Federal Court of Australia

Djordjevic v Mondino [2023] FCA 882

ORDERS

THE COURT ORDERS THAT:

1.    The respondent’s interlocutory application dated 19 June 2023, seeking that the deed be set aside, is dismissed.

2.    The respondent is required to specifically perform his obligation under cl 3.2(b) of the Deed, executed by him on 5 June 2023, and sign and return to the applicant for filing with the Court the consent orders provided to him by the applicant on 16 June 2023 to the effect that:

(a)    The sequestration order be set aside;

(b)    Leave for the application for review of the Registrar’s decision to make a sequestration order to be dismissed; and

(c)    No order as to costs;

within seven (7) days of the date of this order.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

RAPER J

1    This matter concerns an application by the respondent (Mr Mondino) for review against an order that Mr Mondino’s estate be sequestered. After filing this application, Mr Mondino entered into a deed which resulted in him paying $20,000 (rather than the outstanding disputed debt of $44,374.11) and the applicant agreeing that the sequestration order be set aside with no order as to costs (Deed). Mr Mondino seeks to set aside that deed and persist with his application to review the sequestration order. For the reasons which follow, the application to set aside the Deed is dismissed and Mr Mondino is ordered to specifically perform his obligation under the Deed to agree to consent orders that the sequestration order be set aside with no orders as to costs.

Background

2    On 19 December 2022, Mr Mondino was served a bankruptcy notice by the applicant’s lawyers in respect of several judgment debts totalling $113,030.92, with the total amount owing being $99,255.71.

3    On 16 March 2023, the applicant filed a creditor’s petition in respect of the judgment debts.

4    On 27 April 2023, a Registrar of this Court ordered that the estate of Mr Mondino be sequestrated pursuant to s 43 of the Bankruptcy Act 1966 (Cth).

5    On 15 May 2023, Mr Mondino filed an interim application in which he sought that the sequestration order be reviewed (review application).

6    This matter was allocated to my docket on 17 May 2023, and was first case managed by me on 26 May 2023. At that case management hearing, Mr Mondino confirmed that he had paid part of the amount owing, being $54,881.60, where the total sum claimed to be owed in the creditor’s petition was $99,255.71. Mr Mondino also claimed that he was solvent. Mr Mondino took issue with how the proceeds from the sale of his motor vehicle by the New South Wales Sheriff following proceedings in the Local Court were accounted for: Specifically, Mr Mondino submitted that the sale proceeds from the vehicle should have been “counter-claimed” against the judgments.

7    On 26 May 2023, I made orders referring the matter to mediation before a Registrar of the Court. I also set down a timetable allowing the matter to be heard on 20 June 2023 should mediation fail.

8    On 5 June 2023, Mr Mondino executed the Deed, following Court-ordered mediation and, on 6 June 2023, Mr Mondino paid a settlement sum of $20,000 to the applicant pursuant to the Deed.

9    On 20 June 2023, Mr Mondino filed an interlocutory application dated 19 June 2023 in which he sought the following orders:

1.    Set Aside Deed

2.    Applicant to reverse the $20,000 transaction

(Emphasis in original.)

10    Mr Mondino provided no grounds for this application nor written submissions in advance of the hearing.

The evidence

11    Both parties relied on affidavit evidence. The relevant portions are extracted as follows. Neither witness was required for cross-examination.

12    By way of affidavit sworn on 4 July 2023, in support of his application, Mr Mondino deposed to the relevant events he said gave rise to why the Deed should be set aside:

2.    The Court had previously noted that Ms Djordjevic was required to provide information to the respondent in relation to the sale, if any, of the respondent’s vehicle which took place by sequestration back in 2018. Upon this request , [sic] made by the respondent under sec 4.03 of the Bankruptcy Rules 2016 the mediator stated:” lets [sic] set that aside for now because there is a sequestration order in place and we need to find a resolution”. The meeting was conducted in the conference room on Lev 17 of the Federal Court in Sydney. I believe i [sic] was unduly influenced by this statement.

