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Supreme Court of Victoria |
Last Updated: 7 September 2020
AT MELBOURNE
TESTATORS FAMILY MAINTENANCE LIST
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JUDGE:
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WHERE HELD:
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DATE OF HEARING:
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CASE MAY BE CITED AS:
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MEDIUM NEUTRAL CITATION:
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CONTRACTS – Application by the defendant to set aside settlement agreement on the basis of unconscionable conduct and/or duress – Whether the defendant suffered from a special disadvantage – Whether absence of legal representation or advice is sufficient to give rise to a special disadvantage – Whether the plaintiff took unconscientious advantage of the defendant’s vulnerability – Whether the settlement agreement was ‘fair just and reasonable’ – Commonwealth Bank of Australia v Amadio [1983] HCA 14; (1983) 151 CLR 447 referred to – Whether a threat to bring a civil proceeding or an application to bring a civil proceeding can amount to illegitimate pressure – McKay v National Australia Bank [1996] 4 VR 677 referred to – Application dismissed.
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APPEARANCES:
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Counsel
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Solicitors
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For the Plaintiff
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Maddens Lawyers
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For the Defendant
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Zenith Lawyers and Consultants
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Introduction and background
1 The applications before me concern the enforceability of a settlement agreement (‘Terms of Settlement’) with respect to a claim by the plaintiff seeking further provision under Part IV of the Administration and Probate Act 1958 (Vic) (‘Act’). In this proceeding, which was issued on 5 December 2018, the plaintiff, Mr Giuseppe Rodolico (‘Joe’) sued the defendant, Mr Benedetto Rodolico (‘Ben’),[1] who was the executor and sole beneficiary of the estate of their late mother, Concetta Rodolico (‘deceased’).[2] The deceased died on 28 September 2016,[3] after a long illness, during which Ben was her carer. The size of the deceased’s estate was modest in contemporary terms, being valued in the inventory of assets and liabilities accompanying the grant of probate at approximately $708,000. The main asset of the estate is the deceased’s family home in Ferntree Gully (‘Ferntree Gully property’), in which Ben lived with his mother in the years before her death, and where Ben continues to live.
2 Ben claims that the relationship between Ben and the deceased on one hand, and Joe on the other hand, was strained at best for many years, and Joe and Ben have been estranged following the death of the deceased. It is not necessary to adjudicate upon the question of where the fault for any estrangement lies for the purposes of the current application. It is fair to say that Joe is in a better financial position than Ben, as Ben, while being well credentialed,[4] is currently unemployed, and was only tenuously employed during the course of 2019. Joe was understandably aggrieved by having been totally excluded from the deceased’s will.
3 At a directions hearing on 9 April 2019, counsel for Joe (‘Mr Wells’) informed the Court that Joe sought an award from the Court equivalent to one third of the value of the deceased’s estate (‘estate’). On that day, Englefield JR ordered that, among other things, the parties participate in a judicial mediation, scheduled to be conducted on 20 June 2019. However, the judicial mediation did not proceed, as on 8 May 2019 Ben’s solicitors filed a Notice of Ceasing to Act. According to Ben, this was done without prior notice to him, shortly after he queried his solicitor as to why the contents of the affidavit filed on behalf of Joe in the proceeding mirrored the contents of a statement he had provided to them recording his instructions regarding the relationships within the family.[5]
4 On 23 July 2019, the parties attended a further directions hearing[6]. Mr Wells appeared on behalf of Joe, Ben appeared for himself, and the proceeding was referred to the Judge in Charge of the Testators Family Maintenance List for pre‑trial directions on 30 August 2019. Ben says that, at the directions hearing on 23 July 2019, Mr Wells threatened him with an application to remove him as an executor if he did not obtain legal representation, and that he would be forced out of the Ferntree Gully property. Mr Wells agrees that, during the course of the directions hearing, he foreshadowed an application to remove Ben as the executor of the estate, but denies making any threats, and in particular, he denies making threats to the effect that Ben would be forced from his home. Ben concedes that Mr Wells did not say words to that effect, but that such a threat was implied.
