Plaintiffs v Defendants

Plaintiffs v Defendants - [2008] VSC 510 - VSC 2008 case summary — Zoe

[130]

64 Whilst Mr Watson and Mr Gibson may have meant to encompass various entities and people from time to time when they used the word "team" - and in particular in day-to-day conversations, there is nothing in the written material to suggest that Mr Battye understood that their references to "the team" encompassed more than RPM in a way that made him the lawyer for entities and people additional to RPM. The plaintiffs' case on this issue was not assisted by the lack of precision the use of the word "team" involved. Specifically, at one point in his evidence Mr Watson appeared to limit the team to the three companies FCG, RPM and GMM.[69] However, at other times Mr Watson said that the team was a six person entity (three companies and three individuals) together with all the staff.[70] It cannot be realistically suggested (and it was not suggested) that in acting for the team Mr Battye undertook to act for all of the employees of FCG, GMM and RPM.[71] Further, it is not immediately apparent why, if the team encompasses all the employees, Mr Battye should (in the absence of an express arrangement) have regarded himself as acting for only some parts of the team, being either the three companies or the three companies together with the three principals. Whilst the meaning of the expression "the team" as at February 2001 might not be governed by what was said later in the year, it is relevant to note that the plaintiffs' case was not assisted by later communications from Mr Watson to Mr Battye in which the team was referred to separately from GMM. For example, in Mr Watson's email to Mr Battye of 18 October 2001[72] Mr Watson states: "I want the best for Craig and the best for Ford, the Team, the merchandising company and my people". There being no written retainer stating that Mr Battye acted for the plaintiffs in this case (my conclusion in respect of the February 2001 retainer letter being that it was a retainer letter in respect of RPM only), it will be necessary to look at the conversations and conduct of Mr Battye that the plaintiffs say demonstrates he was in any event acting for them. Before dealing with those matters, I need to deal with the meaning of "Gibson Motorsport".

[139]

69 On 12 February 2001, Mr Gibson signed the February 2001 retainer letter. On that day, Mr Battye received a faxed copy of the Ford sponsorship contract as described above. On 14 February 2001, Mr Battye had a conference with Mr Gibson and Mr Watson at the workshop premises in Dandenong. At this meeting, Mr Battye asked for an explanation of the operations of Gibson Motorsport. Mr Battye was told that FCG had purchased the franchise previously owned by Mr Dumbrell and that FCG also owned the building in which the workshop was located. Mr Forbes had purchased the business of the race team via RPM. RPM owned all the machinery in the workshop and was licensed to trade as Gibson Motorsport. Mr Battye was told that there was no contract between Mr Gibson and Mr Forbes, and he said that he thought a contract should be put in place. Mr Gibson said that he would provide Mr Battye with instructions to prepare a contract. Mr Watson told Mr Battye that he (Mr Watson) was responsible for sponsorship and merchandising, and that this would be done using GMM. There was discussion concerning the need for an agreement between RPM and GMM, and Mr Battye asked Mr Watson to provide him with instructions to draw the agreement. Other things were discussed, including the Ford sponsorship contract. Mr Battye said that the contract with Ford would need to be in the name of RPM because it was the entity that had contracted with Mr Lowndes. There was discussion about the implications of telling Ford as to Mr Forbes' involvement with the team. Mr Battye denies saying at the meeting that he would have a look at the Ford sponsorship contract in closer detail and advise. His account (which I accept) is that during the meeting he said he would wait for Mr Gibson and Mr Watson to confirm that the issue with Ford had been resolved or that they were happy for him to raise the issue with Ford. As I have said above, insofar as there is a conflict between Mr Battye's recollection on the one hand, and the recollection of Mr Watson and Mr Gibson on the other hand in relation to meetings and conversations (including this meeting), I prefer the evidence of Mr Battye. His evidence is supported by his file notes and the other contemporaneous documents, and was not as much of a reconstruction as the evidence of Mr Watson and Mr Gibson.