3.    It was set aside by the Mediator and a Registrar cannot set aside an Order of a Judge.

4.    I was then asked by the mediator how much i [sic] could afford to pay as i [sic] still owed $55,000 it was stated.

5.    Upon making the first offer to pay the outstanding amount of the Bankruptcy Notice by instalments the Applicant’s solicitor rejected this offer and the Mediator and the Applicant’s solicitor both exited the room and engaged in conversation in a side room. I remained in the conference room. The mediator kept relaying messages between the parties from there on.

6.    I was intimidated when it was mentioned to me that the Applicant wanted to place a caveat on my home as guarantee to which i [sic] objected strenuously. I subsequently agreed to paying $20,000 upfront and the rest by way of instalments

7.    The deed was drafted by the solicitor with the assistance of the mediator which happened to be the Register [sic] whom [sic] had previously made orders against me, adjourning the initial application to set aside the bankruptcy notice.

8.    I agreed to pay $20,000 and the remainder by way of instalments under duress with the fear of a caveat being placed on my property.

9.    I sent the $20,000 via electronic bank transfer to the trust account described in the Deed of settlement and release on the 6th June 2023.

10.    I signed and sent the deed on the the [sic] same day.

11.    Ms Brooke Schweers of Mason Black+Mendelsons Lawyers has deceived me as the $20,000 paid would relieve and release Mason Black and anyone else from any future claims made against them.

12.    None of the terms within the Deed were communicated to me. Nor am I able to understand them.

13.    The Deed is a gross misrepresentation of the contested liability as to previous legal costs of proceedings rather than the amount outstanding in the bankruptcy notice.

14.    It does not seek to achieve it’s [sic] objective, nor is it clear, nor precise nor unambiguous in it’s [sic] content as it only creates further dispute as to the legitimacy of Bankruptcy proceedings, brought against me by way of subrogation, from inter-state jurisdiction to which the Deed is legally inapplicable.

15.    It is self-indemnifying and therefore illegal and raises questions of a constitutional nature in regards to it’s [sic] prohibited use in another Jurisdiction.

16.    It is in the interest of Justice, that the Respondent seeks, that the Honourable Court make the following order :

That the $20,000 payment be returned to the Respondent

The Deed be set-aside or not as the Court seeks fit.

13    By way of affidavit sworn on 19 July 2023, Ms Schweers, legal representative for the applicant, provided her own account of the mediation. Ms Schweers deposed:

6    The parties began the mediation in the same room prior to going to separate rooms on instructions from the mediator.

7    During negotiations, with a view to securing the debt in the case of an ongoing payment arrangement with the Respondent, the Applicant suggested to the mediator that both parties consent to a caveat being placed on the Respondent’s property should the Respondent insist on paying by way of instalments.

8    The mediator took this offer to the Respondent, who rejected there be a caveat put on his property. We accordingly sought instructions from our client who agreed to not pursue the caveat however required a lump sum payment to settle the matter. We believe this was then communicated to the Respondent by the mediator.

9.    The parties then began settlement discussions on an appropriate lump sum figure, with $20,000.00 ultimately agreed. We were also instructed that the settlement would be subject to a deed. This was communicated to the Respondent by the Mediator, who we were informed agreed.

10.     The matter was settled in principle at mediation with the Parties agreeing that:

(a)    The Respondent was to pay the Applicant the reduced figure of $20,000.00 (Settlement Sum), to be made by way of lump sum payment, as full and final settlement of the Debt outstanding pursuant to the Bankruptcy Notice and subsequent Creditor's Petition;

(b)    The Parties would execute a Deed to set out the settlement terms in finality;

(c)    On receipt of the Settlement Sum and executed Deed, the Applicant would provide consent orders proposing that:

i.    The sequestration order be set aside;

ii.    The application for review of the Registrar's decision to make the sequestration order be dismissed; and

iii.    No order as to costs.

