The context in which the plaintiff entered the Agreement
121The plaintiff's case is that she was incapable of making an informed decision as to what was in her best interests in relation to the Family Court proceedings. It was further submitted that the plaintiff was obsessed with Anthony her stepson, such obsession being irrational. It was further submitted that her persistent rejection of considered legal advice and the sacking of lawyers because she did not like their advice was a further indication of her irrational behaviour. It is further accepted that the plaintiff is the kind of person who needed everything "sugar coated". In other words she liked people to tell her what she wanted to hear and would not listen to them when they told her something she did not want to hear. It was also submitted that she could fairly be regarded as greedy and manipulative. Further, it was submitted that at the time she met Mr Byrnes she did not need litigation funding and Mr Byrnes astutely assessed her personality and character and hence her vulnerability and took advantage of her by in fact telling her what she wanted to hear which had the effect of inducing her to sign the Agreement and the Addendum.
122Before considering the evidence given by the witnesses in any detail it seems to me important to analyse and hence understand the history of the family law proceedings immediately prior to the plaintiff entering into the Agreement. That provides in my assessment at least a most pertinent context in which to view her actions when it came to entering into the arrangements with the defendants.
123During her marriage to her former husband she assisted him in operating the Hampton Court Hotel in Bayswater Road, Kings Cross amongst what she describes as "other ventures". She was from time to time a director of a number of companies associated with her former husband's business interests. The description that she gives herself to the relationship with her former husband is at best described as volatile. There seems little doubt that the relationship between herself and her former husband probably deteriorated significantly from about May 2003 when, having obtained some DNA results, she announced to him that Anthony who no doubt her former husband believed was his son was in fact not his biological son at all.
124This clearly created considerable tensions between herself, her former husband and her stepson Anthony. From the materials filed it seems she was extraordinarily jealous of the relationship between her former husband and his son Anthony. She became obsessed with her stepson and alleged he was behind some plot to have her murdered.
125In an affidavit (11 February 2008) filed in the Family Court her former husband says that during the course of his marriage to the plaintiff he was engaged in the management of hotels, nightclubs and property development. He appears to have accepted the plaintiff's contention that Anthony was indeed not his biological son. He also asserts that part of the reason why the relationship between himself and the plaintiff became strained was by reason of the fact that the plaintiff insisted that because Anthony was not his biological son he should disinherit him. Unsurprisingly he refused to abide by her request. He describes himself as being "shocked and hurt" by the plaintiff's actions in apparently securing a DNA sample from Anthony and having it tested. He said that he pleaded with the plaintiff to accept Anthony as his son. Instead she insisted that he remove Anthony from his life. He asserted in his affidavit that "her motivations were purely financial". Further, in his materials, he presents himself indeed as long-suffering, having discovered the plaintiff's frauds perpetrated upon one or other of his corporate entities (and which were investigated by ICAC) and a long term affair which he discovered that the plaintiff had had with a Mr Greg Sealby, who was the Liquor Administration Board inspector. I will return to some of these matters later.
126In any event in 2006 the plaintiff first commenced proceedings in the Family Court of Australia, it seems on the advice of a solicitor, Ms Wendy Baker. Apparently she did not inform her then husband about the commencement of the proceedings at least for a while because as she said in her evidence she did not want to upset him. She said she commenced those proceedings on advice from her solicitor, Ms Baker, in order to "secure herself". It was her decision not to inform her husband that she had commenced the proceedings.
127In July 2007 she changed solicitors. There is no explanation why she did so. From that point at least she was represented by a Mr Nabil Wahhab, from a firm called York Family Law. In an amended application filed on 24 December 2007 by Mr Wahhab, where the plaintiff's usual occupation was described as "homemaker", a claim was made that the court order the husband to transfer his interest in the family home at Mona Road, Darling Point, to the plaintiff free of all encumbrances, and that the husband vacate the Darling Point property. Further, a claim was made that the husband be ordered to pay the plaintiff the sum of $30 million by way of property settlement. Other orders were also sought.
128Further, in December 2007 in a lengthy affidavit, the plaintiff sets out in some considerable detail the history of the relationship between herself and her former husband. Unsurprisingly she refers to her assets and her good fortune in terms of both gifts and inheritances from a person she describes as her "adopted Australian mother" a Ms Mavis Johnston. Ms Johnston it seems gave the plaintiff in or about 1989 the sum of about $180,000 which she used towards the acquisition of property. Ms Johnston did not stop there. Apparently she gave the plaintiff a further $100,000 shortly thereafter. Sadly however when her "adopted Australian mother" died in June 1995 she nonetheless inherited her two properties, one at East Kurrajong comprising some eight acres, and the other of one acre. She was also fortunate enough to inherit approximately $300,000 in cash, artefacts and jewellery. In relation to the jewellery she inherited, she sold that for approximately $100,000 and also sold a silver frame which came from the "inheritance" for something in the order of $50,000. All this was by way of background to explain how she had been able to provide those monies or large portions of those monies to her former husband to assist him. She corroborates her former husband's evidence insofar as their relationship began to deteriorate soon after she was able to reveal the DNA test results concerning Anthony. In the body of the affidavit she says she requested a sum of money be released for the payment of her legal fees and disbursements in the proceedings. She indicated at [78] that she had been informed that potentially the case could cost between $100,000 and $250,000.
