Abriel v Levitt [2004] NSWCA 258 | Case summary

30 JULY 2004 RUDOLF ABRIEL v STEWART A LEVITT Judgment 1 HANDLEY JA: Mr Abriel, representing himself, has applied for leave to appeal from the decision of Gzell J of 19 December 2003 summarily dismissing as an abuse of process his action for negligence and breach of duty against his former solicitor. 2 The proceedings arise out of the settlement of proceedings in the Federal Court against Westpac and Australian Guarantee Corporation (AGC) following a mediation conducted by the Hon Trevor Morling QC on 31 March 1998. The settlement was implemented by a Deed of Settlement of 28 April and consent orders made on 8 May. 3 The opponent Mr Levitt (the solicitor) acted on a contingency basis for Mr and Mrs Abriel and their company (the Abriel parties) in the Federal Court litigation and the mediation and he implemented the settlement on their behalf. 4 The settlement with Westpac and AGC has given rise to extensive litigation initiated by the Abriel parties. The first proceedings were brought against Westpac and AGC in the Federal Court seeking to have the settlement set aside on the ground of unconscionable conduct contrary to the general law and s 51AA of the Trade Practices Act and undue influence exerted by the defendants against the Abriel parties through Ms Bennett SC who was acting pro bono as their counsel. On 29 August 2000 those proceedings were dismissed by Dowsett J following a five day trial. An appeal to the Full Federal Court was dismissed on 2 March 2001 and the High Court refused special leave to appeal. 5 Later in 2001 the Abriel parties brought proceedings in the Supreme Court against the senior counsel who had appeared for them pro bono in the Full Federal Court. The proceedings, based on alleged negligence in the conduct of that appeal, were summarily dismissed by Burchett AJ on 8 November 2002 and an appeal, pursuant to leave, was dismissed by this Court on 18 March 2004. These proceedings have no direct bearing on the fate of the present application. 6 At some time during 2001 the Abriel parties also sued Ms Bennett SC in the Supreme Court for negligence and breach of duty arising out of her conduct of the mediation. These proceedings are directly relevant because the solicitor instructed Ms Bennett on behalf of the Abriel parties. On 2 May 2003 Adams J summarily dismissed the proceedings against Ms Bennett as an abuse of process in the light of the decision of Dowsett J in the Federal Court. A summons by the Abriel parties for leave to appeal from this decision was dismissed by this Court on 10 November 2003. 7 While the appeal from the decision of Burchett AJ was pending in this Court and the action was pending against Ms Bennett in the Supreme Court the Abriel parties commenced the present action against the solicitor. Mrs Abriel and the Abriel company were dismissed from the proceedings on procedural grounds and the action proceeded at the suit of Mr Abriel alone until it was dismissed by Gzell J. 8 The statement of claim alleged breaches of duty by the solicitor in writing a letter to another solicitor, in annexing it to an affidavit he swore in the first Federal Court proceedings, in failing to disclose it to the Abriel parties, and in the conduct of the mediation (paras 10, 13, 14). It also pleaded breaches of his contract of retainer to the same effect together with allegations that the solicitor used his influence over the Abriel parties to force them to accept the settlement and in breach of his retainer had refused to act for them through to the trial if the mediation failed (para 21). It also alleged that the defendant, with Ms Bennett, used his influence and undue pressure to force the Abriel parties to accept the settlement, and in doing so preferred his interests to theirs (para 16). 9 The statement of claim alleged that the Abriel parties accepted the settlement as a result of the influence and undue pressure of the solicitor (para 17), and they suffered damage by reason of his negligence and breaches of duty (para 18). These are the only express allegations of causation and they were not repeated or expressly applied to the allegations of breach of the contract of retainer in para 21. This was followed by allegations of damage in para 22. It seems to me however that these allegations of causation are applied by implication to the claims for breach of contract. 10 The allegations of unconscionable conduct and undue influence against Westpac and AGC in the second Federal Court proceedings arose from the conduct of the mediation by their legal advisers who were alleged to have brought pressure to bear on the Abriel parties through their own legal advisers. Evidence was given by Mr and Mrs Abriel, the solicitor, Ms Bennett SC, and by the legal advisers for the defendants. 11 The case centred on a letter, described as foolish, sent by the solicitor in 1995 (the 1995 letter) to another solicitor in the Jewish community while the original Federal Court proceedings were pending. The letter attempted to enlist the sympathy and co-operation of the recipient for the benefit of the Abriel parties because of their common membership of that community. The letter was annexed to an affidavit by the solicitor he filed in those proceedings. During the mediation Mr Dowdy, counsel for the companies, showed a copy of this letter to Ms Bennett to explain the tough approach they were taking. 