5 In any event, no application to remove Ben as the executor of the estate was made. Instead, the parties’ cousin, Mr Spina, became involved in the dispute between the brothers. Mr Spina is a business consultant and accountant. He describes himself as the first cousin of both parties, although his father’s sister was the deceased, such that there is no blood relationship between him and Joe. However, he sees Joe more frequently than he does Ben, both socially and in a professional context, being Joe’s accountant. He said that, after the death of the deceased, Ben kept himself isolated from the family, living a hermit-like existence, rarely participating in family events, and not returning telephone calls made by him and other family members. He was aware that Joe was unhappy with the terms of the deceased’s will, and that Joe had issued this proceeding. He decided to intervene to try and resolve the matter, after discussions with another cousin, ‘Lisa’.
6 Mr Spina swore an affidavit in this application which was tendered in support of Joe’s application for judgment. Ben disputed some of the evidence given by Mr Spina, but accepted that meetings took place between him and Mr Spina in the relevant period, and that Mr Spina was present during a telephone call between him and Joe on 21 August 2019. The veracity of Mr Spina’s evidence was not undermined by cross‑examination.
7 In his affidavit sworn on 21 August 2020, Mr Spina deposed as follows:
Through discussions separately with Joe and Ben I became aware that Ben was concerned about the proceedings and the scheduled Court dates and the consequences of not attending.In the early part of 2019 I spent many hours with Ben at the [Ferntree Gully property] discussing our family’s history and the background to the fact that Joe had now made a claim on the Estate.
Ben freely and readily agreed with my suggestion that a negotiated resolution would be an appropriate outcome. We discussed his capacity to pay a sum of money to settle Joe’s claim and the need to finance a loan secured by a mortgage over [the Ferntree Gully property]. Ben suggested that he could service a loan through fees he could charge for tutoring work through the university he attended. To assist him and at his request I obtained an ABN to facilitate that arrangement.
On the afternoon of 21 August 2019 I was with Ben at the [Ferntree Gully property] and was privy to a telephone conversation between Ben and Joe in which they discussed the proceeding. I was able to hear the full conversation as Ben activated the speaker phone facility. As I recall the conversation proceeded by Ben asking Joe words to the effect “what do you want to resolve the matter?”. In response Joe said words to the effect “I want $200,000 plus my legal costs”. There then followed a quite heated discussion between the two (2) brothers during which they discussed other non-related familial issues as well as Joe’s claim. The conversation came to a conclusion when Ben said to Joe words to the effect “I will pay you $150,000 inclusive of your costs”.[7] To that Joe said “done”.
Following the telephone discussions referred to in the preceding paragraph of this my Affidavit and at Ben’s request I arranged appointments with a local Bank Manager for Ben to meet and make application for a bank loan to facilitate payment of the settlement sum. Ben sought approval of a loan for $200,000. He told me he wanted to use the additional funds for other purposes. I am aware that the loan was approved on the condition that Ben could establish that he had a modest, steady income. At that time Ben told me that he could readily satisfy that requirement as he presently held three (3) jobs.
In early August 2019 Joe contacted me and asked me to convey an offer to Ben that the proceeding be settled for $150,000 payable in thirty days. On 21 August 2019 Ben approached me with a document he had prepared which was headed Settlement Agreement and Release. The document provided for payment of $150,000 to Joe within 120 days of signing. Ben signed and dated the document in my presence as did I. He also asked me to forward it to Joe’s solicitors Maddens Lawyers.
...
On Monday, 26 August 2019 I received an email from Maddens Lawyers advising that the Settlement Agreement and Release signed by Ben and myself on 21 August 2020 “requires some amendments” and further suggesting an adjournment of the Court Hearing from 30 August 2020 be obtained by consent “to allow the parties to finalise the Agreement”. This was done.
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I was with Ben when he signed the 21 August 2019 version and in Ben’s company I read the document and discussed it with Ben. I then witnessed his signature. I formed the view that Ben was clear in his thoughts and understood what he had drafted and what he was saying. He did not appear to me to be under any duress or pressure to sign. I continued to hold that view throughout the subsequent period up until and beyond the date the Terms[8] were signed. Indeed a few days after the Terms were signed Ben volunteered to me that he was sleeping a lot better and that he was pleased with the settlement.
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Throughout the events referred to in this my Affidavit I did not make any threats to Ben or place him under pressure to ·sign the Terms. I have no interest in the matter other than to attempt to assist my cousins to reach a reasonable and sensible resolution to this dispute.