129Notwithstanding the very long history given of the relationship between herself and her former husband, she was able along the way to point to alleged criminal activity on the part of Anthony and indeed her former husband in terms of forging signatures, fabricating evidence in various proceedings and, as she would have it, blatant breaches by them of the Corporations Act 2001 (Cth).
130On 30 January 2008 the plaintiff filed an amended application in the Family Court. Amongst other things she sought injunctions restraining her husband and Anthony for that matter from dealing with various bank accounts concerning the husband's business activities. In addition, she sought the repayment of the sum of $2,845,287 which was said to be a loan owed by F & V Nemeth Investments Pty Limited advanced from the plaintiff to that entity. Interim costs were also sought in the sum of $250,000.
131On 8 February 2008 the plaintiff sent a very long and detailed email to Mr Wahhab. Importantly she asked a number of very precise questions concerning the type of relief she hoped to obtain against her former husband and Anthony, effectively preventing them from mortgaging or adversely dealing with the Hampton Court Hotel contrary to her interests. She said:
1. To stop Ferdy/Anthony or Directors of IF & V Nemeth to mortgage the hotel.
2. To stop Ferdy and Anthony or the Directors of IF & V Nemeth Inv. P/l from any dealing with Fred Ayoub, Director of MFS Constructions P/L in relation with the Hampton court hotel.
(I believe that Ferdy is negotiating with Mr. Ayoub to make it out that the F & V Nemeth Inv. Owe so much monies to MFS constructions P/L and eventually make the F & V Nemeth Investment bankrupt)
3. To stop work at the Hampton Court.
4. To subpoena the accountants and lawyers.
132In the same email, she made the following reference to her former husband's solicitor Mr Paltos:
I have a friend working for corporate lawyer. I mentioned about my case and she said "I am very concern about you that your husband engaged Paltos as his lawyer". They will give you hell and they will do all the dirty tricks to make sure that you will get the minimum amount of settlement."
133The day before this email, namely 7 February 2008, she had already had a conference with Mr Trevor Hall, solicitor to whose firm she was soon to retain. In an email to the plaintiff dated 8 February 2008, Mr Hall referred to a meeting on 7 February 2008 and to his understanding of the current state of the proceedings. Mr Hall made note of the fact that there was a claim before the court for the $250,000 for future legal expenses and that he thought the matter was due to come before the court the following week (8 February being a Friday). He was going to try to arrange someone from his office to observe the proceedings. On 12 February 2008 the plaintiff's former husband filed a financial statement indicating as at that date the total value of property owned by him was in the order of $40 million.
134On the same day her former husband signed what is described as a response to an application for final orders. He sought that the plaintiff vacate the home in Darling Point and transfer her interest to him. Other orders were sought, and further, the husband sought an order that he pay the wife an amount equal to 20% of the net assets of each of the husband and wife as determined by the court, subject to certain exceptions.
135In response to the application for funding for her case, a response was filed by the former husband. The husband indicated that by way of interim and/or partial property settlement he would be prepared to pay to the plaintiff's solicitors $250,000, first by the payment of $100,000 within 14 days and the further $150,000 within three months of the date of the order. Importantly the husband also indicated, without any admission, that in the event of completion of the sale of the Hampton Court Hotel he was prepared to cause the relevant corporate entity to deposit the sum of $30 million to an interest bearing account and undertook not to allow the amount to go below that sum.
136Again on 12 February 2008 a number of orders were made which included the payment of the $250,000 on account of legal costs and disbursements as suggested by the husband.
137By 25 February 2008 Mr Hall became the solicitor for the plaintiff. There is no contemporaneous documents which indicate why it was that the plaintiff terminated her relationship with Mr Wahhab although she does make an assertion that he in some way or other discriminated against her. She certainly did not, so it seems, terminate that relationship by reason of any advice she got which she did not wish to accept. There is only the plaintiff's word for the assertion of some form of discrimination. Although I will return to this matter, I have been invited by her counsel to regard virtually everything said by the plaintiff (unless otherwise corroborated) as entirely unreliable. So far as this matter is concerned, I am simply unable to say anything but the fact that she simply came to a decision to terminate Mr Wahhab.
