvement offered the prospect of what they considered would be a more rational assessment of the applicants’ prospects, and they took advantage of it.  As Mr Dowdy said, the involvement of any other rational and competent counsel would also have been welcome.

CREDIBILITY AND FINDINGS OF FACT

55                  It is a startling assertion that one barrister could exert sufficient pressure upon another to cause the latter to withdraw from a case.  To exercise influence over another to bring about a specific result will usually be a difficult exercise.  Although there are many cases in which the courts have recognized that the will of one person has been overborne by that of another, they have been exceptional cases, usually involving either special relationships of trust or influence, or intellectual or physical inequality.  Ms Bennett is an experienced barrister who has taken silk.  Although there is little evidence before me as to the nature or extent of her practice, there is no suggestion that she is other than experienced and competent.  Neither Mr Levitt nor the applicants expressed any reservations concerning the quality of her work prior to the mediation conference.  It is inherently unlikely that such a person would react in the dramatic way which is here alleged simply because the Grunstein letter was produced to her, even assuming a special sensitivity concerning Jewish issues.  To some extent this view is based upon my observations of Ms Bennett as a witness.

56                  The first and second applicants were, in my view, very closely committed to their cause.  The first applicant, in particular, appeared to be almost obsessive about it.  On more than one occasion in the course of the trial, he spoke of success or failure as a matter of life and death to him.  He offered extreme, and not always consistent views concerning Ms Bennett and sought to maintain the almost impossible position that she was a victim of Mr Dowdy’s misconduct, having virtually no responsibility for her own decision to withdraw from the case despite her alleged earlier undertaking.  The first applicant also demonstrated a deeply-felt bitterness towards the respondents based upon transactions which occurred a very long time ago.  It cannot be overlooked that this is the second occasion on which the applicants have apparently compromised their claims and then sought to resile from such compromise.  On each occasion, money was paid to the applicants pursuant to the compromise, but within a short time thereafter, the applicants sought to re-litigate the matters in question.  This history explains the reservations which, according to Mr Dowdy and Mr Opperman, the respondents held concerning the reliability of the first applicant and his good faith in entering into any discussions as to compromise.  I doubt whether the first and second applicants have any capacity for objectivity concerning this case.  It is likely that this incapacity has affected their reliability as witnesses.  It is also relevant that in the first applicant’s letters to Ms Bennett of 14 and 22 April 1998, he made no reference to any undertaking by her to conduct the trial.

57                  As to Mr Levitt, I am somewhat equivocal as to his reliability.  He seemed, at some points, anxious to assist the applicants in a way which caused him to be unfair to others.  I cannot otherwise characterize his conduct in attributing Ms Bennett’s withdrawal to the receipt of the Grunstein letter from Mr Dowdy and in criticizing Mr Dowdy’s conduct.  After all, the letter was his and there was no reason why Ms Bennett should not have been informed of its content.  If it had the effect of provoking her withdrawal, then I would have thought that Mr Levitt might at least have considered the possibility that the fault lay with him and not with her or Mr Dowdy.  Further, if he perceived at the mediation conference that the Grunstein letter had led to Ms Bennett’s withdrawal and possibly affected her advice to the applicants, then he should have said so at the time, and certainly before they signed the deed.  His duty would dictate that course, whether or not the first and second applicants had heard any conversation with Ms Bennett concerning the Grunstein letter.

58                  On the other hand, he contradicted the first applicant concerning the interlineations in his letter dealing with costs.  This might be thought to indicate that he was trying to be even-handed, and therefore honest in his evidence.  Alternatively, he may have considered that the provision concerning continued representation was protective of his own position.  I should say that I draw no inference adverse to Mr Levitt from the fact that he wrote the Grunstein letter.  For reasons previously discussed, I do not feel that I am sufficiently in command of the surrounding circumstances to do so.  I treat the letter as relevant only for the effect which it may have had on Ms Bennett.