14    After the mediation, at 5:17 pm on 31 May 2023, Ms Schweers sent a copy of the proposed Deed to Mr Mondino. In the covering email, Ms Schweers told Mr Mondino that she had “tried to draft the deed so it reads as simple as possible”, but noted the presence of some technical terms and said “if you had [sic] any queries please do not hesitate to contact me”.

15    Just over an hour later, at 6:39 pm, Mr Mondino replied as follows:

Dear Brooke

Im [sic] happy with the deed except it does not state the whole amount paid

$54,881.60

$ 6,000.00

$20,000.00

Could you include this if possible? Or provide me with some sort of receipt.

Regards,

Mario Mondino

16    Ms Schweers attached to her evidence correspondence between herself, Mr Mondino and the Registry on 2 June 2023, in which the Registrar had followed up on the parties’ progress with respect to executing the Deed. The Registrar’s email is extracted as follows:

Dear Mr Mondino and Ms Schweers,

I will telephone you today at approximately 1pm to see how you are progressing with respect to execution of the deed.

17    Later in this chain, still on 2 June 2023, Mr Mondino informed Ms Schweers’ office (though not the Registrar) that he would execute and post the Deed to her office, along with a cheque in the amount of $20,000. This email from Mr Mondino is extracted as follows:

Good afternoon

I will return the signed Deed with the cheque first thing Monday morniing [sic]

18    This amount was received into her firm’s trust account on 6 June 2023. A copy of the Deed executed by Mr Mondino was received by her office on 15 June 2023.

19    Ms Schweers gave the following evidence in relation to the mediation, the drafting of the Deed, her communications with Mr Mondino, and Mr Mondino’s actions:

(a)    the Deed was intentionally drafted in the simplest terms possible, as directed by the mediator, to assist the Respondent in understanding the content of same;

(b)    At no point did the Respondent ask any questions or raise any issues with the content of the Deed, save for his request for receipts to be raised for payments previously made;

(c)    At no point was I deceptive, nor make any representation to the Respondent as to what would or would not be included in the deed;

(d)    Both our office and the mediator made it clear to the Respondent that should he have any queries or concerns with regard to the Deed, he was welcome to contact either Party to discuss same;

…

20    I note from the Court file that on 16 June 2023, Ms Schweers sent to the Court and to Mr Mondino a copy of their proposed consent orders, in the terms agreed under cl 3.1(b) of the Deed.

21    It is uncontroversial that Mr Mondino did not sign those orders, as required under cl 3.2(b) of the Deed, but rather he filed his application to set aside the Deed, four days later.

Competing positions

22    Neither party filed written submissions in advance of the hearing.

23    However, as can be seen from Mr Mondino’s evidence above, it was his contention that he was subjected to undue influence from the Judicial Registrar, as well as duress and deception by the conduct of Ms Schweers during the course of the mediation.

24    The applicant submitted that there is no basis upon which the Deed should be set aside. According to the applicant, the parties mediated in good faith, and reached an in-principle agreement at the mediation. The applicant submitted that the Deed was sent to Mr Mondino after the mediation, that an invitation was extended to him to make any enquiries he wished to and he subsequently executed the Deed five days later on 5 June 2023.

The terms of the Deed

25    A review of the executed deed reveals the following:

(a)    Mr Mondino agreed to pay Ms Djordjevic the sum of $20,000 inclusive of interests and costs in full and final settlement of all claims as between the parties, being the applicant, Mr Mondino and the applicant’s insurer, connected with the incident that occurred on 26 December 2012, arising out of or in any way related to the subject matter of the claims therein (cl 2.1).

(b)    Ms Djordjevic and her insurer agreed to release and discharge Mr Mondino from “all claims, actions, suits, demands, damages, charges, expenses and liabilities of every description whatsoever (including any costs, whether or not the subject of a court order) connected with the Incident or arising out of or in any way related to its subject matter or the claims made therein, including the Bankruptcy Proceedings” (cl 3.1(a)).