138It seems that the person who she describes as a "close friend" (plaintiff's affidavit of 9 September 2011, [125], or her "dear friend" at [T73]) had in about February 2008 introduced her to Mr Trevor Hall and as a result she thereafter instructed him, [97] and [98]. Mr Hall appears to have acted for the plaintiff for most of 2008 and into early 2009.
139On 12 December 2008 a mediation was held. Mr Hall has had, it seemed, retained Mr Grahame Richardson SC, a leading family law practitioner to represent the plaintiff at the mediation. Mr Hall however did not attend personally. The mediation was held before Mr Lindenmayer, a former Family Court judge.
140As the result of the mediation Heads of Agreement were drawn up and signed. The Heads of Agreement provided that the husband would, within 14 days of the date of any final order, transfer unencumbered to the wife the Darling Point property. Within 12 months or the date of completion of the sale of the Hampton Court Hotel, whichever occurred first, the husband agreed to pay the plaintiff $7.5 million and within 14 days he was to pay the plaintiff $500,000 which was to be a sum in addition to the payment of $7.5 million. The former husband agreed to give certain indemnities to the plaintiff in relation to his corporate entities, other releases were to be provided and then the plaintiff was to use her "best endeavours" to have each adult member of her family execute certain releases. In passing I should observe that the plaintiff had previously organised for the employment of a number of members of her family at the Hampton Court Hotel.
141The plaintiff asserts that she had a conversation with Ms Sarah Winter in early 2009. She told Ms Winter that although she had reached a settlement with her former husband she was not happy with it, because there was a condition that her family release her former husband from any claims. In effect she asserts that Ms Winter agreed with her. What concerned the plaintiff were her family's potential claims for unpaid wages as they, she asserts, worked at the hotel for below the minimum award wage.
142On numerous occasions in her evidence (at T42 and T53) she asserted that she was advised not to go ahead with the Heads of Agreement. It became clear that she attributed the "advice" to Ms Winter. She accepted however that she did discuss the Heads of Agreement with Mr Richardson SC. It is plain that she was certainly advised by her lawyers at the time to implement the Heads of Agreement, at the time she signed them.
143She was concerned about the prospects of her family providing releases and therefore missing out on their proper entitlements to wages and other entitlements. However it seems clear also that she simply thought that the amount of money that she was being offered was not enough. She made that clear subsequently to Mr Byrnes when she met him and I have little doubt that weighed heavily on her mind especially given the claim she had been advised previously to make for the unencumbered property in Darling Point together with $30 million.
144She was clearly unhappy about Mr Hall's role in the mediation and his non-attendance. In his email to her of 10 January 2009 he was at pains to emphasise the level of his engagement both with Mr Richardson SC and with the mediation more generally. He told the plaintiff the level of Mr Richardson SC's involvement in preparation for the mediation and how he (Mr Hall) had written the first draft of the position paper.
145The plaintiff was clearly concerned that her lawyers had failed to appreciate the significance of what has been described as the Prynew proceedings and its inter-relationship with the Family Court proceedings. The reference to the Prynew proceedings was a reference to the alleged damage which had occurred to the matrimonial home as the result of their neighbour, a Mr Tsu, undertaking excavation work on his land. Prynew was the name of the corporate entity associated with Mr Tsu. The plaintiff alleges that although the damages were only around $240,000 she and her former husband had spent approximately $2 million on legal fees. The plaintiff asserted that her former husband and Anthony had contrived the case and were involved in acts of dishonesty in relation to the litigation.
146Mr Hall also told the plaintiff that he had checked with Mr Richardson SC and Mr Richardson SC did not believe that Mr Hall needed to be at the mediation. He said "I never abandoned your matter". The email is very lengthy but importantly contains the following statements:
In answer to your question as to if the settlement can be undone, the answer is that it probably can be, by just not entering into it. An avenue would be the comments that Ferdinand Nemeth made to you that the proceeds of sale of the Kings Cross Road property were not properly accounted for by him. Be this as it may, the advice of Richardson SC and of Mr LindeMeyer is that the settlement is in your best interests and that you should accept it.
The alternative is to go to trial and the other side will do their best to make you look like an absolute liar. I am telling you that they will make it their business to destroy you ruthlessly in the witness box. They will take you through everything you have ever said and done with one sole purpose of causing you as much damage as possible. Anything that is not supported by detailed financial records will be denied. There are findings in the ICAC report that you effectively stole money from the Nemeth Family companies and you were involved in defrauding the State Treasury. There are numerous possibilities if the Taxation Department becomes involved. Frankly, you don't want to know where your matter could end up if you go to trial.
Just remember that when you came to us you were offered $10,000,000 and not the house. You now have the house and about $7,500,000 to $8,000,000. The house is an appreciating asset. I suggest that you should look at what you have got out of this, not what you have not gotten out of. It is the best that we can do for you.