[205]

110 Later on the same day, Mr Battye conferred with Mr Lowndes. During this conference, Mr Battye told Mr Lowndes that he would need to consider carefully both Mr Forbes' and Mr Watson and Mr Gibson's perspectives and make a decision as to what he wanted to do. Criticism was made of Mr Battye in cross-examination that Mr Watson and Mr Gibson were not being given a fair opportunity to put their position because, unlike Mr Forbes, they were not aware of "everything that had been going on".[130] I accept that Mr Watson and Mr Gibson were surprised when they attended the meeting on 10 October to find Mr Lowndes there. However, they knew that Mr Forbes was to be at the meeting. Whilst with hindsight more could have been said by Mr Battye to Mr Watson to enable him to prepare as best he could for the 10 October meeting, in the circumstances of this case where everyone's positions were to the front of their own minds by virtue of the constant communications and dealings between the parties, there was no unfairness, nor any unfairness causative of an outcome with which Mr Watson and Mr Gibson were unhappy.[131] Mr Lowndes, unsurprisingly, wanted to stay with the team.[132] The team was owned by Mr Forbes. Mr Watson and Mr Gibson had failed to secure a buy-out. Ford wanted to sponsor Mr Lowndes and/or the team for which he drove. When all this was revealed, Mr Gibson said he was going to leave, and left the meeting. Following the end of the meeting, Mr Battye had a couple of conversations with Ms Allen in which he thinks he probably summarised what had happened, but that his real purpose was to organise a meeting with Mr Polites to explain to him what had happened. The next day, Mr Battye had a conversation with Mrs Lowndes concerning the possible termination of the management agreement with Mr Watson. On the same day (11 October), Mr Watson and Mr Battye had a telephone conversation in which they discussed Mr Watson producing a proposal that he had referred to the previous day in relation to GMM.

[215]

115 It is clearly possible to go back through the documents examining individual documents out of the context of the whole of the relationship between the parties as it evolved throughout 2001. By such a process, it is possible to look at an individual document or transaction and assert that it demonstrates that Mr Battye was retained on behalf of one or some of the plaintiffs so as to owe one or some of the tortious and fiduciary duties alleged by the plaintiffs. However, to do so ignores the reality of what actually happened in 2001. I find that Mr Battye was retained by RPM in February 2001 and that, in the course of the performance of that retainer, he was required to do work in which GMM had an interest and then to bill GMM separately in respect of that work. Mr Battye was careful to explain conflict issues, commencing when he was first asked to act for the team on 2 February 2001. Mr Watson and Mr Gibson chose to ask Mr Battye for advice from time to time in respect of matters which involved the team and in which they also had interests, which may or may not have diverged from the interests of the team from time to time. Whilst Mr Watson and Mr Gibson had their own lawyers who acted for them from time to time (Mr Daniel Butler in the case of Mr Watson and Mr Falconer of White Cleland in the case of Mr Gibson) and from whom they would seek advice in relation to their own specific interests whenever the need arose, they were prepared to obtain as much advice as they could from Mr Battye (probably in the knowledge that they were not likely to receive an account for which they would be personally responsible). The very fact that they sought advice from their own lawyers and their own accountants on specific relevant matters during 2001 shows that Mr Battye was not acting for them during this period.[142] Further, the fact that they sent drafts of letters that they proposed to send to others to Mr Battye for comment in circumstances where Mr Battye might have been expected to send the letters if he was acting for them suggests again that Mr Battye was not acting for them.[143] The position of the defendants is corroborated to some extent by the evidence of Mr Forbes that neither Mr Watson nor Mr Gibson ever referred to Mr Battye as "their lawyer".[144]

[220]

However, the true position between the parties is not that simple. Undoubtedly, Mr Battye gave Mr Watson and Mr Gibson advice concerning legal matters from time to time. The question is whether he was advising them in his capacity as Mr Lowndes' or the team's lawyer on the one hand, or as a lawyer supposed to be looking after the interests of Mr Watson and Mr Gibson. For the reasons given above, I find that such advice that Mr Battye gave the plaintiffs in 2001 was given to them either in his capacity as acting for Mr Lowndes and his companies or RPM. Ultimately, whatever may have been in the minds of Mr Gibson and Mr Watson, Mr Battye was retained to act in the interests of the Lowndes entities and RPM and it was reasonable for him not to regard himself as acting independently for the plaintiffs. Specifically, insofar as Mr Battye acted for GMM in the discrete matters identified above, this was on the instructions of RPM in order to advance the interests of the team. Whatever instructions Mr Battye had to act for GMM in respect of specific matters, they were not instruction to act on behalf of GMM in relation to the buy-out issue or in relation to the structure of the team. It is not the point that the work done involving GMM was done in a file headed or entitled or designated "general advice" or that that description was the same in respect of the files opened for Gibson Motorsport and Mr Lowndes. The administrative naming of the GMM file in this case sheds no light on the terms upon which Mr Battye and Ebsworths were retained. Further, the fact that Mr Battye may have been a "hub" through which messages were conveyed between the parties does not alter this position. Properly characterised, what occurred during 2001 was that from time to time Mr Watson would tell Mr Battye what he was going to do in respect of a particular matter, Mr Watson having a common goal with the goals of Mr Battye's clients. Mr Watson did this in the same way that different parties with common interests often run ideas and proposals past each other with a view to seeing whether the other has a different view. In such circumstances, each might expect the other to rely on what the other is saying. However, this does not translate into a relationship of solicitor and client.