(c)    Once the settlement money was received and cleared, Ms Djordjevic would provide Mr Mondino with consent orders in the following form (cl 3.1(b)):

a.    The sequestration order be set aside;

b.    The application for review of the Registrar's decision to make the sequestration order be dismissed.

c.    No order as to costs

(d)    Upon receiving the signed consent orders from Mr Mondino, Ms Djordjevic was required to sign and file the consent orders with the Federal Court (cl 3.1(c)).

(e)    Mr Mondino was required to provide a release in the same terms as the release in cl 3.1(a) in favour of Ms Djordjevic and her insurer (cl 3.2(a)).

(f)    After Ms Djordjevic had received payment, Mr Mondino was to sign consent orders as referred to in cl 3.l(b) and to return a signed copy of the orders to Ms Djordjevic for filing (cl 3.2(b)).

(g)    The Deed contained a term allowing each party to plead the Deed as a bar to any proceedings (cl 4).

(h)    Each party was required to keep the terms of the Deed confidential (cl 6.1), with certain exceptions noted (cl 6.2).

(i)    The governing law was described in the following terms:

9.1    This Deed is governed by the laws of New South Wales. The Parties submit to the exclusive jurisdiction of courts exercising jurisdiction of the New South Wales courts.

Legal principles

Undue influence

26    Neither party provided me with any real assistance as to the applicable equitable and common law principles arising from Mr Mondino’s case. To the extent that I am able to decipher them, Mr Mondino’s claims involve assertions of undue influence, duress and potentially unconscionable conduct.

27    The doctrine of undue influence was explained by Mason J in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, in which his Honour said (at 461):

Historically, courts have exercised jurisdiction to set aside contracts and other dealings on a variety of equitable grounds. They include fraud, misrepresentation, breach of fiduciary duty, undue influence and unconscionable conduct. In one sense they all constitute species of unconscionable conduct on the part of a party who stands to receive a benefit under a transaction which, in the eye of equity, cannot be enforced because to do so would be inconsistent with equity and good conscience. But relief on the ground of “unconscionable conduct” is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage, e.g., a catching bargain with an expectant heir or an unfair contract made by taking advantage of a person who is seriously affected by intoxicating drink. Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position.

(Emphasis added.)

28    Undue influence is concerned with whether, in entering into the impugned transaction, the plaintiff freely exercised their will: Thorne v Kennedy [2017] HCA 49; 263 CLR 85 at [31] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ. The enquiry is focussed on the party bringing the application. Their free will need not be subordinated to the extent that they are reduced to an automaton, or were a “mere channel through which the will of the defendant operated”: Thorne at [32], citing Tufton v Sperni [1952] 2 TLR 516 at 530 per Jenkins LJ. However, their judgmental capacity must at least be “‘markedly sub-standard’ as a result of the effect upon the person’s mind of the will of another”: Thorne at [32].

29    The existence of undue influence can be proved by showing that (1) the parties are in a recognised category of relationship or, even if their relationship does not fall within a recognised category, it involved one party occupying a “position of ascendancy and influence and the other a corresponding position of dependency or trust”; and (2) the transaction was one “commonly involving a ‘substantial benefit’ to another, which cannot be explained by ‘ordinary motives’, or ‘is not readily explicable by the relationship of the parties’”: Thorne at [34] (Citations omitted.). Certain relationships constitute recognised categories and carry a presumption in favour of the party claiming that a transaction is affected by undue influence: Watkins v Combes (1922) 30 CLR 180 at 193–4 per Isaacs J. The relationships between litigant and litigant, or between litigant and mediator, do not fall into recognised categories of relationship. Nor does the mediator in this case occupy a position of ascendancy and influence, or Mr Mondino a corresponding position of dependency or trust.