It would be great to be able to get you the largest proportion of the estate but the advice we are receiving is that putting your case at its heighest, $18,000,000 washes it up.
I am unsure if you are aware - but there was the bizarre case where Richardson SC was advising a settlement of $42,000,000 in another matter. The wife refused and as a consequence of margin calls on shares, received nothing. This dissipated the marital estate.
In your matter you could be made to look an absolute liar and a person motivated by money and nothing else. If the tax office becomes substantially involved, you could receive also, nothing. There are years and years of improperly accounted for taxes and revenues that would consume this estate if it were ever rigorously audited by the tax office. That would be a disastrous outcome for you, and for this and a host of other reasons you must take steps to avoid it and settle the proceedings.
My advice to you is - go and ask York Family Lawyers, the supposed experts in this area if you should accept the current settlement. Otherwise, go and ask Mr Lindenmayer or Mr Richardson SC. Don't ask me if you don't want my opinion, ask these people. They know.
147Clause 14 of the proposed Heads of Agreement was in the following terms:
That the parties undertake to each other that in relation to the Supreme Court proceedings (Prynew-Tsu Litigation) each will:
14.1 Not seek any costs order against the other;
14.2 Not put any contention to the court in the event that any defendant seeks a costs order against them that the other should be required to contribute or that the order should be made against the other;
and each shall indemnify the other in respect of any loss occasioned from the breach of this undertaking.
148In the Prynew litigation the plaintiff and her former husband were co plaintiffs and Prynew Pty Ltd and Mr Tsu were the first and second defendants (Ferdinand Nemeth and Anor v Prynew Pty Limited and Ors [2005] NSWSC 1296). It is clear that, along with other concerns the plaintiff had, she was concerned about the nature of the indemnity she was being asked to agree to in relation to the undertaking.
149There is no doubt that it seems the much more significant matter that was weighing upon the plaintiff's mind was the possible exposure to costs in relation to the Prynew matter. There is no doubt that Mr Hall thought the matter should be settled, as did Mr Richardson SC for a combination of reasons. An important reason though is that Mr Richardson SC and for that matter Mr Hall had formed the view that the plaintiff was likely to be found in a number of respects to be a dishonest witness and hence in their opinion would present as an unattractive face for the purposes of making a very substantial claim in the proceedings.
150In the email from Mr Hall he had invited her to double check his advice with York Family Lawyers, the plaintiff's previous solicitors. She chose not to do that but instead to instruct a Mr Max Meyer said to be an accredited family law specialist at the firm of Meyer Pigdon. An appointment was made for 29 January 2009. In anticipation, Mr Meyer sent the plaintiff a schedule of his and his staff's charge-out rates. There is not material before the court which indicates precisely what it was that Mr Meyer discussed with the plaintiff. However there seems little doubt that the plaintiff wished to continue to retain Mr Richardson SC. It seems a fresh retainer agreement was prepared on behalf of Mr Richardson SC and sent to the plaintiff on 23 February 2009 by Mr Meyer.
151On 24 February 2009 the plaintiff responded to Mr Meyer indicating that she had read the proposed retainer agreement together with other materials including the "Supreme Court judge decision re Prynew" and requested a meeting with Mr Meyer the following week. Mr Meyer and the plaintiff met on 17 March 2009. At that meeting the plaintiff provided Mr Meyer with a copy of the Heads of Agreement and there was clearly a discussion between the two of them about its terms. Mr Meyer wrote a letter to the plaintiff on 18 March 2009 which records their discussions and the plaintiff's then view as to the various paragraphs, it seems, in the document. It is not entirely easy to reconcile the paragraphs referred to in Mr Meyer's letter of 18 March with the paragraphs in the Heads of Agreement. It is clear that he is making a reference to paragraph numbers of "your note" meaning a note from the plaintiff. This would not appear to be in evidence. However what is clear from the letter of Mr Meyer of 18 March 2009 is that the plaintiff was now content with a number of matters in the Heads of Agreement, indeed a substantial number or so it appears. She still had some reservations, as is also clear from his letter. What this shows though, was that she was collaborating with Mr Meyer and in turn Mr Richardson SC and working (albeit slowly) through the various items that concerned her. Again, it is by no means clear what the plaintiff had requested but she clearly wanted some interim payment, to which Mr Meyer responded in his letter of 18 March 2009 in the following terms:
In answer to your questions:
1. No: The family court will deal with the matter only on a final hearing basis. There is no case for an interim payment of that magnitude...
2. ...