12 The Abriel parties claimed in the second Federal Court proceedings that Mr Dowdy showed the letter to Ms Bennett with the object of depriving the Abriel parties of her services at the trial to put pressure on them to settle. 13 Ms Bennett was alleged to have reacted to the letter by telling the solicitor and the Abriel parties that she would not appear for them at the trial on a pro bono or contingency basis. The solicitor was also alleged to have told the Abriels that he would not act for them after the mediation had concluded. The Abriel parties then agreed to accept the offer from the defendants of $90,000 inclusive of costs. 14 The defendants insisted that the settlement should not be implemented until after a cooling off period and the Abriel parties then asked Mr Levitt to delay this while they attempted to secure legal representation for the trial. When they were unsuccessful they instructed the solicitor to implement the settlement. The settlement payment, less an amount for his costs, was paid to the Abriel parties. Some time later they commenced the second Federal Court proceedings. 15 Dowsett J accepted the evidence of Ms Bennett that she had never agreed to appear for the Abriel parties at the trial on a pro bono or contingency basis and had not agreed to continue to represent them once the mediation had concluded. The Judge rejected the evidence of the Abriel parties to the contrary and was assisted in doing so by letters which Mr Abriel had written to Ms Bennett on 14 and 22 April during the interval between the mediation and the implementation of the settlement. The letters asked her to appear for the Abriel parties at the trial and expressed gratitude for her assistance up to that point. The letters did not refer to any earlier promise or undertaking to appear at the trial which she had withdrawn. 16 The Judge also accepted the evidence of the solicitor that he had not agreed to act for the Abriel parties after the mediation. His draft costs agreement with Mr and Mrs Abriel in the form of his letter to them of 28 March 1998 indicated otherwise because it defined his retainer as: "The work you require us to do is everything necessary to succeed with your Federal Court action against AGC and Westpac and has extended to commencing and maintaining the proceedings. This includes appearing for you on the Mediation." 17 This letter was annexed to Mr Abriel's affidavit of 11 June 1999 together with a signed version containing handwritten interlineations. A copy of the letter with interlineations was also annexed to the solicitor's affidavit of 15 June. Mr Abriel said that he received the amended version before the mediation and the Judge found this to be the fact. The amended version contained the handwritten statement: "Nothing in this agreement places any party under any obligation to continue in a solicitor-client relationship beyond 31 March 1998." 18 The Judge accepted the solicitor's evidence that before the mediation the Abriel parties agreed to the letter with the interlineations. Thus he found that neither Ms Bennett nor the solicitor had agreed to continue acting for the Abriel parties after the mediation had concluded. 19 Dowsett J also found that the 1995 letter had no effect on Ms Bennett and that she did not read it carefully at the time. It followed from these findings that the conduct of Mr Dowdy, as counsel for the defendant companies, was not causative; in the Judge's words it "could not have had actionable consequences". He also held that there was no evidence that Mr Dowdy had taken premeditated action to use the letter to force a settlement, and that the case of the Abriel parties to this effect was based on mere suspicion. 20 The Judge also found that the Abriel parties did not act on Ms Bennett's advice, because they did not sign the settlement deed immediately but delayed while they sought legal representation for the trial. The Abriel parties signed the deed after it became clear that they could not arrange such representation. His Honour made no express finding that they did not rely on the solicitor's advice but this is implicit in his decision. 21 The Judge's findings negative Mr Abriel's claims in the statement of claim that the solicitor was in breach of his retainer in refusing to act after the mediation, that he used his influence and undue pressure to force them to settle, and that they settled for that reason. The findings also negative the allegations that the solicitor failed to properly instruct Ms Bennett, to disclose to Mr Abriel the effect that disclosure of the letter had on her that she then had a conflict of interest, that he failed to act in the interests of his clients during the mediation, and failed to properly advise them. 22 What remains are the allegations of negligence in writing the 1995 letter, annexing it to his affidavit, failing to inform Mr Abriel of these matters, failing to properly consider the effect of the letter on the mediation, and informing the legal advisers of the defendant companies that he was not committed to taking the case to trial. 