[222]

118 It follows from what I have said above that I do not accept that on or about 9 February 2001 Ebsworths were retained to act generally on behalf of GMM or FCG.[147] That is, there was no Gibson Motorsport Merchandise retainer or FC Gibson retainer as alleged by the plaintiffs. Further, insofar as the plaintiffs allege that as a result of dealings between the parties after 9 February 2001 such retainers came into existence, I disagree. There was no assumption of responsibility on the part of the defendants to look after the interests of the plaintiffs, nor was there any known reliance.[148] Likewise, I reject the plaintiffs' claims that on 7 September 2001 Ebsworths were retained to act on behalf of Mr Watson and Mr Gibson in connection with the dispute between them and Mr Forbes and RPM (the alleged disputation advice retainer). There was no communication between Mr Battye and Mr Watson and Mr Gibson on or about 7 September 2001 giving rise to any such retainer. Additionally, the existence of any such retainer would not have been consistent with the dealings between the parties (for example Mr Watson and Mr Gibson writing their own letters to Andersen Legal and Mr Battye confirming to Mr Watson that Mr Watson and Mr Gibson were talking to their own lawyers). Properly understood, Mr Battye's role in 2001 was acting principally in the interests of Mr Lowndes. He took on RPM as a client with Mr Lowndes' permission on the basis that there would be no conflict and he then proceeded to act on behalf of both clients - taking such steps as were required to bring to fruition a racing team in which Mr Lowndes was the principal driver. In acting in Mr Lowndes' interests, this involved him actively assisting in respect of a wide range of matters, including the various sponsorship proposals and agreements to which GMM might be or have become a party. When the possibility of conflict between the interests of Mr Lowndes and the interests of RPM arose at the end of August 2001, Mr Battye, as he had always said he would, reverted to being Mr Lowndes' lawyer. His conduct thereafter was consistent with acting on behalf of Mr Lowndes and following Mr Lowndes' instructions. There was never any doubt that Mr Battye would take this course. It was a course that he had foreshadowed right from the start.

[267]

142 The real issue is whether or not Mr Watson and Mr Gibson could have changed the outcome of the meeting on 10 October 2001 had they been kept fully informed of Mr Forbes' intentions and activities. The first question to be asked is whether Mr Watson and Mr Gibson had a prospect of staying with Mr Lowndes and Ford as at the 10 October meeting. Mr Lowndes had not finally made up his mind. The question becomes whether Mr Watson's and Mr Gibson's chances would have been enhanced to any and what extent if they were more fully prepared to put their case on 10 October. As I have said above, this assumes that Mr Watson and Mr Gibson did not in fact put their best foot forward on 10 October - a conclusion I have rejected. Neither Mr Watson nor Mr Gibson gave any evidence of a "better" presentation that could have been made on 10 October had they been better prepared. Indeed, at no time in this trial was it suggested that there was relevant material which could have been put before Mr Lowndes on 10 October 2001 which might have enhanced Mr Watson's and Mr Gibson's case. Further, it is to be remembered that, as at 10 October, Mr Lowndes was contractually bound to RPM under the RPM driver agreement until at least 31 December 2002. Whilst this matter does not appear to have been expressly referred to, it seems likely that, had Mr Lowndes suggested that he would leave RPM, an issue of breach of contract would have been raised. Ordinarily, one would think that a person in Mr Lowndes' position would not take a step (if he did not have to) that would place him in breach of contract. Whilst Mr Lowndes might have taken such steps in relation to TWR in the second half of 2000 and in early 2001, the circumstances were very different and there would have been no up side in Mr Lowndes exposing himself (and his company) to a claim for breach of contract by RPM in October 2001. In the circumstances, and with Mr Forbes maintaining that he would not sell to Mr Watson nor Mr Gibson, there was no realistic prospect of a different outcome in relation to the 10 October meeting and the separation at or shortly after that time of the Watson and Gibson interests from the team.

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Cases Cited (21)