152On 19 March 2009 Mr Meyer again wrote to the plaintiff. Again, although it is a somewhat long letter, in my view it is important to set out the details relevantly as follows:
Next, I confirm that we attended the conference with Mr Richardson of Senior Counsel and your friend Sarah. We discussed the question of security for the performance by Mr Nemeth of the obligation he accepts or accepted to you to pay you $8,000,000. It was expressly left open Mr Richardson said, and Mr Nemeth's lawyers were advised that you would not accept only injunctions restraining Mr Nemeth and the companies from disposing of their assets: there would need to be more than that. Therefore it would be open to you to approach the question of security without putting the whole of the settlement at risk.
However, Mr Richardson, and I both expressed the view that if you were to pursue the other matters that you raised and I confirmed in my letter yesterday, there was a serious risk that Mr Nemeth would walk away from the settlement. I confirm we both advised you that neither is bound at the moment by the Heads of Agreement and each of you can walk away.
I confirm also:
1. Mr Richardson advised that if the matter went to trial everybody would lose because of the tax problems.
2. Because of the ICAC findings against you, there was a serious risk that your evidence would not be accepted unless it were corroborated by independent arms length evidence from others and if it was merely you against Ferdy then he would be believed and you not: the ICAC findings Mr Richardson described as hugely damaging to you.
3. There is also a huge question mark on the realisation of the Hampton Court Hotel project.
4. In relation to Mr Nemeth's staying in the home it was your proposal that he do so.
5. The claims that may be made by your relatives: you said that it was highly unlikely that any of these would be pursued. Mr Richardson confirmed they certainly could not be pursued in the Family Court. In any event you are required only to use your best endeavours under the Heads of Agreement and you must do so in good faith.
6. The attempt to reopen the question of occupation of the home and continuation for further period of the spouse maintenance would also run the serious risk that Mr Nemeth will want to reopen the negotiations and also security may be harder to negotiate than it might otherwise be.
7. The Court will not give you security if the result were obtained after a defended hearing.
8. As to the question of your risk of costs in the Supreme Court proceedings this was discussed but we could reach no conclusion because we were not really fully aware of those issues even now. There does appear to be an application that you pay costs of the defendants because of the offer of settlement and you have provided us with the document showing this by way of submissions. Mr Richardson suggested, and I shall follow this up if you want me to, that I speak to the barrister who appeared for you in the Supreme Court proceedings as to any cost risk.
At the end of the conference you instructed me to approach Mr Paltos, once I was on the record for you, and to pen a dialogue with him as to the question of security by inviting his proposals on behalf of Mr Nemeth. I shall now do so.
153This by no means shows that the plaintiff had rejected her lawyer's advice, but again shows she was carefully working her way through the various matters involved in the proposed settlement. Certainly by this stage at least she had been told that the Heads of Agreement were not binding and that each party, if they chose, could walk away. She clearly was looking at resolving issues without a contested hearing.
154Again on 19 March 2009 Mr Meyer sent a further email to the plaintiff. He informed the plaintiff that Mr Hall had informed him that all of the money in Mr Hall's trust account (and then some more) went on account of Mr Hall's fees. It is clear from paragraph 2 of Mr Meyer's email that the plaintiff raised the possibility of tax evasion on the part of her former husband in relation to dealings with his superannuation fund. Mr Meyer indicated that as Mr Nemeth was well over 65 he had been entitled, without tax penalty, to draw monies out of his super fund. In any event this shows in my view an attention by the plaintiff to the financial detail together with her seeking to obtain some forensic advantages on the basis of the accounting for her former husband's superannuation fund. In his email, Mr Meyer pointed out that the delay in implementing the Heads of Agreement was considerable and it was now difficult to know whether or not the settlement was still on foot given the delay. He stated:
You have quite properly formed the view that the existing settlement is very much in your interest and both of us (Richardson and I) have confirmed your view. Obviously the course of safety in relation to understanding your exposure to the costs orders is to await the outcome but that needs to be balanced against the possibility of losing the settlement and we do not yet know what the risk of that might be. As Mr Richardson pointed out there is also the question of Ferdinand's age and health and your having to deal with his executor about these matters if he should die before the settlement is implemented by the way of making court orders.
155Mr Meyer also said:
As to whether we need Mr Richardson if we go ahead with the agreement that is largely a choice for you. Given the very significant sums of money and the risks involved you may feel more comfortable if once documents have reached close to final form having Mr Richardson provide final advice.
156Again this material does not show the plaintiff unequivocally rejecting advice given, but rather suggests that in broad terms at least she had come to the view at that point that the settlement was in her best interests. It is also clear however that there was work to be done and perhaps further negotiations and indeed further documentation before the arrangements could be consummated. It will become apparent that the reference to "costs orders" is a reference to the Prynew litigation.
157Mr Meyer formally went onto the record on 19 March 2009. On 30 March 2009 he again sent an email to the plaintiff. Again, it is on the lengthy side but it is important to set it out.