8 Mr Spina gave evidence during the course of the hearing of the applications that, following the events referred to in his affidavit (as reproduced above) Ben attended his office in Wantirna on between four and six occasions to discuss arranging finance to be secured by the Ferntree Gully property in order to pay Joe the money required to be paid to him in accordance with the Terms of Settlement (‘settlement sum’). Mr Spina assisted Ben by arranging introductions to a loans officer at the Bendigo Bank, and persuading the loans officer to ‘fast track’ the period in which Ben could qualify for an offer of finance. There is no evidence as to whether Ben’s application for a loan was rejected or simply not pursued. The title to the Ferntree Gully property currently shows the deceased as being the registered proprietor of the property, which of itself would presumably impede any offer for finance being made or accepted.
9 On 20 November 2019, Ben sent an email to Joe’s solicitors in the following terms:
Dear Maddens (Genevieve Faulkner):Will be seeking a month extension to the TOS agreement, so that I can finalise the amount, and have it transferred to your account. If this is not agreeable please email me directly.
Regards
Ben Spina in Rodolico[9]
10 No response to this email, or any further correspondence between the parties is in evidence. At a hearing on 13 December 2019, Moore J made orders adjourning the further hearing of this proceeding to 21 February 2020, where McMillan J gave further directions for the conduct of the parties’ applications concerning the enforceability of the Terms of Settlement, both of which had just been issued.
The applications
11 On 11 February 2020, Joe issued a summons seeking the following relief:
1. Pursuant to:-
(a) Clause 3 of Terms of Settlement executed by the parties on 4 September 2019; or alternatively(b) Rule 21.03(1)(a); or alternatively
(c) Rule 21.03(1)(b); or alternatively
(d) Pursuant to the inherent jurisdiction of the court –
That judgment be entered against the Defendant for the sum of $151,250.00 together with interest thereon (calculated from 14 December 2019, up until the date of this order) at the rate fixed pursuant to the Penalty Interest Rates Act.
3. Any further or other orders as the court may deem fit.
12 On 19 February 2020, Ben, by then represented by new solicitors, issued a summons seeking the following relief:
13 While Joe’s summons is first in time, given the existence of the signed Terms of Settlement, Ben is really the moving party these applications, in that he seeks to set aside the Terms of Settlement on the grounds of either duress and/or unconscionable conduct on the part of Joe and/or his agents. At the hearing of the applications, counsel for Ben conceded that, if Ben’s client’s application was unsuccessful, then orders should be made in accordance with the terms of Joe’s summons, given the terms of the Terms of Settlement.
14 The operative terms of the Terms of Settlement provided as follows:
And further by the Defendant, by the execution of these Terms of Settlement hereby consents to an affidavit from the Plaintiff’s solicitors deposing to such default, as being acceptable and conclusive proof of such default.
(a) The Plaintiff agrees that he will thereupon release and forever discharge the Defendant (both personally and in his representative capacity) and the estate of the Deceased, from all actions claims and demands he had, now has, or may hereafter have, in relation to the estate of the deceased, or the assets and or property of the deceased.(b) The Plaintiff represents and warrants that no other person or entity has or has had any interest in the claims, demands, obligations or causes of action referred to in this Settlement Agreement, except as otherwise set forth herein, and that it has not sold, assigned, transferred, conveyed or otherwise disposed of any of the claims, demands, obligations, or causes of action referred to in this Settlement Agreement.
(c) The Defendant agrees that he will thereupon release and forever discharge each the Plaintiff from all actions claims and demands which he or the estate had, now has, or may hereafter have against the Plaintiff, arising out of or in connexion with the assets and estate of the Deceased.
The evidence
15 Ben relied upon two affidavits sworn by him on 18 February 2020 and 20 August 2020 respectively. In his affidavit sworn on 18 February 2020, Ben deposed, in summary, as follows:
(a) his former solicitors ceased to act for him without explanation on 8 May 2019, causing the judicial mediation to be adjourned;(b) on 23 August 2019,[10] he appeared in Court at a directions hearing, where Mr Wells informed the Court that Joe would be making an application to have him removed as the executor of the estate unless he was able to obtain legal representation;
I was without financial means and therefore in no position to engage a lawyer. In an effort to move the case along I resorted to getting in contact with the son of my mother’s brother (the plaintiff’s accountant) to see if he could get some dialogue occurring with the plaintiff. This person also stated that the plaintiff had contacted him during the same time period to do the exact same thing.This matter was never formally mediated by a nationally accredited mediator in this particular field of law.
