Garrick Michael Hawkins v Tom Michael Oates

Mr Hawkins' Claims

1. Mr Hawkins asserts, and Mr Oates accepts that there was, in addition to the terms contained in the draft deed, a further term of the settlement to be implied, namely a duty of good faith between Mr Hawkins and Mr Oates.
2. The evidence of how the settlement came to be reached is found in the affidavits of Mr Leeming of 8 September 2011, 9 September 2011, 22 May 2013 and in a memorandum of Mr Leeming of 12 September 2011. Some portions of Mr Leemings' affidavits were tendered by Mr Hawkins in his case in chief and some were read by Mr Oates in his case. Mr Leeming was not required for cross examination. An affidavit of Mr Stitt which had been filed by Mr Hawkins was not relied on by Mr Hawkins at the hearing.
3. I shall refer to the settlement reached by counsel for Mr Oates and Mr Hawkins on behalf of their clients and reflected in the draft deed and incorporating the implied term of good faith as "the Settlement Agreement".
4. There are two conversations deposed to by Mr Leeming which have assumed some importance in the case. The first is found at para 13 of Mr Leemings' affidavit of 22 May 2013, Court Book (Exh A2) p 549 "The language I ordinarily use to describe that clause is a "divorce". Based on what I have sworn in paragraph 44 of my affidavit of 9 September 2011, I believe that Mr Stitt used the language of a "clean break", as opposed to a "complete wash up", but I lack an independent recollection of that today in 2013." The second is found at para 46 of Mr Leemings' affidavit of 9 September 2011, Court Book (Exh A2) p 520 and Annexure C to the effect that on Tuesday 6 September after Court and having obtained instructions from Mr Oates, Mr Leeming said to Mr Stitt "Tom strongly resents the accusations Garrick has made against him and in view of these does not wish to meet with him and nor does his father. He has never dobbed him in to the Inland Revenue or anyone else and would never do so. Tom has always acted honourably towards them despite their conduct towards him and he considers himself a very moral person. Despite all this Tom does not want to see them get into trouble with the tax man, the RTA or anyone else."
5. In his opening on behalf of Mr Oates in the 2009 proceedings Mr Leeming made reference to the matters in the pleadings to which I have referred and drew attention (see Exh A4 T50 - T53 of the transcript of the hearing before Ball J) to the following: 1. that Mr Oates asserted that Mr Hawkins and Mr Tyne disregarded their obligations to their companies and to Mr Oates 2. that Mr Oates asserted that Mr Hawkins and Mr Tyne knew that material supplied to ASIC was false 3. that Mr Oates asserted that Mr Tyne has misled the Queensland RTA and the NSW RTA 4. that Mr Oates asserted that Mr Hawkins and Mr Tyne had misled ASIC concerning the existence of and appointment of the fictitious Mr Scott McClay
6. Of critical importance in this case is the fact that on 2 September 2011 the Liquidator sought approval in the Federal Court for a funding agreement between himself on behalf of Matrix and Mr Oates. On 6 September 2011 Jacobson J of the Federal Court approved the entry by the Liquidator into that funding agreement ("the Funding Agreement"). It provided for Mr Oates to pay up to $300,000 to the Liquidator of which $27,000 was for the Liquidator's past costs and the balance of which was to be used towards the examination of the officers of Matrix in relation to the examinable affairs of the company. Clause 13.1 of the Funding Agreement provided that: "Oates is entitled, at his sole discretion, to terminate his obligations under this Agreement, other than accrued obligations, by giving 7 days written notice to the Insolvency Practitioner that the Agreement and Oates's obligations are terminated." Clause 4.1 provided that Mr Oates would not discontinue or compromise the 2009 proceedings without the consent of the Liquidator. The Funding Agreement also provided by clause 6.5 that Mr Oates would be entitled to at least 40% of the net monies obtained following judgment or resolution.
7. There is no dispute that neither the existence of the Funding Agreement or the negotiations leading to the Funding Agreement were advised by Mr Oates to Mr Hawkins. There is no suggestion made by Mr Hawkins that Mr Oates' legal representatives in the 2009 proceedings had any knowledge of the Funding Agreement or the negotiations leading to it.
8. Mr Hawkins claims that Mr Oates' provision of funds to the Liquidator constituted a breach of the general release term of the Settlement Agreement ("breach of the general release term"), or alternatively constituted a breach of the implied duty of good faith owed by Mr Oates to Mr Hawkins ("the good faith breach").
9. Mr Hawkins also claims that by Mr Oates' silence (in not making reference to the Funding Agreement) Mr Oates engaged in misleading and deceptive conduct within the meaning of, and in breach of, s 18 of the Australian Consumer Law. I shall refer to this as "the trade practices claim".
10. Mr Hawkins made a further claim, namely that Mr Oates misled the Liquidator by telling him that the Settlement Agreement was not inconsistent with the terms of the Funding Agreement, and that this conduct was also misleading and deceptive conduct.
11. Mr Hawkins is represented in these proceedings by Mr Studdy SC (with Ms K.C. Morgan) and Mr Oates is represented by Mr Sullivan QC (with Mr A.M. Hochroth).
12. Mr Studdy made it clear in his submissions that Mr Hawkins' principal case is that had he been made aware of the Funding Agreement he (and the other active parties to the settlement) would not have entered into the Settlement Agreement- ie that his case is what is sometimes described as a 'no transaction' case.
13. Mr Tyne has been made bankrupt and the proceedings against him (or his bankrupt estate) and his mother have been abandoned.