1. My firm will not become involved in the Supreme Court proceedings. The only relevance of those proceedings is to the Family Court proceedings, and the Heads of Agreement, insofar as they relate to indemnities and the need to understand the Supreme Court proceedings as a background to the exposure that you might suffer in relation to costs.
2. There is a response from Trevor Hall and a response from me to him, each of which has not been copied to you.
3. It is disappointing that you do not want to proceed in relation to the Heads of Agreement and that you are now once again talking about trying to deal with negotiations on behalf of your family. This is directly contrary to the advice given by Mr Richardson of Senior Counsel in conference, and also would seem to be directly contrary to the Heads of Agreement to which you agreed at the mediation in relation to members of your family.
4. The problem is there is no real accounting of the trust account yet.
5. Thank you for being straight forward with us about the budget for your legal costs and I agree that there is every need to be careful. In any event I have yet to receive any response from Dennis Paltos as you know.
6. Mr Hall has so far refused to hand over his file.
7. You have already provided me once before with Sarah's statement.
8. You are perfectly well aware that Mr Hall says there is no balance of the trust funds to be transferred to our account: quite the contrary, all the money has been spent in payment of his fees and those of Counsel presumably, and not only is there no money left but a reasonably substantial debt is claimed to be owed by you to him.
158At this point clearly the plaintiff was resisting the advice previously given to implement the Heads of Agreement. It is also plain that she was experiencing financial difficulties both in relation to a budget for her legal costs going forward and for what is described as a substantial debt claimed by Mr Hall in relation to unpaid fees. There seems little doubt that she was concerned about Mr Hall's accounting and presumably was concerned about the level of fees said to be outstanding. She was still concerned about the Prynew proceedings and her family's claims.
159On 25 March 2009 the plaintiff wrote to Mr Meyer. In that letter the plaintiff informed Mr Meyer that she proposed to speak directly with her former husband and that she would rather negotiate with him than litigate. This statement was made in relation to her family's claim for unpaid wages. The plaintiff then stated:
I was very depressed then and vulnerable and trusted Trevor and Nella Hall until I realised that I was caught up between unsettled couple and only became that they did not have enough experience to deal with my case when Mr Hall was unable to attend the court and conferences and written a letter to Judge Macready.
160On 1 April 2009 Mr Meyer again emailed the plaintiff. He indicated, amongst other things, that he had not been able to get any response from Mr Paltos. In that email, Mr Meyer concluded that Mr Richardson SC believed that the settlement was a very good one for the plaintiff.
161On 20 April 2009 the plaintiff sent an email to Mr Meyer on a whole range of issues. Among them, she indicated that she had met with her family (ten members of whom had been working at the hotel) and that they were willing, as it were, to provide a release in relation to any claims. She also indicated that she had an old will that she wanted to update to put her affairs in order, as she believed that she had been in fact receiving threats on her life. She also informed Mr Meyer that she was proposing to go away for a month.
162On 23 April 2009 Mr Paltos wrote to Mr Meyer. He made it clear that the release referred to in the Heads of Agreement was an essential part of any settlement being implemented.
163On 18 June 2009 Mr Meyer sent an email to the plaintiff. He referred to a telephone mention for both lawyers before the Registrar on that day. Mr Meyer said:
I telephoned Mr Paltos to find out what had occurred. He of course told me in the meantime his fax arrived in any event.
I also took the opportunity to discuss with him where things were heading. I must say I am deeply concerned about what I perceive to be a level of game playing and evasiveness on both parties' parts.
On your part I cannot get any instructions as to whether and if so how to proceed other than that you wish to adhere to the overall heads of agreement.
However in recent communications you have wanted me not to take any further steps.
From Mr Paltos's part and arising not only our phone conversation today but previous communications it seems that:
He interprets the Heads of Agreement as requiring you to produce the releases from your family members as conditions precedent to any settlement. In my view this is not an available reading of the Heads of Agreement and indeed makes no logical sense.
However and subject to what follows if there is a settlement and if we have to give the releases as part of the settlement it seems to me to make no difference if you obtain those releases now instruct me to advise Paltos that we have them but they are to be held by me in Escrow against any final settlement and to be provided at the time of settlement.
However I could not get Mr Paltos to commit to the rest of the settlement even if those conditions were fulfilled. Neither would he say what his client's reservation was.
164Mr Meyer clearly perceived that both parties were, for their own particular reason, as he put it, involved in "game playing". Certainly it is difficult to fathom precisely what the motivations of each side were at this point.
165On 19 June 2009 the plaintiff sent an email to Mr Meyer. She makes it plain that she was prepared to go ahead with the Heads of Agreement when she and Mr Meyer had met with Mr Richardson SC, but she was concerned that members of her family who worked at the company and made a huge contribution to the business had not been properly compensated. She went on to indicate that she may have to litigate the matter because of the requirements in relation to the releases and then stated:
As you are aware I have no funds to meet further legal cost.