On Wednesday the 28th of August, a phone conference was conducted between me and the plaintiff and the accountant as a “go-between”. The accountant was not an accredited mediator. During this exchange certain offers of settlement were discussed and I made an offer to settle. I had no financial means by which to engage any type of legal representation, and as such was not privy to any advice on which to base any offer. The plaintiff stated that he would put the offer to the law firm,[11] on Friday the 30th of August.
On Friday the 30th of August 2019 the plaintiff called the go-between, to whom Maddens lawyers had assigned the status of “mediator” and claimed that Maddens had counter offered with the amount of $150,000 dollars. I did not have any other choice but to accept the offer. I was still unable to gain any type of legal representation, and could not access any help on my situation, or alternatives I could pursue in the matter. I could not assess whether the offer represented a fair settlement on behalf of the estate as I did not have the benefit of legal advice at any stage.
I reluctantly agreed to the $150,000 amount. The plaintiff’s law firm went on leave for a week, and during this time, I was beside myself. I thought I was going to be kicked out of my home, and be left on the streets, just because I was unable to get a lawyer. I simply had no legal advice and no way for me to be able to properly assess the plaintiff’s case to start with or whether he even had a claim, let alone settling the matter for a sum of money.
(d) during the course of that week, he went online to look for a template settlement agreement which he completed and sent to Maddens, but Maddens rejected it and proposed their own version of the agreement;
Most of the clauses in the terms of settlement were unintelligible to me. Without the benefit of legal advice, I simply did not know the meaning of what I was entering into and what the nature, effect and consequences of the terms of settlement as I am not a legal practitioner. Looking back at it now, the proposed terms of agreement would certainly have been rejected by any good lawyer as being unjust and unfair, had I had the opportunity to obtain legal advice.Maddens, the plaintiff’s lawyers, at no stage told me that I should get legal advice before signing the terms of settlement.
The next procedural hearing had been set for the 21st of September 2019, and that left little more than week, before it was to be heard. My anxiety grew, I would have agreed to almost anything, just to appease my anxiety over losing the home, and this was clearly evident by the number of calls and messages I sent to the “go-between/accountant”.
(f) he deposed further as to the correspondence between the parties before he signed the Terms of Settlement at his home during a Friday night meeting[12] organised by the ‘go-between/accountant’ (Mr Spina);
Without all the ongoing threats of me being removed as executor of the will, and being kicked out onto the streets, I was able to reflect on the terms of settlement, and realised that I had made an error and the plaintiff and his lawyers took advantage of my vulnerable position and the fact that I did not have the benefit of legal advice. I realised that I had been taken advantage of, and that the terms of settlement were wholly unfair. I attempted to gain legal representation, but without funds all lawyers except for one or two would even hear the case or look at the papers.Once I had gained some legal perspective by way of a lawyer, I wanted to have the terms of settlement set aside, so that during any negotiations or any legal matters that arose, I could have legal advice and counsel on how to proceed and also wished that this matter would be mediated properly and fairly by an independent nationally accredited mediator in the field of deceased estates.
(h) he deposed that:
(i) the Terms of Settlement have not been approved by the Court;(ii) the matter has not been mediated by a nationally accredited mediator in the field of deceased estates; and
(iii) no consent orders have been filed with the Court to dispose of the proceeding;
(i) he deposed as follows:
I have not had the benefit of any legal advice prior to agreeing to the settlement and signing the terms of settlement to assist me with determining:
(a) Whether the plaintiff has a claim against the estate to begin with.(b) The parameters of the dispute in this proceeding were not refined and were uncertain.
(j) Ben deposed that he seeks that a ‘proper and formal’ mediation be conducted after full financial disclosure is made by Joe; and
I believe the Court has the power to set aside the terms of settlement as the matter is still currently before the Court due to an injustice arising by reason of:
(a) The terms of settlement being entered into in circumstances where the plaintiff had the benefit of legal advice but I did not.(b) I was unable to judge the nature, effect and consequences of the agreement or whether it was appropriate or fair by reason of my vulnerable bargaining position compared with the plaintiff, my inexperience and the plaintiff and the plaintiff’s lawyers “pressuring” conduct during the negotiations.