Breach of the General Release Term

1. Mr Studdy described the second claim as a breach of the general release term. He asserted that there was to be added to the actual terms of the Settlement Agreement the first conversation between Mr Leeming and Mr Stitt to which I have earlier made reference at [10].
2. In my view, since the draft deed records the agreement into which the parties to the Settlement Agreement entered, it must be assumed that what Mr Leeming contemplated by "divorce" and what Mr Stitt contemplated by "a clean break" has found its way into the terms. Rectification of the agreement is not sought and I do not regard this conversation as having any additional significance to the contract claim.
3. The phrase 'Active Defendants' was defined and did not include Matrix. Mr Hawkins says that he sought to have the Liquidator made a party to the settlement and provide a release but that did not occur: see Mr Hawkins 22 March 2015 para 7.
4. Clauses 7, 8, 9, 10 and 11 of the Settlement Agreement are all indicative of the resolution of disputes between Mr Oates and Mr Hawkins and these are very specific clauses which reflect the termination of the possibility of any claims between Mr Oates and Mr Hawkins, and agreement not to report each other to the regulatory authorities or agencies.
5. In my view Mr Oates was clearly giving up any right to claim against Mr Hawkins, Mrs Hawkins, Mr Tyne, Mrs Tyne and Pegela but he did not, by the settlement, agree not to provide assistance or funding to the Liquidator of Matrix. If Mr Hawkins had required such a promise as part of the settlement then it was incumbent on him to insist on such a term as a condition of his settlement with Mr Oates which he did not do.
6. I am not persuaded that it was a term of the settlement that Mr Oates would not provide funding to the Liquidator.

The Good Faith Breach

1. It was agreed that this term only assists Mr Hawkins if the general release breach is established. If the complete release breach is established Mr Hawkins does not need this breach. Mr Sullivan contended that the duty of good faith only applies to obligations imposed under the contract: see Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 [13] per Allsop P and Mr Studdy accepted that this was so (T78.26- 40).

The Liquidator was Misled Claim

1. This claim is a claim based on the proposition that the Settlement Agreement was inconsistent with the Funding Agreement.
2. As I have held that the Settlement Agreement did not preclude Mr Oates from funding the Liquidator the foundation for the argument is not made out. Further, no evidence was called from the Liquidator to the effect that he was misled or relied on the communication: see email of 7 September 2011 from Mr Calabria of Bridges Lawyers by which Mr Oates, in effect, responded to the enquiries for confirmation that the terms of the deed of release were not inconsistent with the Funding Agreement by saying "Oates cannot say whether giving a release would preclude him from receiving payments pursuant to the funding agreement. He would have thought that his right to be paid is directly from Matrix (and the actions are between Matrix/Liquidator and not him so releases should not (and do not directly apply) and accordingly are sufficiently separate however as to whether there is an indirect effect this is a legal matter. He would have thought that, if anything, this would only adversely effect his ability to receive payment under the funding agreement as opposed to effecting in any way the Matrix/Liquidator's rights. As for assistance this dealt with below." I strongly doubt that that statement could be described as misleading and deceptive in any event, but even assuming it could be so categorised the absence of evidence from the Liquidator is fatal to Mr Hawkins' claim.

