Abriel v Rothman

PARTIES : Plaintiff - Rudolph Abriel, Vera Abriel and Premier Knits Pty Ltd Defendant - Stephen Rothman JUDGMENT OF : Burchett AJ

COUNSEL : Mr Abriel - in person Mr J.G. Duncan - Defendant SOLICITORS : McCabe Terrill Lawyers - Defendant CATCHWORDS : LEGAL PRACTITIONERS - action against barrister in respect of conduct of appeal - advocate's immunity from suit - whether argument should have been presented of apprehended bias on the part of the trial judge - counsel's paramount duty to the Court - PRACTICE AND PROCEDURE - circumstances where proceeding was required to be summarily dismissed LEGISLATION CITED : Supreme Court Rules Fair Trading Act 1987 (NSW) Giannarelli v Wraith (1988) 165 CLR 543 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-130 Abriel v Australian Guarantee Corporation Ltd [2000] FCA 1198 Abriel v Australian Guarantee Corporation Limited (unreported, 2 March 2001) CASES CITED : Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147 S S Hontestroom v S S Sagaporack [1927] AC 37 at 47 Devries v Australian National Railways Commission (1993) 177 CLR 472 Johnson v Johnson (2000) 201 CLR 488 at 493 Vakauta v Kelly (1989) 167 CLR 568 at 571 Re J.R.L.; Ex parte C.J.L. (1986) 161 CLR 342 at 352. Rondel v Worsley [1969] 1 AC 191 at 227-228. DECISION : Plaintiffs' action must be summarily dismissed with costs

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROFESSIONAL NEGLIGENCE LIST

20636/01 - Rudolph Abriel, Vera Abriel and Premier Knits Pty Ltd v Stephen Rothman

JUDGMENT 1 HIS HONOUR: By his Amended Notice of Motion, the Defendant seeks summary dismissal of the Plaintiff's action pursuant to Pt 13 r 5 of the Supreme Court Rules, or alternatively, an order for security for costs. 2 The principal proceeding in question has been brought against the senior counsel who represented the Plaintiffs upon an appeal from a decision of Dowsett J, a judge of the Federal Court of Australia, to a Full Court of the Federal Court of Australia. In the Amended Statement of Claim in that proceeding, the Plaintiffs allege that Mr Rothman was informed of the "details which pertained to the conduct of Ms Annabelle Bennett SC who had represented the plaintiffs in proceedings G388 of 1995 [the compromise of which was the subject of the judgment under appeal]", and Mr Rothman was "specifically instructed…to put the said information before the Court at the hearing [of the appeal]". It is then alleged that "the defendant negligently and/or wilfully failed to put this information before the Court". The alleged "negligence and breach of duty" are said to have "consisted of":

"(i) failing to prosecute the proceedings in a manner which served the best interests of the plaintiffs; (ii) failing to put before the Court information which would have affected the outcome of the proceedings; (iii) failing to follow instructions; (iv) failing to inform the plaintiffs prior to the proceedings of a conflict of interest raised by the presentation of the said information; (v) failing to act with due candour towards the plaintiffs; (vi) failing to withdraw from representing the plaintiffs as soon as the conflict of interest became apparent and thus preventing the plaintiffs from obtaining alternative legal representation."

The Amended Statement of Claim continues by alleging that "the defendant negligently and/or wilfully failed": "(a) to make submissions to the Full Court of the Federal Court which were consistent with the second Ground of Appeal in that his Honour Dowsett J had displayed apprehended bias in the conduct of the proceedings. The second Ground of Appeal to the Full Court of the Federal Court was in a form which had been settled by the Defendant and was a ground which the plaintiffs had strongly urged with the defendant prior to the hearing of the Appeal; (b) to draw the attention of the Full Court of the Federal Court to the sections of the transcript of the proceedings in which his Honour Dowsett J displayed bias towards the plaintiffs; (c) to present legal argument in support of the grounds of appeal regarding apprehended bias of a trial judge; (d) to inform the plaintiffs prior to the Appeal to the Full Court of the Federal Court that he would not press the Ground of Appeal of apprehended bias; (e) to obtain instructions regarding the submission to the Full Court of the Federal Court on the issue of apprehended bias." 3 In addition to these allegations, the Amended Statement of Claim pleads under s 42 of the Fair Trading Act 1987 (NSW) that the Defendant "falsely represent[ed] to [the Plaintiffs] that he would argue and present all appealable issues…and in particular that he would make submissions to the Full Court of the Federal Court on appeal in regard to: (a) the apprehended bias of Dowsett FCJ; (b) the conduct of Ms Annabelle Bennett at the Mediation on 31 March 1998 in proceedings G388 of 1995 and the effect upon her of the 'Grunstein letter' [the reference to this letter will be explained later in these reasons]. (c) the degree and effect of the influence exercised by Ms Bennett over the plaintiffs a [sic] the said Mediation."