23 The allegations that the solicitor was negligent in writing the 1995 letter and annexing it to his affidavit (in each case without express instructions) are not inconsistent with any of the findings of Dowsett J. Once the affidavit had been served there was nothing the solicitor could do to prevent it being used in the mediation, but the Judge's findings establish that its use had no causative effect on Ms Bennett, the solicitor or the Abriels. The findings also demonstrate that the writing of the 1995 letter and its annexation to the affidavit had no direct or indirect effect in causing the Abriel parties to sign the deed of settlement. 24 The sole remaining particular of negligence is that in para 14(xii) of the statement of claim that during the mediation the solicitor intimated to the legal advisers for the companies that he was not committed to taking the case for the Abriel parties to trial. Such disclosure, if it occurred, would have been a gross breach of duty because it would encourage the legal advisers for the companies to take a tough line in the negotiations and would tend to reduce the offers they would otherwise make. It would also have been a gross breach of the solicitor's duty of confidentiality, and his clients' privilege. 25 The evidence Mr Abriel put before the Court included, in annexure D to his affidavit of 18 August 2003 extracts from the transcript of the Federal Court proceedings before Dowsett J containing evidence given by the solicitor (7 pages), Mr Dowdy (1 page), and Ms Bennett (2 pages). There is no evidence in this transcript or otherwise that supports this particular of negligence. Assuming such a disclosure was made there was also no evidence of when during the mediation it was made. It might, for example, have been made after the provisional settlement had been reached. In that event it would still have been a gross breach of duty but the breach would have had no effect on the outcome of the mediation. 26 Subject to the exception considered in the last two paragraphs the present proceedings are an attempt by Mr Abriel to re-litigate issues decided against him by Dowsett J in a final judgment. He was a party to those proceedings, the issues decided in them were critical to the result, the parties regarded them as important, and the defendants were appropriate contradictors. 27 The relevant principles are those established in Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404; State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aust Torts R 81-423 at 64089; and Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198. The principles themselves were not challenged by Mr Abriel and for the reasons given they apply, subject to the exception mentioned, in the present case. 28 In my judgment therefore the decision of Gzell J to summarily dismiss the action against the solicitor must, subject to the exception mentioned, be affirmed. The allegation in para 14(xii) of the statement of claim although vestigial, is not inconsistent with any findings made by Dowsett J. 29 In particular, assuming that such a statement was made, there is no evidence that Mr Abriel was present. It would be most unusual if he was. Settlement negotiations between lawyers are normally conducted in the absence of the clients. Mr Abriel may have evidence by way of admission by the solicitor and evidence of such a conversation may have been given during the trial before Dowsett J by the solicitor, or by one or more of the legal representatives for the companies. 30 The solicitor filed two affidavits in the Common Law Division in connection with these proceedings, the first of 7 April 2003, the second of 23 July, but did not deny the matter alleged in para 14(xii). He was not cross-examined during the hearing before Gzell J. His second affidavit annexed a request for further and better particulars of the statement of claim of 5 April 2003 and answers from Mr Abriel of 2 May and 17 June. 31 Mr Abriel was asked, among other things, by way of further particulars of the allegation in para 14(xii), for the words or other means by which the solicitor intimated to the legal advisers for the companies that he was not committed to taking the matter to trial. Mr Abriel's response on 2 May was: "The defendant said that without Ms Bennett he would not go to trial either". No further particulars of this allegation were either sought or supplied. 32 The fact that this allegation has not been supported by evidence in the present proceedings, and that Mr Abriel did not attempt to obtain evidence to support it by cross-examining the solicitor provides no basis for striking it out. However if this allegation were proved the measure of damages would be limited to damages for the loss of the chance that the companies would have been prepared to offer more than $90,000 to settle the case at mediation. 33 In my judgment therefore the opponent failed to establish that there was no triable issue in relation to the allegation in para 14(xii) of the statement of claim. In these circumstances the following orders should be made:

Abriel v Levitt

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