16 In his affidavit sworn on 20 August 2020, Ben deposed, in summary, as follows:
(a) given that Joe has made a claim for further provision under part IV of the Administration and Probate Act 1958 (Vic), Joe’s financial resources, earning capacity, and financial needs are relevant to the issues in these applications;(b) correspondence between his solicitors and Maddens seeking disclosure of Joe’s financial position bore no fruit, and his solicitors issued subpoenas directed at the National Australia Bank Ltd (‘NAB’) and Spina Consulting Group Pty Ltd (Mr Spina’s firm); and
(c) the documents produced upon subpoena indicate that Joe has and at least five tenanted rental properties. He believes that there still has been inadequate financial disclosure, and he believes that Joe has assets in excess of $5 million, including a commercial property and a large palatial home.
17 Exhibited to Ben’s affidavit of 20 August 2020 was the correspondence between his solicitors and Maddens in June and July 2020 regarding requests that Joe provide further financial disclosure. In this correspondence, Ben’s solicitors sought further financial disclosure by Joe, on the basis that Joe’s financial position is relevant to the issues in the proceeding, and there were matters which he had not previously disclosed. In their letter dated 6 July 2020, Ben’s solicitors stated as follows:
4. Your client has failed to disclose:
(a) His interest in the Rodolico family trust or any other trust.(b) Bank accounts with NAB.
(c) Any interest he had or may have in Erica Constructions.
(d) His wife’s assets, income, expenses etc.
(e) Details of other properties he may have an interest in located in the Dandenongs and/or surrounding areas.
(f) Commercial property in Croydon.
(g) Rental income from investment properties.
(h) Interest in Jeffalyn Pty Ltd.
18 Maddens replied as follows:
We refer to your letter of 6 July 2020 wherein you refer to your instructions and speculate about matters relating to our client's circumstances including as follows:
You have not referred to the Affidavit sworn by our client on 1 April 2019 and filed and served in this proceeding prior to the Directions Hearing before Judicial Registrar Englefield on 9 April 2019 at which your client was represented by Ms E L Coates of Counsel. None of the alleged deficiencies in our client’s Affidavit material was raised at that time or subsequently....
19 As noted above, on 10 August 2020, Ben’s solicitors issued subpoenas directed at NAB and Spina Consulting Pty Ltd (Mr Spina’s firm). Documents were produced by the subpoenaed parties, which are available on the Court file. However, apart from the references to those documents by Ben in his affidavit of 20 August 2020 summarised at paragraph 16(c) above, no other reliance was placed upon the subpoenaed documents at the hearing of the applications.
20 During the course of the hearing of the application, Ben was cross‑examined by Mr Wells. Relevantly, Ben gave evidence that:
(a) the reason he took so long to obtain a grant of probate was the grief he was suffering after the death of the deceased;(b) he knew that Joe had not been provided for in the deceased’s will, but did not know that Joe was unhappy about his exclusion from the will;
(c) he avoided service of the Originating Motion in this proceeding on the advice of his former solicitors;
(d) he understood what the purpose of a mediation was, but he had never reached the stage of discussing offers with his former solicitors;
(e) he took it on himself to organise a meeting with Joe because he did not have enough money to retain a lawyer, and he felt there was no other choice but to do so, as otherwise he would be forced from his home. He was emerging from a severe depression at that time;
(f) he disputed Mr Spina’s evidence as to what was said during the course of the telephone conversation between him and Joe on 21 August 2019. He said that he did not ask Joe how much he wanted to settle the proceeding. He said that he offered Joe $100,000 inclusive of costs to settle the proceeding, because it was a nice round number;
(g) the matter was not settled during the course of the telephone meeting on 21 August 2019, as Joe had to check with Maddens before agreeing to the amount proposed. He had to wait until Friday afternoon,[13] when he telephoned Mr Spina, who told him that Mr Pendergast had offered to accept the sum of $150,000, payable within thirty days;
(h) he was concerned to make sure that the settlement was documented before Mr Pendergast went away on holidays, and that was why he downloaded and completed the Settlement Agreement and Release;
(i) he agreed that there were several versions of the Terms of Settlement: he did not agree with the proposed recitals, or the entitlement of Joe to lodge a caveat. He wanted a payment period of 120 days, as the only way he could make a payment within the thirty day period proposed by Joe was to sell his home;
(j) notwithstanding the above, he did not understand his obligations under the Terms of Settlement until October 2019, when he first consulted a lawyer, and if he had known what the Terms of Settlement required he would not have signed it;
(k) when taken to clause 10 of the Deed of Settlement (see paragraph 14 above), he said he did not have an opportunity to obtain legal representation because he had no money;
(l) he agreed that he had told Mr Spina that he had been sleeping better after signing the Terms of Settlement, but denied that he told him that he was pleased that the matter had settled;
(m) he tried to issue a subpoena to obtain further details of Joe’s financial position, but the Court would not allow him to do so because he was self‑represented;[14]
(n) he sent the email to Maddens on 20 November 2019 seeking an extension of time because he wanted extra time to obtain legal assistance to bring an application to set aside the Terms of Settlement; and
(o) he did not wish to discuss the matter further with Maddens, because he believed Mr Pendergast and Mr Wells were hostile to him and wanted to get him out of his home.