166On the same day Mr Meyer responded in a lengthy email. Mr Meyer perceived at least that the plaintiff was having difficulties in dealing with her family about the releases. Given the number of her family who had been involved at the hotel this is perhaps not surprising. Mr Meyer however said as follows:
Last it is not correct that I am aware that you have no funds to meet further legal costs. It is rather fundamental to the nature of the agreement between us that you would keep me advised about your financial position and your ability to meet our fees as they become due.
It is inconsistent for you at the same time to ask whether "we can arrange a hearing" for release of more funds to cover my legal costs.
Mr Richardson and I both pointed out to you that should Mr Nemeth die before this settlement is concluded and implemented it may be significantly more difficult for you to deal instead with Anthony as an executor of Mr Nemeth's estate.
167On 7 July 2009 the plaintiff sent an email to Mr Meyer. She invited Mr Meyer to debit her Mastercard with any outstanding fees. She also made reference to the fact that she had requested Mr Meyer to make a claim for additional funding from the Family Court. She also informed Mr Meyer that although she had attempted to have her family sign the releases, they had decided to take legal action against her former husband and the company. She also informed Mr Meyer that as far as she was concerned, the neighbour (Mr Tsu) was appealing the decision of the Court and presumably she was concerned again about some costs issue in relation to those proceedings.
168On the same day, Mr Meyer reminded the plaintiff that she owed $9,443.50 by way of outstanding fees.
169On 8 July 2009 the plaintiff again instructed Mr Meyer to make application to the Family Court to have $250,000 ordered for legal expenses because of her former husband's unreasonableness in failing to implement the Heads of Agreement without releases from her family. She also wanted him to have the deposit of $30 million which had been placed in an ING account in the name of F & V Nemeth Investments Pty Ltd transferred to her trust account. She also informed Mr Meyer that her family had instructed lawyers to bring a claim for their unpaid wages (amongst other things). Further she informed Mr Meyer that her neighbour was definitely going to appeal and she required an indemnity in relation to the costs of those proceedings.
170On 10 July 2009 Mr Meyer responded. It is plain from his email that upon his analysis of the financial statement of Mr Nemeth, the only liquid funds disclosed in his view were $11,694 in a Westpac Account and $6,441 in the solicitor's trust account. He identified a number of loans and then concluded that in his view there was no liquidity against which a court could order Mr Nemeth to make demand upon either company for repayment of the loan amounts and therefore there was no funds available against which a court could order Mr Nemeth to pay the amount. He observed that the company at one stage had cash at the bank of $10 million but he had no idea currently whether that was still the position. He further advised that he thought a court would not order the $30 million in the ING account to be transferred to a trust account in the plaintiff's name. He also informed the plaintiff that the prospect of her family commencing proceedings may have the effect of adjourning the Family Court proceedings. He advised her in relation to the proceedings concerning the adjoining property that it was a good idea to await the outcome of the appeal. On these aspects, importantly he stated:
4. the action to be taken by your family against the company may have some impact upon your Family Court proceedings because the proceedings represent a contingent liability of the company once commenced. Mr Nemeth may want the proceedings in the Family court adjourned until the proceedings by your family are concluded. I do not know what step he will take.
5. At this stage it is probably appropriate to await the nature and scope of the appeal. If there is to be one it may not include any appeal against the costs orders but of course it might. There is no reason why you could not ask the Family Court for such an indemnity but I suspect the Court may say that this is a matter for the Supreme Court to determine.
171On 28 July 2009 he asked for instructions in relation to the proposed directions hearing in the Family Court.
172On 18 August 2009 the plaintiff sent an email to Mr Meyer. In that email she expressed the view that Anthony was unduly interfering in her ability to arrive at a settlement with her former husband. She said:
Ferdie is 84 years of age and I strongly believe that we did not have Anthony to interfere with our lives we wont be in this situation we are in at the moment. Anthony should live his own life and have left us alone.
She also makes it abundantly plain she was in financial difficulties and said:
As you are aware I have no funds for litigation. Therefore I need to be very careful with my expenses. I shall organise for you to have the file sometime next week.
173On 23 September 2009 Mr Meyer reminded the plaintiff that an amount of $4,613.18 was outstanding. On 29 September 2009 he advised her that his hourly rates were increasing. On 2 October 2009 he again reminded her that she had not paid the amount outstanding. On 12 October 2009 she sent an email to Mr Meyer indicating to him that she had not been well and apologised for the delay in responding to his requests. She asked him to debit her credit card with the outstanding amount and then concluded by saying "I also wish to advise you that due to a lack of funds I have to terminate your services from this date. I intend to represent myself".