The Misleading and Deceptive Conduct Claim

1. Mr Hawkins primary case is one based on s 18 of the Australian Consumer Law which provides that "[a] person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."
2. Mr Studdy accepts that Mr Hawkins' case is one based on silence- that is a failure by Mr Oates to tell Mr Hawkins that he had, prior to the settlement (the day before in fact), entered into an agreement with the Liquidator to fund examinations which would clearly involve inquiry into the conduct of Mr Hawkins and Mr Tyne and others as directors of Matrix. Mr Studdy drew to my attention the recent decision of the Court of Appeal in Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 in which Barrett JA, with whom Bathurst CJ and Beazley P agreed, approved the summary of principles taken from two earlier cases: "(iii) The question in a case of alleged misleading or deceptive conduct as a result of non-disclosure is whether in the light of all relevant circumstances, there has been conduct which is misleading or deceptive … While the circumstances in which silence can be characterised as misleading or deceptive cannot be exhaustively defined, unless they give rise to a reasonable expectation that if some relevant fact exists it will be disclosed, mere silence will not support the inference that the fact does exist. (iv) In commercial dealings between individual entities, the characterisation of conduct must be undertaken by reference to circumstances and context. The relevant circumstances include the knowledge of the person who claims to have been misled and any common assumptions or practices established between the parties or in the particular activity or business in which they are engaged. (v) The language of reasonable expectation is not statutory but is an aid to characterising non-disclosure as misleading or deceptive. The judgment as to whether there is such a reasonable expectation is objective. (vi) The invocation of a reasonable expectation that if a fact exists it will be disclosed, directs attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs, or high moral expectations that exceed the requirements of the general law or of the prohibition imposed by [s 42 of the Fair Trading Act]. (vi) In general, [s 42 of the Fair Trading Act] does not require a party to commercial negotiations to volunteer information which will assist the decision-making of the other party. A fortiori, s 42 does not require a party to volunteer information in order to avoid the careless disregard of its own interests of a party of equal bargaining power and competence." (Emphasis added)
3. Mr Sullivan accepted that Traderight provided the test for consideration of whether silence constituted misleading and deceptive conduct.
4. The focus is thus on the relevant circumstances which are said to give rise to a reasonable expectation that the party asserting misleading and deceptive conduct claims would be told by the other about the matter of which he was not informed.
5. Mr Hawkins asserts that the following matters are relevant: 1. the 2009 proceedings involved claims against Mr Hawkins and Mr Tyne that they had engaged in serious misconduct in relation to Matrix 2. that Mr Hawkins and Mr Tyne promised not to report Mr Oates to any regulatory authority and Mr Oates promised not to report Mr Hawkins and Mr Tyne to any regulatory authority in relation to subject matter of the 2009 proceedings 3. that Mr Stitt and Mr Leeming had agreed that the general release was to effect a divorce or a clean break 4. the general release meant that Pegela was foregoing a judgement of $91,000 plus interests and costs and Mr Hawkins foregoing costs of up to $450,000 in District Court proceedings 5. in consideration of the provision of the funding Mr Oates had agreed with the Liquidator that he would obtain a portion of such monies recovered by the Liquidator from Mr Hawkins 6. Mr Oates was to be paid $750,000 by Mr Hawkins and Mr Tyne
6. Mr Oates submits in response: 1. he was not required to volunteer information which would be of assistance to the decision making of the other party: Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 [22]. Full disclosure is not required at all times: General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164, at p 178 per Davies and Einfeld JJ and see Lam v Ausintel Investments Aust Pty Ltd (1990) ATPR 40-990 per Gleeson CJ (Samuels AJA and Meagher JA agreeing) "where parties are dealing at arms' length in a commercial situation in which they have conflicting interests it will often be the case that one party will be aware of information which, if known to the other, would or might cause that other party to take a different negotiating stance. This does not in itself impose any obligation on the first party to bring the information to the attention of the other party, and failure to do so would not, without more, ordinarily be regarded as dishonesty or even sharp practice. It would normally only be if there were an obligation of full disclosure that a different result would follow. That could occur, for example, by reason of some feature of the relationship between the parties, or because previous communications between them gave rise to a duty to add to or correct earlier information." 