30    However, undue influence can be proved outside these presumptive relationships by adducing “direct evidence of the circumstances of the particular transaction” that shows actual undue influence: Thorne at [34]. The transaction must have been “the outcome of such an actual influence over the mind of the [weaker party] that it cannot be considered his free act”: Johnson v Buttress (1936) 56 CLR 113 at 134 per Dixon J. It is relevant to consider the nature and terms of the agreement reached between the parties when determining if it was the result of undue influence, including whether the consideration under the agreement was adequate: Johnson at 136. Other relevant factors include the relation of the parties, the susceptibility of the transferor to the influence of the other, the opportunity of the other to exert undue influence and the extent to which the transferor acted on the basis of independent advice: Thorne at [59], quoting American Law Institute, Restatement of the Law Third, Restitution and Unjust Enrichment (2011), §15, comment c.

Duress

31    Some ambiguity surrounds the law of duress. The New South Wales Court of Appeal has held that duress is “limited to threatened or actual unlawful conduct”: Australia & New Zealand Banking Group v Karam [2005] NSWCA 344; 64 NSWLR 149 at [66]. An alternative position regarding the test for illegitimate pressure, more consistent with English and American authority, is concerned with “whether the pressure goes beyond what is reasonably necessary for the protection of legitimate interests”: see Thorne at [71] (per Nettle J). The High Court has so far declined to address the arguments in favour or against the approach in Karam, and the suitability of alternative approaches: see Thorne at [29] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ; at [70]–[73] per Nettle J. In Thorne, the High Court held that it was not necessary to address the arguments in favour of or against the Karam position that duress requires proof of threatened or actual unlawful conduct: Thorne at [29], [73].

Unconscionable conduct

32    Unconscionable conduct arises where “a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage”: Amadio at 461 per Mason J. A special disadvantage does not exist in every case where there is some difference in bargaining power; instead, it must be a condition or circumstance “which seriously affects the ability of the innocent party to make a judgment as to his own best interests, and where the other party knows or ought to know of the existence of that condition or circumstance and its effect on the innocent party”: Amadio at 462. The High Court in Kakavas v Crown Melbourne Ltd [2013] HCA 25; 250 CLR 392 held unconscionable conduct concerns the prevention of “victimisation” not the consequences of foolishness (at [18]) or “proof of a predatory state of mind”, not mere “[h]eedlessness of, or indifference to, the best interests of the other party” (at [161]). In this regard, unconscionable conduct is focussed on the conduct of the party defending the application.

Consideration

33    I am not satisfied that Mr Mondino has proven the setting aside of the Deed on any of the vitiating factors described above. There was no clear demarcation in Mr Mondino’s submissions between the application of each possible vitiating factor and the impugned conduct.

34    All circumstances giving rise to Mr Mondino signing the Deed are relevant to my determination. Relevantly, while the alleged conduct arose in the mediation, Mr Mondino did not in fact receive a copy of the Deed until after the mediation and did not execute it for five days after receipt. I will detail this aspect of the chronology further below. However, I will start with a consideration of the alleged conduct giving rise to his claims at the mediation on 31 May 2023.

35    Mr Mondino asserts that, during the course of the mediation, he was “unduly influenced” by the Registrar. He relies on [2] of his 4 July 2023 affidavit, extracted at [12] above. He also submitted that the Registrar was involved in the preparation of the Deed, which he appeared to assert formed part of this claim.

36    It can be accepted that Mr Mondino raised concerns with the Registrar about the applicant’s alleged failure to provide information about the sale of his car. In this respect, I note that there had been no order made by me requiring that the applicant provide such information. Rather, on 26 May 2023, I noted, in timetabling orders which included setting the matter down for hearing, the following:

Before the mediation, the Applicant’s (Mr [sic] Djordjevic) legal representatives will write to the Respondent (Mr Mondino) to explain the basis upon which they say account has been taken of the sale of Mr Mondino’s car with respect to the outstanding debt relied upon in the Creditor’s Petition and provide any relevant documents from the Sheriff or otherwise which demonstrate the fact of the car’s sale and the proceeds received.

