JUDGMENT
1 HIS HONOUR: Rudolph Abriel, Vera Abriel and Premier Knits Pty Limited commenced an action in this Court against Ms Annabelle Bennett SC in respect of conduct said to have been committed by her as their counsel in proceedings between them and Australian Guarantee Corporation Limited and Westpac Banking Corporation (variously, the respondents and the financiers) in the Federal Court of Australia in which the plaintiffs had sought to set aside a deed of release executed in April 1994 resolving certain disputes between them and the financiers, and damages. Those proceedings were terminated following a mediation when the parties entered into a further deed of settlement (the 1998 deed) under which the financiers agreed to pay Mr and Mrs Abriel $90,000 in full and final settlement of all disputes between the parties. The defendant acted as counsel for the plaintiffs at this mediation. The plaintiffs assert, amongst other things, that the defendant had also undertaken to appear for them at the trial, in the event that the mediation failed. Both the defendant and her instructing solicitor, Mr Levitt, say that the defendant had at no time been retained or briefed to appear in the trial and that the plaintiffs knew this. In this, and other contexts, that the defendant acted pro bono at all times before and during the mediation is a significant fact.
2 In September 1998 the plaintiffs, as applicants, took proceedings in the Federal Court of Australia against the financiers as respondents seeking to set aside the 1998 deed and consequential orders and claim damages (the 1998 proceedings). They failed at first instance following a trial before Dowsett J, their appeal to the Full Court of the Federal Court of Australia was dismissed on 2 March 2001. On 14 December 2001 special leave to appeal to the High Court of Australia was refused and an application to reopen refused on 15 November 2002.
3 At the centre of the plaintiffs' case was a letter dated 8 December 1995 from Mr Levitt, the plaintiffs' solicitor, to a Mr Gary Grunstein, also a solicitor, (the Grunstein letter), in which an appeal was made by Mr Levitt for Mr Grunstein's assistance in providing an affidavit as to certain material facts, referring, in part, to the fact that the Abriels were Jewish and were being helped by a prominent Rabbi and Senior Counsel and needed help in their action against the financiers. The plaintiffs maintained that this letter, when it was produced by the financiers' counsel to Ms Bennett at the mediation, induced her to act inconsistently with her duty to them as their counsel.
4 On 5 February 1999 Branson J considered an application by the financiers to dismiss or permanently stay the action against them: Abriel v AGC & anor [1999] FCA 50. Her Honour noted that "the essence of the plaintiffs' case" was identified in their written submissions as follows -
"[29]…'(a) [U]nbeknown to the applicants at the time, the respondents produced the Letter of 8 December 1995 to Ms Bennett SC at the Mediation and informed her that the Letter had been received from the Law Society of New South Wales as a result of a complaint made by Mr Grunstein, with a view to influencing Ms Bennett SC not to continue to represent the applicants in the Federal Proceedings and to advise the applicants to settle the proceedings on the terms then being offered by the respondents;
(b) following the production of the Letter, Ms Bennett SC informed the applicants she was no longer prepared to act for the applicants beyond the Mediation and during the period after the Mediation up to the entering into the Deed of Settlement, Ms Bennett SC gave advice to the applicants to the effect that they should accept the settlement offer;
(c) unbeknown to the applicants at the time, but to the knowledge of the respondents, at the time of Ms Bennett SC giving that advice to the applicants, Ms Bennett SC had a personal interest to avoid the possibility of being embarrassed by the public production of the Letter in the Federal Court Proceedings and to avoid the possibility of being drawn into a complaint stated to have been made by Mr Grunstein to the Law Society of New South Wales."
5 Branson J said (ibid at [30]) that, although the plaintiffs' case was "novel" she was unable to conclude it was doomed to fail and therefore refused to strike out the amended statement of claim. However, her Honour also considered that the amended statement of claim did not properly plead the case which, in fact, the plaintiffs wished to advance and concluded that the nature and extent of the deficiencies were such as required that it should be wholly struck out, giving leave to the plaintiffs to file a further amended statement of claim.
6 Branson J concluded her judgment with the following remarks -
"The applicants now have the benefit of the legal advice and representation of counsel. It is to be hoped that if the applicants exercise the leave to be given to them to file and serve a further amended statement of claim, their counsel will prepare this pleading for them. In this eventuality it will be important for the applicants to be conscious of the responsibilities of counsel in the preparation of a pleading, and in particular counsel's ethical responsibility in respect of a pleading which includes allegations which reflect adversely on the reputation of individuals. It is an ethical responsibility of counsel not lightly to plead such allegations but to satisfy himself or herself that the clients' instructions provide a proper basis for the making of such allegations ( White Industries (Queensland) Pty Limited v Flower & Hart (1998) 156 ALR 169). Although the first and second applicants appear to believe otherwise, the allegations which they wish to make reflect seriously on the integrity of the legal representatives acting for the respective parties at the time of the mediation before Mr Morling. In particular, it is a serious reflection on the integrity of counsel, and even more on that of senior counsel, that he or she would, whilst acting in a professional capacity, fail to disclose to a client a conflict between his or her own interests and those of the client, and provide advice to a client calculated to advance his or her own interests at the expense of the interests of the client."