59                  Superficially, Mr Moses’s account offers some support for Mr Levitt’s version but on closer analysis, it is clear that his evidence does not take the matter very far at all.  According to Mr Moses, Ms Bennett reported receipt of the Grunstein letter, said that she was embarrassed by it and said that she did not know how “they” had obtained it.  There is no doubt that the letter was mentioned in conversation between Mr Levitt and Ms Bennett.  Ms Bennett said that she may have suggested that it was embarrassing, but not that it was embarrassing to her.  She agreed that she had asked Mr Levitt how the respondents could have acquired the letter, although Mr Levitt claimed that he raised that issue.  As I can see no reason why Ms Bennett would have found the letter personally embarrassing, I am inclined to treat Mr Moses’s evidence as generally accurate but, to the extent that it differs from Ms Bennett’s, to prefer her evidence.

60                  As to Ms Bennett, I saw no reason to doubt her honesty.  She undoubtedly devoted a substantial amount of time to the applicants’ cause without charge.  One would not normally expect to see unselfish conduct of that kind in somebody who was willing to conceal the truth where the interests of others were concerned.  It is implicit in the applicants’ case that notwithstanding her earlier generosity, Ms Bennett has concealed the truth to protect her own professional standing.  I saw nothing in her demeanour to suggest that this was the case. 

61                  I have reached a similar conclusion concerning Mr Opperman and Mr Dowdy.  Their accounts are quite plausible.  Mr Dowdy’s account of the circumstances in which he came to disclose the Grunstein letter to Ms Bennett is particularly so.  I can well imagine that, faced with Ms Bennett’s question as to why the respondents were taking an apparently intransigent position, he might respond by pointing to the history of the matter, including the letter, particularly if he had formed an adverse view as to Mr Levitt’s conduct.  Ms Bennett said that she had, at one stage, said to either Mr Dowdy or Mr Morling that she had expected, as part of the mediation process, an offer from the respondents, implying that she was surprised at the way in which they had conducted themselves in the initial stages of the mediation. (See TS p 368, ll 4-10.)  This may well have been a reference to the conversation recounted by Mr Dowdy.  For the sake of completeness I should also say that I saw nothing in the demeanour of Messrs Dowdy, Opperman or Curd to suggest that any of them was other than truthful.

62                  As to specific issues of fact, an important matter is Ms Bennett’s attitude to her continued involvement in the case in the event that it was not settled at mediation.  She claims to have told Mr Levitt, and possibly the first applicant that she would not continue.  Mr Levitt said that she had certainly indicated some reluctance about continuing in the matter.  According to Mr Dowdy, she told him that her commitment was limited and did not include involvement in the trial, although she was willing to attend a mediation.  Although one would not like to place too much weight upon these conversations, they provide some evidence of her state of mind.  It is also of significance that the first applicant and Mr Levitt agreed that she had first become involved on a very limited basis.  The first and second applicants said that, at a later stage, she expressly undertook to go to trial.  Mr Levitt said nothing about the circumstances which led him to believe that her involvement had been extended to include conduct of the trial. 

63                  As I have previously pointed out, in April 1998, the first applicant wrote to her, asking that she take the matter to trial without any assertion that she had previously undertaken to do so.  Had he believed that she had so undertaken, he would probably have referred to it in the letter.  Mr Levitt’s assertion in his costs letter that he would not be obliged to continue in the matter after the mediation also suggests the absence of any arrangements concerning the trial.  I am inclined to accept that the letter (with interlineations) was agreed to by the first applicant before the mediation.  It is difficult to imagine any purpose in the interlineations other than to have the applicants agree to them.  The use of the mediation as a critical point in connection with future involvement in the matter suggests that Mr Levitt would have wanted to obtain such agreement before it occurred.  Thus I accept Mr Levitt’s evidence that the applicants agreed to the letter with interlineations prior to the mediation.  It follows that they were aware that Mr Levitt was not finally committed to the trial.  It is a little difficult to see how, in those circumstances, they could have felt sure that Ms Bennett was so committed.