1. the parties in question were engaged in hostile litigation. Parties to litigation are required to make their own assessment as to their strengths and weaknesses and may have information pertinent to the settlement, indeed highly pertinent to the settlement, which the other does not have 2. Mr Hawkins could have asked whether or not Mr Oates had made any arrangements with the Liquidator or was contemplating doing so. It did not occur to Mr Hawkins or those representing him to do so and it is his failure to do so and his failure to ensure that there was a clause in the settlement by which either Mr Oates agreed not to do so, which has led to him not being appraised of a matter relevant to his decision to settle and the terms of that settlement
7. As to the six matters relied on by Mr Hawkins 1. I think the first actually made it likely that there might be investigation by the Liquidator if he could obtain funding (although I should note that Mr Hawkins did say that from what the Liquidator's solicitor had said in Court he knew that the Liquidator did not have funds) 2. it is true that Mr Oates promised not to report Mr Hawkins to any authority (save under compulsion of law) but the funding of the Liquidator did not involve any reporting by Mr Oates 3. I accept that counsel spoke of a divorce or a clean break but that was a clean break or divorce in so far as all claims between each of the Active Defendants on the one hand and Mr Oates on the other. Matrix not being a party to the Settlement Agreement did not forego any claims it might have against Mr Hawkins arising out of the alleged conduct of Mr Hawkins and Mr Tyne 4. it is true that Pegela and Mr Hawkins were foregoing claims to judgment and costs orders but Mr Hawkins was buying the certitude that he would not have to pay more than the $1.8 million represented by the settlement in respect of claims equal to or in excess of $5,000,000 (that figure is taken from a file note of Mr Hawkins' solicitor on 6 September 2005- see Exh 2) 5. the fact that Mr Oates would be entitled to a share of the proceeds of any recovery from Mr Hawkins by Matrix is significant. It is true in a sense that he would obtain, through the back door, amounts in addition to those obtained by the Settlement Agreement but that was the price he was able to extract from the Liquidator for the funding which he was willing to give and which he would never see repaid to him except out of monies obtained by Matrix from Mr Hawkins 6. it is true that Mr Oates was to be paid $750,000 by Mr Hawkins and Mr Tyne and that this demonstrated that Mr Oates was obtaining a significant benefit from the litigation and its resolution, but he did not, by those payments, obtain payment of all that he claimed due to him
8. I accept the submissions on behalf of Mr Oates and particularly having regard to the context in which the parties found themselves. In my view no obligation was imposed on Mr Oates to inform Mr Hawkins of what he had agreed with the Liquidator. He made no promise not to assist Matrix or the Liquidator and I do not think the circumstances imposed on him a duty to inform Mr Hawkins of the Funding Agreement. I did raise with counsel the question of the significance of the words "Despite all this Tom does not want to see them get into trouble with the tax man, the RTA or anyone else" set out at [10] above. In my view that statement was potentially misleading if Mr Oates was contemplating funding the examination summonses which he was, and could provide support for a case going beyond mere silence. Mr Sullivan contended that the comment made by Mr Leeming had to be seen in the context of what he had said in opening his case and that the Liquidator was not someone Mr Hawkins would be 'in trouble' with since he is not an authority like the RTA, ASIC or the ATO. In my view the words "anyone else" are wide enough to cover the Liquidator. There is no evidence, however, that Mr Hawkins was ever told of (or relied on) that comment (it was not even recorded in the note made by his solicitor) and it was not part of his case.