And, finally, an "implied undertaking" is alleged "to provide professional services…with due care and skill", of which the Defendant's asserted failure to argue "all appealable points" and his asserted failure to advise "that he would not present all such appealable issues" are claimed to have constituted breaches. 4 The consequences of the Defendant's conduct for which relief is sought are alleged to be or to flow from the dismissal of the appeal and of an application for special leave to appeal made to the High Court of Australia. 5 In supporting the motion for summary dismissal, counsel for the Defendant relies on two basic contentions: first, that the complaint against his client relates to the conduct of the hearing of the appeal, so as to fall fairly and squarely within counsel's immunity from suit pursuant to the principle of Giannarelli v Wraith (1988) 165 CLR 543; and secondly, that in any case to have urged upon the appeal court the matters to which the Amended Statement of Claim refers would have been wrong or futile, so that the Defendant's conduct in failing to do so could not have given rise to a claim for relief against him. 6 Before examining each of these propositions, I should emphasise the nature of the legal burden which the Defendant must shoulder in moving such a motion as this. The general rule is that a party who approaches the Court must be given a hearing, in the interests of justice, according to the normal and applicable procedures of the Court. Exceptionally, a full hearing may be denied where the proceeding is clearly shown to be without foundation and bound to fail. That is a stringent test, going well beyond a mere conclusion that the prospects of success are low. But where the test is satisfied, in a sense just because it is so stringent, the Court has a duty to terminate the matter rather than allow the administration of justice to become oppressive through the maintenance and pursuit against someone of a hopeless claim. These principles have often been rehearsed, frequently by reference to the dissenting judgment of Dixon J in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 and the judgment of Barwick CJ in General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-130, which definitively state the law for Australia. 7 In order to understand the issues now under consideration, it is necessary to look back to the history of the matter. I shall begin, for present purposes, where Dowsett J began in his judgment in Abriel v Australian Guarantee Corporation Ltd [2000] FCA 1198. His Honour said, under the heading "Background": "In the early 1990s companies associated with [Mr and Mrs Abriel]…obtained finance from [Australian Guarantee Corporation Ltd or Westpac Banking Corporation] 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 G338/95 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." His Honour went on to explain the nature of the proceeding before him, as follows: "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."

8 Dowsett J rejected the case so formulated, and it is with the appeal from his decision to a Full Court of the Federal Court of Australia that the present case against the Defendant is concerned. The Defendant appeared for the Plaintiffs upon that appeal, which was dismissed by the joint judgment of Heerey, Sundberg and Merkel JJ: Abriel v Australian Guarantee Corporation Limited (unreported, 2 March 2001). There is no doubt, as the joint judgment reveals on its face, that the argument presented by the Defendant in the appeal was pressed upon only one basis - that Dowsett J denied the appellants procedural fairness in refusing to allow them to cross-examine their former senior counsel, Mrs Annabelle Bennett, who was called by them. Two issues were raised in respect of her evidence: first, whether (as she denied, and Mr and Mrs Abriel asserted, supported, the Full Court assumed, by their solicitor, Mr Levitt) Mrs Bennett had been committed, at the time the mediation conference was entered into which led to the execution of the deed, to take the appellant's case to trial on a pro bono basis; and secondly, whether (as, again, she denied and they asserted with some support from Mr Levitt) she had declined to honour that commitment by reason of being shown by the finance company's solicitor, for the purpose of producing such a reaction, a letter (referred to as 'the Grunstein letter") which was alleged to raise the embarrassing suggestion that Jewish people were combining to give improper assistance to Mr and Mrs Abriel, as fellow Jews, in their claim against the finance company and the bank. As to the second issue, it should be pointed out that Mrs Bennett, whose evidence the trial judge expressly accepted, not only denied having been influenced by the Grunstein letter; she also denied it had caused her any personal embarrassment, although she thought Mr Levitt should have been embarrassed that he had written it. 9 The Full Court rejected the argument presented by Mr Rothman, both because their Honours did not accept "that Mr Abriel should be treated as having applied for leave [to cross-examine Mrs Bennett, his own witness] and his Honour as having refused it", and also, after a citation of Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147, because any cross-examination "could not possibly have produced a different result from that reached". The latter point goes to more than the procedural question whether cross-examination of Mrs Bennett should have been permitted. The joint judgment elaborates it as follows: "In order to succeed on their unconscionability claim the appellants had to establish unconscionable conduct on the part of the respondents. This they could do only by reference to those in the respondents' camp - effectively Mr Dowdy, Mr Opperman and Mr Curd. The primary judge's acceptance of the evidence of all three, and two unchallenged findings based on that evidence … must spell the end of the appellants' case. The first finding is that none of these people desired that Ms Bennett should cease representing the appellants. The second finding is that Mr Dowdy's disclosure of the Grunstein letter to Ms Bennett was motivated solely by his desire to demonstrate to her the reasons for the respondents' reluctance to pay money to the appellants in order to settle a claim the respondents considered to be without merit. The same findings spell the end of the alternative claim that the respondents knowingly assisted in creating the undue influence Ms Bennett was alleged to have exercised over the appellants, and that they knowingly assisted in her breach of her duty to give legal advice to the appellants free of any conflicting or potentially conflicting interest of her own without first disclosing that interest to the appellants."