64                  Against this evidence there appears to be only the assertions by the first and second applicants that Ms Bennett had expressly undertaken to conduct the trial and Mr Levitt’s claim to that effect, despite his belief that she was equivocal about it.  It is conceivable that the applicants may have formed such a view without any real encouragement from Ms Bennett.  She may well have given an estimate as to the likely time involved in the trial.  Such an estimate must have been given to Tamberlin J at one or other of the directions hearings, resulting in his Honour’s concern that the parties should undertake mediation.  It is possible that the applicants inferred from the fact that Ms Bennett gave such an estimate that she was committed to the trial, even if she had otherwise been careful to avoid creating that impression.  Notwithstanding any mental reservations which she may have had, her continued participation in the matter could easily have led the first and second applicants, and perhaps even Mr Levitt, to assume that she would continue to trial.  The first and second applicants’ pre-occupation with it would have, almost inevitably, led them to such a conclusion, given Ms Bennett’s efforts on their behalf.  Mr Levitt’s doubts concerning her attitude prior to the mediation are, to some extent, supportive of Ms Bennett’s assertions. 

65                  In the circumstances, I prefer the evidence of Ms Bennett that she had at no time committed herself to take the matter to trial, although in so finding, I do not necessarily attribute to the first and second applicants or to Mr Levitt any deliberate dishonesty on this score.  Their evidence may have been based upon incorrect assumptions.  I also accept Ms Bennett’s evidence that the Grunstein letter had no effect on her at the time and that she did not read it carefully at the mediation.  This conclusion is based partly upon my difficulty in seeing how the letter could have so affected Ms Bennett and partly upon the fact that it could only have been marginally relevant in the mediation process. 

66                  These conclusions mean that any conduct on the part of Mr Dowdy could not have had actionable consequences, but I do not leave the matter there.  The allegation of premeditated action by him on behalf of the respondents might well be thought to reflect adversely on him, the respondents, Mr Opperman and Mr Curd.  Yet there is, in the end, simply no evidence of any such action.  The applicants’ claim is based upon mere suspicion, raised, as I conclude, in the minds of the first and second applicants by Mr Levitt’s disclosure to them of his own perceptions concerning the reasons for Ms Bennett’s withdrawal, firstly in conversation, and then in his letter of 27 June 1998.  At best for him, this perception was based upon a misunderstanding concerning Ms Bennett’s commitment to the trial and an incorrect assumption as to the effect upon her of the Grunstein letter.

67                  The versions of the circumstances surrounding Mr Dowdy’s disclosure of the Grunstein letter vary greatly.  With one exception, I prefer Mr Dowdy’s account to the others.  His own conduct was attacked at an early stage when he probably had a fair recollection of events.  The only exception to this view is as to his account of his initial reference to the Grunstein letter in his conversation with Ms Bennett.  I suspect that he probably gave her a brief summary of its contents.  I accept Ms Bennett’s account of her reaction to it and conduct thereafter.  I expressly reject the evidence of the applicants’ other witnesses where it conflicts with hers.  I strongly suspect conscious or unconscious reconstruction based upon misunderstandings of Ms Bennett’s position concerning the trial and, in the case of the applicants, their pre-occupation with the case.