Damages

1. In their submissions counsel for Mr Oates pointed out that even if, contrary to their primary submissions, Mr Oates had engaged in misleading and deceptive conduct the damages claimed by Mr Hawkins could not be established. There were in effect two species of damage claimed- the first being amounts expended or foregone in accordance with the terms of the settlement (eg $375,000 paid to date, the foregone costs orders obtained in other proceedings) and the second being the costs incurred in seeking to have the examination summonses set aside and having representation at the examination summonses.
2. As Mr Sullivan pointed out that the first category could all be said to be amounts incurred as a result of the Settlement Agreement but the second category was not incurred as a result of the Settlement Agreement. In other words had the Settlement Agreement not been entered into costs connected with the examination summonses incurred would still have been incurred.
3. Mr Hawkins could not establish that any of the examination summons costs were costs which he incurred because he had entered into the Settlement Agreement (for example he did not base the attempt to set aside the examinations or the Funding Agreement on the existence of the Settlement Agreement).
4. It follows in my view that Mr Hawkins could not recover both species of damage. This leads me to the next problem which is this. If Mr Hawkins was induced to enter into the Settlement Agreement because of the alleged misleading and deceptive conduct it was open to him to seek to set aside the Settlement Agreement as between himself and the other plaintiffs with Mr Oates and the orders made as a consequence. He did not, however, seek to do so. Rather what he asserts is that all of the amounts paid and foregone should be repaid to him, and that he should not be liable for the remaining $375,000 due under the Settlement Agreement but not paid.
5. Mr Sullivan pointed out that to succeed on such a basis Mr Hawkins would have to establish on the balance of probabilities that he would not have entered into the Settlement Agreement had he been told by Mr Oates of the Funding Agreement and also to establish what result he would have achieved in the litigation had it proceeded, as his position is that had he known of the Funding Agreement he would not have settled the 2009 proceedings. It was not a part of Mr Hawkins' case that had he known of the Funding Agreement he would have sought to require Mr Oates and the Liquidator to abandon such activity as a condition of settlement.
6. S 236 of the Australian Consumer Law provides that a person who suffers loss or damage because of the conduct in contravention of the Act, may recover an amount of the loss or damage from that other person. The plaintiff must establish that he has suffered loss or damage. Here the plaintiff claims that by entering into the Settlement Agreement he suffered loss and damage.
7. In Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 109 ALR 247 Mason CJ, Dawson, Gaudron and McHugh JJ approved Ackner LJ's statement of principle in UBAF Ltd v European American Banking Corporation [1984] QB 713, at 725, that "[t]he mere fact that the innocent but negligent misrepresentations caused the plaintiffs to enter into a contract which they otherwise would not have entered into, does not inevitably mean that they had suffered damage by merely entering into the contract." At 255 of Wardley the majority said: "[t]hat is because it was not self-evident that the value of the chose in action which the plaintiff acquired, the right to repayment of a loan, was worth less than the amount paid to the borrower at the time of entry into the loan agreement. Evidence was required to establish that fact, if it were a fact."
8. Mr Hawkins bears the onus of proving on the balance of probabilities that he would not have entered into the Settlement Agreement, that he has suffered loss and of establishing the quantum of loss: see McCrohon v Harith [2010] NSWCA 67 applying Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 and see LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74. Here that means he has to establish that he would not have entered into the Settlement Agreement and that if had not entered into the Settlement Agreement he would be better off.
9. Mr Studdy contended that Mr Hawkins' evidence that he would not have entered into the Settlement Agreement if he had been told of the Funding Agreement should be accepted. Mr Studdy accepted that to establish loss and damage he had to establish that Mr Hawkins would have been better off if he had not entered into the Settlement Agreement. He contended that the Court should find that Mr Hawkins would have been completely successful in the 2009 proceedings and he submitted that the following basis for such a conclusion existed on the evidence before the Court (see T108- T109) 1. that Mr Stitt had advised Mr Hawkins that he would win the case and "win handsomely": Mr Hawkins T55.36- 48 2. Mr Hawkins' unchallenged evidence that he would have continued to defend the proceedings 3. the absence of any evidence of a file note or advice from counsel or his solicitors in the 2009 proceedings that he should settle the proceedings
10. Mr Studdy submitted that this was a case in which, difficult as it may be, the Court should 'do its best' in accordance with the principles laid down in Howe v Teefy (1927) 27 SR (NSW) 301 and see Amann at p 125 per Deane J.