10 The significance of the Full Court's elaboration of the appellants' position is that it demonstrates, in respect of all but one (to which I shall turn later) of the omissions alleged against Mr Rothman, that the point Mr Abriel would have wished him to argue could have availed nothing. I have unfeigned respect for the ability and tenacity with which Mr Abriel has pursued his claim, but unfortunately, as a layman, he does not appear to have understood the basis of their Honours' remarks. Perhaps he was misled by the use in the joint judgment of the word "unchallenged". It would be clear to a lawyer that the findings in question were unchallenged because they were, in the circumstances, legally unchallengeable. The trial judge, having seen and heard a number of witnesses, had reached clear conclusions about the trustworthiness of the evidence of each of them, conclusions which must have involved the considerations commonly encompassed by the expression "demeanour", which include the judge's estimate of the witness as a person. That makes applicable to the findings based on the evidence of those witnesses an unshakable rule of the law governing appeals, memorably given expression by Lord Sumner when he said, in S S Hontestroom v S S Sagaporack [1927] AC 37 at 47: "Not to have seen the witnesses puts appellate judges in a permanent position of disadvantage as against the trial judge…. If his estimate of the man forms any substantial part of his reasons for his judgment the trial judge's conclusions of fact should, as I understand the decisions, be let alone".

This approach has the endorsement of the High Court: Devries v Australian National Railways Commission (1993) 177 CLR 472. 11 In the circumstances of the appeal against the decision of Dowsett J, the one argument which, if it had been valid, would have afforded a ground for overturning his judgment was the contention that the appeal should succeed on the basis of apprehended bias. However, I should say at once that there is no vestige of support to be found in this case for that argument. An adverse decision, or series of decisions, does not suggest bias. Nothing more is to be seen here than a firm persuasion to the contrary of the plaintiffs' case. It must not be overlooked that, as Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said in Johnson v Johnson (2000) 201 CLR 488 at 493, "the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice". Judges may, and often do, as cases proceed, indicate initial reactions to propositions put to them without becoming, or giving rise to any reasonable apprehension that they may have become, so wedded to those indications as to be thereafter biased: see the discussion in Johnson v Johnson (ubi supra); Vakauta v Kelly (1989) 167 CLR 568 at 571. For a judge to be disqualified in this way, the existence of a reasonable apprehension of bias must be "firmly established": Re J.R.L.; Ex parte C.J.L. (1986) 161 CLR 342 at 352. 12 For these reasons, the Plaintiffs' case against Mr Rothman cannot possibly succeed. His decision not to advance futile arguments was correct, and the result, of course, could not have been improved had he advanced those arguments. They were not, in reality, to use the expression in the Amended Statement of Claim, "appealable points". 13 But 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". Indeed he was required to exercise "independent judgment in the conduct and management of the case". The quotations are from the judgment of Mason CJ in Giannarelli v Wraith at 556. In the same case, Wilson J said (at 572): "Counsel could never be in breach of duty to the client by fulfilling the paramount duty [to the Court]."

These propositions are in accordance with the view of counsel's duty in England as Lord Reid stated it in Rondel v Worsley [1969] 1 AC 191 at 227-228. 14 It is a corollary of counsel's duty to the Court that he has an immunity from suit in respect of the conduct of a case in court or the decisions made in the preparation of a case for hearing. In Giannarelli v Wraith at 579, Brennan J stated the principle: "[N]either a barrister nor a solicitor may be sued by a client in respect of any act done or omission made in the conduct of the client's case in court or in the making of preliminary decisions affecting the way in which the case is to be conducted when it comes to a hearing."

On this ground also the Plaintiffs are bound to fail. 15 It follows that the Plaintiffs' action must be summarily dismissed. I make that order with costs. The alternative application for security for costs, as a consequence, falls away.

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