SOME PERIPHERAL OBSERVATIONS

68                  A number of other matters should be mentioned.  Firstly, the theory that the respondents and their legal advisers plotted to provoke Ms Bennett’s withdrawal is inherently unlikely.  There is no evidence that the respondents, Mr Opperman or Mr Dowdy knew that Ms Bennett was unaware of the Grunstein letter until she said so at the mediation.  The letter was an exhibit in the proceedings and so might well have come to her attention.  The “plot” theory assumes that the conspirators believed that she had not previously seen it.  It also seems odd that any such “plot” should have involved disclosure of the Grunstein letter at the mediation conference.  It would have been more effective if Mr Dowdy had disclosed it to Ms Bennett in the privacy of her chambers.  It would then have been much easier for her to withdraw from the matter in a way which would not have aroused suspicion concerning her reasons for so doing or concerning the respondents and Mr Dowdy’s involvement.  Alternatively, it would have been more devastating from the applicants’ point of view had it been disclosed at the beginning of the trial.  Ms Bennett’s withdrawal at that stage would have had much more serious consequences for the applicants.  All of this is speculative, and no doubt there are reasons, consistent with the “plot” theory, which can be advanced for the disclosure being made at the mediation conference.  These observations merely highlight the unlikelihood of Mr Dowdy, his instructing solicitor and the respondents wasting time in pursuing such an exercise rather than making constructive efforts to dispose of the matter in an orthodox way.  This is particularly so in view of the fact that they believed the applicants’ claims to be without merit. 

69                  The applicants’ present claim depends to some extent upon their having relied upon Ms Bennett’s advice to accept the respondents’ offer.  It is clear, however, that they had adequate opportunity to seek other advice after the mediation and before execution of the deed.  Mr Levitt was, in any event, still acting for them and had full knowledge of the circumstances in which Ms Bennett had advised them.  They chose to seek other legal representation in order to go to trial.  They also had advice from Mr Courtenay who appears to have been closely associated with them.  Clearly, it was not Ms Bennett’s advice which led to the applicants’ signing the deed, but their inability to arrange other legal representation.  In any event, even on the first applicant’s version of that advice, it was clearly balanced and sensible.  Further, the ultimate decision was left to the applicants.  It is inherent in what I have already said, that there is no evidence of any conflict as between Ms Bennett’s  professional duty and her personal loyalties.

70                  I should also observe that the merits of the applicants’ claims in the earlier proceedings have not been ventilated before me.  It seems that this course was the result of a direction given by another Judge who, at one stage, had the management of this case.  I have not considered those strengths or weaknesses, although I have kept in mind the fact that the claims, or aspects of them have been twice compromised.

71                  I make the following express findings of fact:

·                 There is no evidence that either of the respondents, Mr Dowdy, Mr Opperman or Mr Curd desired that Ms Bennett should cease representing the applicants.  The evidence suggests to the contrary.

·                 Mr Dowdy’s disclosure of the Grunstein letter to Ms Bennett was motivated solely by his desire to demonstrate the reasons for the respondents’ reluctance to pay money to the applicants in order to settle a claim which they (the respondents) considered to be without merit.

·                 Ms Bennett at no time committed herself to acting for the applicants at trial.  Disclosure of the Grunstein letter had no effect upon her decision not to do so.

·                 Such disclosure also had no relevance to, and no effect upon any advice given by her to the applicants or her conduct of the mediation.

·                 Ms Bennett gave advice in accordance with the certificate attached to the deed and as deposed to by the first applicant in par 41 of his affidavit filed on 11 June, 1999.

·                 I am not satisfied that in entering into the deed, the applicants acted upon any such advice.

72                  Clearly, the Court has credited the applicants’ claims with more substance and respectability than they have ever deserved.  Unfortunately, in ensuring that meritorious claims are not shut out, we often permit unmeritorious claims to be ventilated.  Further, in conducting the trial, I felt compelled to allow a certain latitude to the applicants, given that they did not have legal representation.  Both in their evidence and in their conduct of the case, they were permitted to express speculative views concerning Mr Dowdy’s conduct although they could not have known what he had said or done.  Similarly, they were permitted to speculate concerning Ms Bennett’s conduct.  I regret that on this occasion, concern that the applicants should have an opportunity to vindicate their claims has resulted in the circulation of unsubstantiated allegations of misconduct against Ms Bennett, Mr Dowdy, Mr Opperman, Mr Curd and the respondents.  Those allegations have been accorded an appearance of credibility which they do not deserve.  I can compensate for that only by saying that they are without any substance whatsoever.

73                  The application will be dismissed.  I will hear submissions as to further findings of fact and as to costs.

Associate:

Dated:              29 August 2000