37    This arose as part of the case management hearing because Mr Mondino had submitted to me that one of the bases on which he sought to challenge the sequestration order being made was because he believed that account had not been taken of the true value of his car in the creditor’s petition. I note the affidavit of Ms Schweers contained, at Annexure A, a copy of a letter sent to Mr Mondino on 29 May 2023. I am satisfied that the letter provides the information I had understood that the applicant’s legal representatives would provide.

38    I do not accept Mr Mondino’s claim that by the mediator saying to Mr Mondino “lets [sic] set that issue [regarding information about his car] aside for now … because there is a sequestration order in place and we need to find a resolution” constituted “undue influence”.

39    The existence of undue influence may be proven by reason of certain recognised categories of relationship which carry a presumption in favour of the party claiming that the transaction is affected by undue influence. I received no submission from Mr Mondino that the Registrar held such a position of ascendancy or influence directly. However, I note that Mr Mondino appeared to suggest the same when he submitted that he was required to attend the Court-ordered mediation, which he said gave him the impression “that the authority of the Court was in place”, where it was held in the Court, where he believed that what had fallen from the words of the Registrar were, in effect, an order, namely that he could not continue to ventilate his concern with respect to the failure to provide that information. Even if it were concluded that this was such a relationship, I am not of the view that the transaction was one of the kind that would fall within the principles identified in Thorne at [34] for the same reasons as otherwise set out below.

40    I accept that, as Ms Schweers submitted, there was nothing to suggest that the mediator had, with the authority of the Court, “ordered” the parties not to consider a particular matter in their negotiations.

41    Of course, undue influence may be proved outside these presumptive relationships by adducing direct evidence of the circumstances of a particular transaction that shows actual undue influence (Thorne at [34]), in particular, that the transaction is one where the outcome of such an actual influence over the mind of the weaker party cannot be considered to constitute a free act (see Thorne at [31] and [32]).

42    Mr Mondino adduced no evidence that the mediator in fact did anything to influence Mr Mondino’s ability to enter into the Deed such that it could be said that his execution of the Deed was not “a free act”. As Ms Schweers correctly submitted, this is a high bar.

43    With respect to Mr Mondino’s allegation that the mediator was involved in the drafting of the Deed, Mr Mondino put on no evidence as to the nature of the alleged involvement. Ms Schweers’ unchallenged evidence was to the contrary, namely that the terms of the Deed were not prepared until after the mediation. All that occurred during the mediation, according to Ms Schweers’ evidence, was that the agreement in principle would be the subject of a deed.

44    Furthermore, there is nothing to be derived from the outcome of the Deed from which it could be inferred that Mr Mondino was unduly influenced. Mr Mondino achieved, by its terms, the result he was seeking in his review application (setting aside the sequestration order and no order as to costs both arising from that order and from his review application) by paying half the outstanding claimed judgment debt.

45    Mr Mondino’s argument in respect of undue influence was limited to the actions of the mediator (who was, of course, not a party to the Deed), and he did not appear to allege undue influence on the applicant’s part directly. This raises additional difficulties for his argument. Whether a contract is void owing to undue influence involving persons who are not parties to the transaction may turn on the extent to which the third party was authorised by one counterparty to obtain the other’s consent: see, e.g., Coldunell Ltd v Gallon [1986] 2 WLR 466 at 480–1 per Oliver LJ and 488–9 per Purchas LJ. There was no suggestion here that the mediator was the applicant’s agent. In any case, given that I have found that undue influence could not be made out on the evidence before me even if a person in the mediator’s position were not a third party, it is unnecessary to consider this issue further.

46    In this context, consideration must be given to all circumstances giving rise to the execution of the deed. The focus cannot be solely on the mediation because of the negotiation of and completion of the transaction after that time. Mr Mondino did not enter into the Deed until five days later. Mr Mondino was provided a copy of the Deed by the applicant’s solicitor after the mediation. Mr Mondino raised no concerns with respect to the Deed with the Registrar (who was still liaising with the parties as seen from the correspondence at [16] above). The applicant’s solicitor invited him to discuss any queries with her in her email of 31 May 2023. Mr Mondino only raised with Ms Schweers that he wanted the Deed to acknowledge other payments he had made in the past but ultimately signed the Deed regardless. There was no evidence nor any allegation of time pressure placed on Mr Mondino to enter the Deed nor any evidence of any impediment upon him being able to obtain legal advice with respect to it.