174On 12 October 2009 Mr Meyer filed a notice of ceasing to act. On 10 December 2009 the plaintiff filed a notice of address for service at the matrimonial home in Darling Point.
175From the above chronology the following would appear to be the case:
(a) There are a number of reasons why, notwithstanding the advice of Mr Richardson SC and Mr Hall, the plaintiff did not settle at the mediation nor seek to implement the Heads of Agreement. She was clearly concerned about the releases in relation to her family and any indemnities in relation to costs that might flow as the result of her involvement in the Prynew proceedings. It was also clear I think that she wanted a larger settlement.
(b) It is plain that both Mr Richardson SC and Mr Hall thought that she would be an unattractive applicant and they clearly had grave misgivings about her integrity and the likelihood that she would be found to be dishonest. Further, they thought that she could expose herself, let alone her former husband, to prosecution by the authorities in relation to tax issues.
(c) It is also clear that the plaintiff felt that neither Mr Richardson SC nor Mr Hall had properly grasped the counter allegations that she thought were open against her former husband in relation to the Prynew litigation.
(d) Mr Meyer appeared to agree with Mr Richardson SC.
(e) It is also clear that the plaintiff thought her stepson Anthony had far too much control over her former husband and that he was obstructing her from obtaining more money by way of agreement from Mr Nemeth.
176Although she really wanted to settle the litigation she clearly felt that given the predicament she was faced with, especially the attitude adopted by her family in wanting to commence their own proceedings, it would be better for her to at least in the short term obtain more funding from the Court. She clearly also believed that the Prynew litigation and the possibility of an adverse costs order against her as a result of a successful appeal by Mr Tsu created considerable uncertainty. Mr Meyer told her it was best to wait to see the outcome of the notice and scope of the appeal.
177She clearly wanted, if she could, to gain control of the $30 million, either in order to achieve that as the ultimate outcome or alternatively to use it as a means by which she could negotiate a larger settlement.
178She had been told by Mr Meyer and clearly believed that there was no prospect that she would be able to make a further claim for interim costs, as it were, to continue the litigation. She also believed, and there is no evidence to suggest to the contrary, that she had no cash reserves to continue to instruct Mr Meyer. It is instructive that the last bill (if not other bills) were paid via her credit card. She also believed, and again there is no evidence to contradict this, that there was a "substantial debt" (although there is no evidence as to precisely what this was) still owed to Mr Hall.
179Her family, (perhaps all 10 or so in number) had indicated to her, and again there is no evidence to contradict this, that they were proposing to commence proceedings in their own right against her former husband (or one of the corporate entities) for unpaid salaries. She had been told by Mr Meyer that this was a complicating factor. There is no reason to disbelieve that aspect at least of his advice.
180She was no doubt angry and quite distressed at the situation she was placed in. She held Anthony to blame for very much of it and given what she had previously done and her attitude towards him, there is no reason to think that Anthony was doing anything to facilitate a reasonable, let alone increased, outcome for the plaintiff in relation to the settlement discussions. Indeed given her treatment of him and the allegations made in relation to him (especially if untrue) there is no reason to suppose that he would have been disposed to invite or encourage his father to display generosity towards the plaintiff. This position was not only exacerbated by her persistent allegations about Anthony not being the biological son of her former husband, but by the many other assertions she made about him including the joint contrivance between him and her husband in relation to the proceedings in connection with the next door property. She had no hesitation ventilating every suspicion she harboured in her family court affidavits. Whether they were intended to be so or otherwise, they were clearly provocative and those solicitors who were instructed no doubt to file those affidavits could not have been left in any doubt that they would have been regarded as highly provocative and prejudicial and were intended by her to be so.
181She perhaps had little sensitivity into how much she had hurt her former husband not only in making the allegations about Anthony, but in her behaviour in defrauding, so it seems, some of his corporate entities and her philanderings with Mr Sealby.
182Part of her motivation, so it seems, so far as Anthony is concerned, was driven by two factors. First, she was jealous of his relationship with her former husband and wished to discredit him in his eyes and demand that he be disinherited. Secondly, she believed he stood in the way of her achieving a more substantial financial outcome.
183What concerned her about the litigation concerning the adjoining property was an exposure to considerable costs given what she knew or believed her formed husband had expended for very little return. She thought the claim was for $250,000 and some $2 million had been expended by her former husband which has caused Mr Tsu to expend significant fees.
184Although she gave evidence to the effect that it was her "friend" Sarah Winter who forced her or told her to sack Mr Meyer, I cannot accept that evidence. It is clear for the reasons above that she did not feel inclined to enter the Heads of Agreement or implement them and she was in her own mind seriously financially distressed at the time and felt she had no option but to terminate his services.
185It is in this context that within a relatively short time she met Mr Byrnes and Mr Rogerson.