7 Pursuant to the grant of leave, the plaintiffs alleged in their further amended statement of claim in the 1998 proceedings that the respondents had acted unconscionably by having their counsel Mr Dowdy produce the Grunstein letter to the defendant, with the intention of placing her in a position where she had a personal interest in resolving the proceedings before hearing and ending her involvement in them by advising the applicants to settle the proceedings on the terms then offered by the respondents and ceasing to further appear for the applicants in the proceedings. It was alleged that the personal interest created by production of the letter was that the defendant would wish to avoid the possibility of allegations being made in a public hearing that she was a party to an organized Jewish attempt to pressurise the respondents and being involved in a complaint said to have been made by Mr Grunstein to the Law Society. The applicants also alleged that the defendant advised them to execute the settlement deed and, in reliance on that advice and on the fact that they could not find alternate representation, they did so. They claimed that, at this time, they did not know that the defendant was in a position of conflict or had been influenced by the Grunstein letter and were under her undue influence. The plaintiffs alleged that the defendant had breached her duty to avoid any conflict of interest in representing them without disclosing that interest to them and that this and her undue influence of them to execute the deed had been brought about or assisted by the respondents.
8 The respondents admitted in their Defence in the 1998 proceedings that they had produced to the defendant a copy of the Grunstein letter but relevantly denied all the allegations of impropriety.
9 After a five day trial in July 2000, Dowsett J, in a judgment delivered on 29 August 2000, found for the respondents: [2000] FCA 1198. A number of witnesses were called, including the defendant. Although called by the applicants, they were (in substance) permitted to cross-examine her. She denied being influenced by the Grunstein letter in her conduct of the mediation or any advice she gave or actions she took. This matter was, of course, at the very centre of the applicants' case and it was necessary for Dowsett J to determine whether Ms Bennett's evidence was true and reliable or otherwise. It is sufficient to state for present purposes that his Honour accepted her evidence and emphatically rejected the allegations that the applicants had made both against her and the respondents. Mr Abriel told me (as will be seen in due course from the amended statement of claim in the current proceedings) that the purpose of the present action against the defendant is to demonstrate that, indeed, the allegations made and rejected by Dowsett J were true and, accordingly, the defendant should pay damages. He informed me, in substance, that he proposed that the evidence adduced before Dowsett J should again be adduced in this Court and that no further or additional evidence was necessary or, as I understood him, available.
10 In July 2001 the plaintiffs sued the defendant (in these proceedings), and in separate proceedings (No 20636 of 2001) sued Mr Rothman SC, who had appeared for them to conduct their appeal in the Full Court of the Federal Court. They alleged against Mr Rothman (amongst other things) that he had failed to make submissions to the Full Court as to the alleged apprehended bias of Dowsett J, as to the conduct of Ms Bennett at the mediation and the effect on her of the Grunstein letter, and as to the degree and effect of the influence exercised by Ms Bennett over the plaintiffs in respect of their execution of the 1998 deed.
11 On 8 November 2002, Burchett AJ summarily dismissed the proceedings against Mr Rothman: Abriel v Rothman [2002] NSWSC 1056. His Honour pointed out that it would have been pointless for Mr Rothman to have argued the matters which Mr Abriel claimed he should have, since they were all, in substance, attempts to refute the trial judge's findings of fact. The only possible attack capable of being mounted against Dowsett J's findings was a contention that there was an apprehension of bias on his Honour's part. Burchett AJ, however, concluded, "... there is no vestige of support to be found in this case for that argument": ibid at [11]. His Honour added (at [13]) -
"… in any event, there is a further ground that independently requires me to reach the same conclusion. In representing the appellants upon the appeal to the Full Court, Mr Rothman owed a 'paramount duty to the Court' which required him not to 'cast unjustifiable aspersions on any… witness', including Mrs Bennett, 'even if the client [had] give[n] instructions to the contrary' [quoting Mason CJ in Giannarelli v Wraith (1988) 165 CLR 543 at 556]."
12 In this court, Mr Abriel appeared for himself, his wife and the company plaintiff. In his submissions, Mr Abriel agreed that the issues concerning the defendant's conduct that were raised in the 1998 proceedings were the same as those he now wishes to litigate. However, as he is appearing without legal assistance, and the application of the defendant is an exceptional one, fairness requires an examination of the amended statement of claim to confirm that this is so.