47    It appeared from Mr Mondino’s evidence and submissions that after signing the Deed, upon reflection, he believed that the applicant’s solicitors were the ultimate beneficiary of its terms (which aggrieved him) and that he would have preferred to have agreed rather than to have paid the lump sum of $20,000 to have paid the entire sum by instalment.

48    To the extent that Mr Mondino seemed to be submitting that, by virtue of the parties sitting in different rooms during the mediation, that could somehow give basis to the setting aside of the Deed, I do not accept that. It is ordinary for a mediator to conduct a mediation in that way. There are clear advantages for all parties to there being a degree of separation when parties are considering offers and counter-offers and issues in the mediation.

49    Mr Mondino claimed, by virtue of the conduct alleged at [6]–[8] of Mr Mondino’s 4 July affidavit, that he was the subject of duress. It was his evidence that he agreed to the payment of $20,000 and the remainder by way of instalments “under duress” for the fear of a caveat being placed over his property. From what I understand of Mr Mondino’s evidence, it was that he was intimidated when it was mentioned that the applicant “wanted to place a caveat on his home”.

50    I note that the applicant relied on the authority in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 and the approach at [46]:

… The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress.

51    I alerted the parties to subsequent authority, in the form of Karam and Thorne, that suggests that the law is not settled with respect to this issue. It is my view that, regardless of how one views the test that is required to be satisfied under the law of duress, noting the different approaches set out above, on neither basis can it be said that Mr Mondino was the subject of duress.

52    Here, it is clear that the suggestion of a caveat being placed on Mr Mondino’s property arose as part of the negotiations where Mr Mondino wanted any payment by him to be by instalment. It was Mr Mondino’s evidence that he “objected strenuously” to this course. It was also evident that the negotiation thereafter no longer proceeded on the basis that a caveat be part of the terms.

53    There was no basis to contend, even applying the lesser test of duress discussed by Nettle J in Thorne at [71], that a suggestion of a caveat where payment by instalment is proposed constitutes something that goes beyond what is reasonably necessary for the legitimate interests of a party.

54    In relation to the claim of the deception by Ms Schweers, set out at [11] of Mr Mondino’s affidavit, I do not accept the underlying premise to the alleged deception. Namely, I do not accept that Mason Black and Mendelsons Lawyers was a party to the Deed or was the beneficiary of any relief under the Deed. Accordingly, I do not accept any basis for this claim of deception, nor that it gives rise to any basis for unconscionable conduct nor that the release was so broad ranging that it would release “anyone else” from any other future claim.

55    At hearing, Mr Mondino asserted that the terms of the deed did not reflect their agreement at the mediation. He also submitted by reason of this difference that the applicant’s legal representative had deceived him as to its terms, which he submitted provided a basis for why the Deed should be set aside. He also submitted, without evidence, that the Deed had been prepared before the mediation and “was always on the cards”. With this as his premise, he submitted that the Deed should have been brought to him at the mediation, and explained to him term-by-term. I do not accept this submission, and I note that it is at odds with both parties’ evidence that at least one different settlement arrangement (where Mr Mondino would pay the settlement sum by way of instalments and in which the applicant would obtain a caveat over his house) was discussed and rejected by Mr Mondino during the mediation.