11. There is a problem with each of the matters on which Mr Studdy relies.
12. I am unable to accept Mr Hawkins' evidence concerning Mr Stitt's advice, and for the following reasons: 1. there is no note of Mr Hawkins' solicitor in the 2009 proceedings recording such advice. Mr Hawkins said that the advice was oral and given, he thought, in the presence of his solicitor. I am unable to accept that it is at all likely that Mr Stitt gave advice to Mr Hawkins without the solicitor present and that if the solicitor was present that they would not have recorded that advice. No note containing a record of such advice was produced in answer to the defendant's Notice to Produce 2. Mr Hawkins had not mentioned the receipt of advice in any of his affidavits- his evidence about Mr Stitt's advice was given in answering a question about the significant costs of an adjournment if his counsel withdrew: see T55.25- 48 3. Mr Hawkins did not give any evidence in his affidavit about the factors that led him to settle other than to say that the bringing to an end of all potential claims and investigations was the only substantial benefit of the settlement: "and without it I would not have entered into the Settlement Agreement" (see para 10 of his affidavit of 22 March 2015). He was confronted with details contained in Exhibit 2 (his solicitor's file note) which appeared to indicate that Mr Stitt had advised him and Mr Tyne on the afternoon of the first day of two significant problems in the case; firstly that there was a conflict between Mr Hawkins and Mr Tyne that would preclude Mr Stitt continuing to act and secondly that Mr Stitt had concerns that an adverse inference would be drawn (Jones v Dunkel (1959) 101 CLR 298) against Mr Hawkins if he was not called as a witness. It is true that what is contained in the note is far from fulsomely recorded but having regard to the cross examination and Mr Hawkins' inability to proffer any alternative explanation for what is written there at a conference in which he was in attendance (Mr Stitt it seems having phoned the other parties to the conversation- Mr Sutherland, Mr Hogan-Doran, Mr Hawkins and Mr Tyne), I am satisfied, notwithstanding Mr Hawkins' denial, that these topics were raised with him. This impacts not only on Mr Hawkins' credit but also on the truth of his assertion that he had no reason to settle the proceedings other than the offer of an end to any disputes 1. the settlement required Mr Hawkins to pay or forego a total of $1.8 million. That is far from $5 million but not reflective of a likely win (handsome or otherwise) by Mr Hawkins 2. the settlement negotiations were initiated by Mr Stitt and concluded rapidly with a significant amount paid or foregone by Mr Hawkins- hardly indicative of a perception that Mr Hawkins would win and win handsomely 3. in the light of (1) to (5) I am not able to accept Mr Hawkins uncorroborated evidence that Mr Stitt gave him the advice which Mr Hawkins claims he did. Mr Stitt was not called in the plaintiffs' case notwithstanding the fact that he had sworn an affidavit which had been filed
13. The second problem is that even were Mr Stitt to have given the advice he did there is no indication whatsoever as to when it was given and on what basis it was given nor whether it was given in contemplation that Mr Hawkins would not give (or might not give) evidence in the 2009 proceedings.
14. The third problem is that 45 offers no support for the proposition that Mr Hawkins would successfully defend Mr Oates' claims in the 2009 proceedings, but is concerned with Mr Hawkins wish to defend the proceedings. What is mentioned at 45 can offer no real support for the contention that Mr Hawkins would win his case having regard to the content of Exh 2. If Mr Stitt thought that Mr Hawkins would win notwithstanding the problems that he had identified that occasion would be an appropriate one to have mentioned that view.
15. I observe also that Mr Hawkins could not have understood that there would be no investigations by the Liquidator because of the Settlement Agreement because the Liquidator was not a party to that agreement and Mr Hawkins himself says that he tried to have the Liquidator made a party.
16. This undermines his evidence that he would not have entered into the Settlement Agreement had he known of the Funding Agreement.
17. It has often been remarked that evidence by a person of what he or she would have done had the defendant not engaged in the conduct of which complaint has been made (ie had the defendant told the plaintiff something the plaintiff was not told) needs to be very carefully considered. In Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232 McHugh J said at p 246 footnote 64 "See, eg, Rogers v Whitaker (1992) 175 CLR 479 at 490;; Nagle v Rottnest Island Authority (1993) 177 CLR 423 at 433. United States and Canadian courts, on the other hand, determine causation issues in medical cases on an objective basis (Canterbury v Spence (1972) 464 F 2d 772 at 791;; Reibl v Hughes (1981) 114 DLR 3d 1 at 16). In practice, there is likely to be little difference in the application of the subjective and objective tests in medical issue cases. Human nature being what it is, most plaintiffs will genuinely believe that, if he or she had been given an option that would or might have avoided the injury, the option would have been taken. In determining the reliability of the plaintiff's evidence in jurisdictions where the subjective test operates, therefore, demeanour can