13 The amended statement of claim commences with an allegation that the defendant was briefed by Mr Levitt to represent the plaintiffs "to do everything necessary to succeed" in the 1998 proceedings, including appearing on their behalf at the mediation. It is alleged (in various ways) that the defendant was under a duty to exercise all due care and skill in so doing but that, instead, she acted negligently and in breach of her duty to the plaintiffs. This conduct, in substance, was particularised as failing to disclose to the plaintiffs the existence of the Grunstein letter, her conversations with Mr Dowdy (counsel for the financiers) about the letter, her reaction to the letter and the effect it had upon her conduct of the mediation, failing to act "without fear or favour on behalf of the plaintiffs" in the mediation or in their best interests, failing to properly advise them, failing to disclose "the conflict of interest between her own interests and those of the plaintiffs, raised by the Grunstein letter" and intimating to the financiers' legal advisors that she "was not committed to taking the matter to trial". The plaintiffs also allege that she brought undue influence to bear on them to force them to accept an unfavourable offer of settlement, when she knew or ought to have known that it was not in their best interests to do so but, rather, it was in her own interest. The substance of these allegations are repeated several times under different rubrics but it is unnecessary to set all this detail out.
14 It will be seen that there is no difference in substance between the allegations now made and those summarised by the plaintiffs in their written submissions to Branson J and set out above, except that it is now alleged, as it was alleged in the 1998 proceedings, that the defendant had undertaken to appear for the plaintiffs at the trial, in the event that the mediation was not successful.
15 I do not propose to set out a detailed analysis of the judgment of Dowsett J, despite the criticisms made by Mr Abriel of his Honour's reasoning. However, it may be useful to quote his Honour's crucial findings, not only to demonstrate whether the issues raised by the present litigation were also, in substance, raised in the Federal Court but also how they were determined. After summarising the evidence adduced before him, Dowsett J dealt with what he called "Credibility and Findings of Fact", commencing with his conclusions concerning the defendant's conduct. This is scarcely surprising having regard to the crucial importance of this matter to the applicants' case. On a number of critical points, Dowsett J was required to decide between conflicting accounts given by the defendant on the one hand and the Abriels on the other, as well as conflicts between the defendant and Mr Levitt. In each case, his Honour preferred the evidence of the defendant, following a careful analysis of the evidence, for reasons that appear to me (with respect) to be singularly cogent. I only make this observation because Mr Abriel submitted, at considerable length, that justice required that he should be permitted to relitigate the issues concerning the defendant as they had not been properly or correctly determined by Dowsett J, arguing by reference to the transcript and affidavits filed in those proceedings, that his Honour's reasoning was flawed to the point of absurdity and is explicable only by the presence of bias against the plaintiffs. I have carefully considered those parts of the transcript tendered before me, together with the documentary material and the judgment. Mr Abriel's submission in this regard is baseless. Having regard to the serious allegations that Mr Abriel has had the opportunity of making against the defendant and others in this Court, I consider that it is only just that I should in this judgment set out Dowsett J's general conclusion about the same allegations -
"[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… 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."
16 The first specific question of fact mentioned in his Honour's conclusions concerned the defendant's attitude to her continued involvement in the case in the event that it was not settled at mediation. Dowsett J accepted the defendant's evidence that she had at no time committed herself to take the matter to trial, although he considered that Mr Levitt and the Abriels may have honestly but mistakenly assumed otherwise. His Honour also accepted the defendant'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, partly upon the ground that his Honour had difficulty in seeing how it could have significantly affected her and its marginal relevance at all events. His Honour concluded, "I accept Ms Bennett's account of her reaction to it and conduct thereafter" and expressly rejected the evidence of the applicants' other witnesses where it conflicted with hers. To my mind, the notion that the Grunstein letter could create a conflict of interest and have the effects on the mind and conduct of a barrister in the defendant's situation as propounded by the plaintiffs is simply absurd.
17 Dowsett J noted that the applicant's claim depended "to some extent upon their having relied upon Ms Bennett's advice to accept the respondents' offer". His Honour observed, however, that it was "clear…that they had adequate opportunity to seek other advice after the mediation and before execution of the deed" and "that Mr Levitt was, in any event, still acting for them and had full knowledge of the circumstances in which Ms Bennett had advised them". He noted also that the plaintiffs "chose to seek other legal representation in order to go to trial" and also "had advice from [a] Mr Courtenay who appears to have been closely associated with them". His Honour found -
"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."
18 Dowsett J was of the view (which, with respect, is plainly correct) that the "applicants' claim is based upon mere suspicion" (ibid at [66]) and set out the following conclusions -
"[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."