56    It was apparent from these assertions that Mr Mondino misunderstood the effect of the Deed, who were the parties to the Deed, and who was indemnified or released from the Deed. Mr Mondino made a number of submissions about the terms of the Deed. First, he assumed Ms Schweers’ firm was a party to and beneficiary of the terms of the Deed: This is not the case. Secondly, he claimed that the deed limited his rights to bring proceedings in relation to his matters in NSW: This is not the case. Thirdly, he expressed the view that, under the Deed, he was liable to make further payments by way of instalment in addition to the $20,000 he paid pursuant to the Deed on 6 June 2023: There is no basis for this view in the terms of the Deed. Fourthly, he submitted, in essence, that the only beneficiary of the Deed was the applicant’s solicitors: This is not the case.

57    Further, Mr Mondino was particularly concerned about the involvement of the insurer: The Deed was executed by Hollard Insurance Partners Limited (formerly known as Commonwealth Insurance Limited) as the subrogated insurer of the applicant.

58    Mr Mondino was similarly exercised by the appearance of the name “Recoveries Corporation” on trust account receipts that the applicant’s solicitors issued to him after he had made earlier payments. He believed that this showed that the claim against him was being managed by a third party who was not named in the Deed. He also expressed concerns that, because Recoveries Corporation is based in Victoria and because of his view that the governing law clause in the Deed limited its effect to New South Wales, his payments had gone to a recipient who was not subject to the Deed. Ms Schweers gave an explanation as part of her submissions at hearing that Recoveries Corporation is a recovery agent for Hollard, that they are not a party to the deed and that the money paid by Mr Mondino was sent to Hollard. I accept this is not evidence; however, I note that the issue had not been squarely raised by Mr Mondino in his own evidence before hearing and therefore the absence of filed evidence from Ms Schweers to this effect is explainable. Further, regardless, I can see no irregularity arising from the evidence that this would constitute some form of vitiating factor.

59    I do not understand how these concerns could give rise to circumstances leading to the setting aside of the Deed. Ultimately, it appeared to be Mr Mondino’s concern that it was the applicant’s solicitors themselves that were bringing these proceedings for their own benefit, in order to get their own costs. I accept that the outstanding amounts in the creditor’s petition relate to unpaid past costs orders. However, those costs are the applicant’s costs and the applicant is able to instruct her solicitor to seek to recover those costs as part of these kinds of proceedings. I do not accept that any of the conduct of Ms Schweers, or the legal firm in which she is employed, was deceptive, nor could it comprise unconscionable conduct.

60    It appeared that Mr Mondino was submitting that the Deed should be set aside because the terms of the Deed should have been spoken about and explained to him during the mediation. I do not accept that there was such obligation. The fact of Mr Mondino being legally unrepresented is a factor to be taken into account in the consideration of each of his claims, which I have. But I do not accept that there was such an obligation nor that the absence of explanation in the circumstance formed a basis upon which the Deed should be set aside. Mr Mondino was given an unlimited period of time to consider the Deed. There was no evidence of any impediment to him obtaining legal advice with respect to its terms. Mr Mondino sought no explanation from nor raised any issue with the mediator nor the applicant’s solicitors as to its terms.

61    I have also taken into account Mr Mondino’s submission that he was in a position of special disadvantage owing to the fact that he sometimes has trouble reading documents and does not understand them very well. However, I note no evidence was filed by Mr Mondino to this effect. I rely on my earlier reasons as to the circumstances in which the Deed was executed, including that Mr Mondino had an opportunity to obtain legal advice and gave no evidence that he raised evidence of any special disadvantage with either the mediator or the applicant’s legal representatives.

Conclusion

62    In the circumstances, given that I am not minded to set aside the Deed, the Deed required that Mr Mondino sign the consent orders (provided to him on 16 June 2023) and return them to the applicant’s legal representatives, consistent with orders that he had in fact sought as part of his review application, namely that the sequestration order be set aside and that there be no orders as to costs arising from that application. Whilst time for compliance is not specified, I infer that it be implied that it was to be done within a reasonable time. Accordingly, I will order that Mr Mondino do this within seven (7) days of the date of this order.

63    The only question that remains outstanding is the costs associated with this application, on which I will hear from the parties.

Associate:    

Dated:    1 August 2023