play little part in accepting the plaintiff's evidence. It may be a ground for rejecting the plaintiff's evidence. But given that most plaintiffs will genuinely believe that they would have taken another option, if presented to them, the reliability of their evidence can only be determined by reference to objective factors, particularly the attitude and conduct of the plaintiff at or about the time when the breach of duty occurred. For that reason, the restrictions on appellate review laid down in Abalos v Australian Postal Commission (1990) 171 CLR 167 and other cases are likely to have little application." and in Rosenberg v Percival (2001) 205 CLR 434 Gleeson CJ said at [16] "There is an aspect of such a question which may form an important part of the context in which a trial judge considers the issue of causation. In the way in which litigation proceeds, the conduct of the parties is seen through the prism of hindsight. A foreseeable risk has eventuated, and harm has resulted. The particular risk becomes the focus of attention. But at the time of the allegedly tortious conduct, there may have been no reason to single it out from a number of adverse contingencies, or to attach to it the significance it later assumed. Recent judgments in this Court have drawn attention to the danger of a failure, after the event, to take account of the context, before or at the time of the event, in which a contingency was to be evaluated. This danger may be of particular significance where the alleged breach of duty of care is a failure to warn about the possible risks associated with a course of action, where there were, at the time, strong reasons in favour of pursuing the course of action." See also Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 per Samuels JA (with whom Meagher JA agreed) at p 582, and reference was also made to this issue by Macfarlan JA at [59] of Tomasetti v Brailey [2012] NSWCA 399.
18. Those comments have relevance here. The prospect of problems in Mr Hawkins' case of the sort encapsulated in Mr Stitt's advice as recorded in Exh 2 would provide a reason for Mr Hawkins to have settled even if there was a prospect of examinations looming. This is coupled with another aspect which is the absence of any detailed evidence from Mr Hawkins as to the advice he received and the 'you will win advice' evidence which I deal with below. As Mr Sullivan pointed out evidence as to what Mr Hawkins was told in the context of his decision to enter into the settlement is a matter very much within his power to lead (see Blatch v Archer (1774) 98 ER 969 cited with approval in the High Court in Hampton Court Ltd v Crooks (1957) 97 CLR 367 at 371). Since Mr Hawkins has not provided any evidence other than unconvincing evidence as to why he entered into the Settlement Agreement and that he knew that the Liquidator was not providing him with any release. As Mr Sullivan pointed out, whilst reliance and causation overlap they are separate questions: see Tomasetti per Macfarlan JA [58]- [59]. Whilst I accept it is possible that Mr Hawkins would not have entered into the Settlement Agreement if he had known about the Funding Agreement I am not persuaded that he would not have done so.
19. The fourth problem is that the plaintiff has provided no evidence on which I could conclude that Mr Oates would be certain or likely to fail in the 2009 proceedings. Whilst it is true that Courts are, on occasions, called on to assess what would have been the likely result in litigation eg Johnson v Perez (1988) 166 CLR 351, I do not think that the task could be fulfilled without regard to the evidence that would have been before the Court and with nothing more than advice from counsel saying "you will win" with no analysis and no detail as to how that conclusion was reached, even accepting that Mr Stitt gave that advice which, as I have indicated, I do not.
20. In Malabar RSL Sub-Branch Club Pty Ltd v RSL Custodians Pty Ltd [2014] NSWSC 1016 I dealt with the question of what must be established in relation to damages where a breach of contract has been established.
21. In Malabar I made reference to NCON Australia Ltd v Spotlight Pty Ltd [2012] VSC 604 as to the principles summarised by Robson J in that case as "(1) The party who sustains a loss by reason of breach, is, so far as money can do so, to be placed in the same position with respect to damage as if the contract had been performed. (2) Damage includes the profits that the plaintiff expects from the performance of the contract as well as the costs incurred in reliance on the contract. (3) The plaintiff is not to be placed in a superior position to that which it would have been had the contract been performed. (4) Mere difficulty in estimating damage does not relieve a court from the responsibility of estimating them as best it can. (5) The plaintiff must establish that there has been an assessable loss resulting from the breach of contract complained of. (6) In Howe v Teefy (1927) 27 SR (NSW) 301 at 305-206 Street CJ said: The question in every case is: has there been any assessable loss resulting from the breach of contract complained of? There may be cases where it would be impossible to say that any assessable loss had resulted from a breach of contract, but, short of that, if a plaintiff has been deprived of something which has a monetary value, a jury is not relieved from the duty of assessing the loss merely because the calculation is a difficult one or because the circumstances do not admit of the damages being assessed with certainty." and what his Honour said at [295] "In my opinion, these authorities establish that the plaintiff is obliged to call such evidence as can be reasonably expected in the circumstances to establish the damages which the plaintiff claims. The Court's obligation to estimate damage as best it can is only triggered where the circumstances are such that the plaintiff is unable to reasonably establish the damage. McGregor on Damages states that the word "reasonable" is the controlling one, and the standard of proof only demands evidence from which the existence of damage can be reasonably inferred and which provides adequate data."
22. NCON and Malabar were contract cases but a similar approach to causation and damages applies to claims based on misleading and deceptive conduct: see Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 at p 355 per Mason CJ, Dawson, Toohey and Gaudron JJ and p 264 per Brennan J.
23. I am inclined to think that since it was open to Mr Hawkins to seek to set aside the Settlement Deed if misleading and deceptive conduct were established that it is not open to ask the Court to, in effect, embark on a trial within a trial. If I am wrong in that view then there is simply insufficient evidence before the Court on which it could be concluded that the Settlement Deed produced a worse outcome to Mr Hawkins then he would have obtained had the 2009 proceedings progressed to judgment. If I am wrong in that view the only conclusion that can be reached on the material presented is that the outcome would have been equivalent to what the parties themselves (advised by the eminent practitioners who they had retained) agreed upon.
24. Another issue on which there was dispute was whether all of the costs which Mr Hawkins incurred in seeking to set aside the examination summonses (as opposed to the costs of representation at the examinations) was part of the his loss and damage as a result of Mr Oates' failure to inform him of the Funding Agreement. Mr Oates contended that even if, contrary to his principal contentions he was liable to Mr Hawkins for costs arising out of the examination summonses he should not be held liable for applications to set aside the summonses which failed. This argument is based on the need for there to be a connection between the costs claimed with the alleged misleading and deceptive conduct. If Mr Hawkins would not have entered into the Settlement Agreement he would still have had to face the examination summonses. His application to set aside the examination summonses and the appeal did not arise because he had entered into the Settlement Agreement they arose because of the Funding Agreement. Mr Sullivan referred to Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191 in this connection. The only way those costs might be recoverable is if Mr Oates was in breach of the Settlement Agreement by funding the Liquidator. Even in that circumstance it would have to be established that the costs which were incurred were reasonably foreseeable: see South Australia v Johnson (1982) 42 ALR 161, at 169- 170 and see Blacker v National Australia Bank Ltd [2001] FCA 254 at [85]- [86] and [93]- [96]. These arguments appear to me to have a great deal of substance but given my conclusions on liability, causation and the absence of any proof that Mr Hawkins was worse off by having entered into the Settlement Agreement I do not think it is necessary to express a concluded view on these matters.
25. The defendant provided a table detailing the invoices referred to in the various affidavits and submissions that many of the amounts should be disallowed even if the plaintiffs succeeded. This was marked MFI 2. The plaintiffs were given leave to respond to this table and their submissions were received on 24 April 2015. The defendant's response to the plaintiffs' submissions was received on 29 April 2015. There were disputes regarding a number of items, the defendant claiming that the following should not be recovered by the plaintiffs: 1. payment made by anyone other than Mr Hawkins, Mrs Hawkins or Pegela Pty Ltd; 2. amounts for work performed for persons other than the plaintiffs; 3. amounts for work not relating to the setting aside of the application in full; 4. work relating to declaration and injunction proceedings that were never commenced; 5. costs incurred by the plaintiffs of briefing a new firm of solicitors and replacement counsel; and 6. costs of examinations of persons other than the plaintiffs Again, in view of my conclusions on the questions of liability, causation and proof of damage, it is not necessary to determine whether individual items would be recoverable.

The Cross Claim

1. Mr Oates cross claimed against Mr Hawkins seeking payment of the remaining $375,000 due under the Settlement Agreement. It was agreed that Mr Hawkins had no answer to that claim if he was unsuccessful in his claim against Mr Oates. The interest on that amount as at 21 April 2015 was $73,648.57 running at $66.78 per day making a total till today, 15 May 2015, of $75,251.29.

Conclusion

1. For the reasons given above there should be judgment for the defendant on the plaintiffs' claim and judgment for Mr Oates on his cross claim in the amount of $375,000 plus interest $75,251.29, ie a total of $450,251.29. I will hear the parties on the question of costs.

Amendments 28 May 2015 - Edit of spelling in [12] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 May 2015