21 In resisting the application to set aside the Terms of Settlement, Joe relied upon two affidavits sworn by his solicitor, Mr Brendan Pendergast of Maddens, and the affidavit of Mr Spina referred to earlier in these reasons.
22 In his first affidavit, sworn on 7 February 2020, Mr Pendergast deposed, in summary, as follows:
(a) on 14 September 2019 the parties executed the Terms of Settlement;(b) Ben has not paid any sum to Joe pursuant to the Terms of Settlement; and
(c) Joe is entitled to enter judgment by consent against Joe.
23 Mr Pendergast exhibited to his affidavit an executed copy of the Terms of Settlement.
24 In his second affidavit sworn on 20 August 2020, Mr Pendergast deposed, in response to Ben’s affidavit of 18 February 2020;
(a) he was not aware of any court hearing listed for 23 August 2019, although the proceeding was listed for pre-trial directions on 30 August 2019;[15](b) he does not know and has not met Mr Spina, although he knows that Mr Spina is the first cousin of Joe and Ben. He has had some email correspondence and a brief telephone call with Mr Spina;
(c) on 23 August 2019 he received an email from Mr Spina attaching a document headed ‘Settlement Agreement and Release’ dated 21 August 2019 and bearing the signatures of Ben and Mr Spina. He stated that ‘[t]he term “Mediator” and the sum of $150,000 does not arise in the document through any input from Maddens Lawyers or myself’;
(d) the draft Terms of Settlement were prepared by Mr Wells, and vary in some respects from the Settlement Agreement and Release executed and proffered by Ben via Mr Spina. Changes were made to the recitals and the operative clauses of the draft Terms of Settlement at the request of Ben;
I have been practising in the area of disputed Probate matters and Part IV Administration and Probate Act claims in particular for approximately 30 years and have been involved in the preparation and execution of Terms of Settlement resolving many hundreds of similar matters. Whilst I acknowledge that every matter turns on its particular facts the form and contents of the Terms are in my opinion not properly described as “unjust and unfair”. Similar terms are quite commonly used in such matters....
I have never spoken to the Defendant and as far as I am aware no member of Maddens Lawyers’ staff has ever spoken to the Defendant. By Clause 10 of the Terms “[The] Defendant acknowledges that he has had the opportunity to obtain legal advice”. I am instructed that the Defendant is a highly qualified university graduated presently undertaking further courses in Medicine and Engineering.
...
I take issue with the suggestion that Maddens Lawyers took advantage of the Defendant. No aspect of the course of this matter supports that observation and it did not occur nor were the threats suggested ever made by any member of Maddens Lawyers’ staff or myself.
(f) he observed that there were five draft agreements in existence preceding the execution of the Terms of Settlement on 14 September 2019, and the period between the production of the first draft and the execution of the Terms of Settlement was 24 days. Apart from the final Terms of Settlement (where a small sum representing interest was added to the settlement sum in order to compensate Joe for a delay in the proposed settlement date), each document provided for payment by Ben to Joe of the sum of $150,000 inclusive of costs.
25 Exhibited to Mr Pendergast’s affidavit were the following documents:
(a) correspondence between the solicitors for the parties regarding, among other things, the subpoenas issued upon Ben’s instructions on 10 August 2020;(b) the email sent from Ben to Maddens on 20 November 2019 requesting an extension of time to pay the settlement sum; and
(c) a bundle of documents including five drafts of the Terms of Settlement, and the accompanying emails. These include the Settlement Agreement and Release sent by Mr Spina to Joe on 21 August 2019, the signed version of the Settlement Agreement and Release sent to Maddens by Mr Spina on 23 August 2019, the draft Terms of Settlement prepared by Mr Wells on or about 9 September 2019, two versions of the draft Terms of Settlement as amended by Ben later that day, and an email from Mr Spina to Maddens on 14 September 2019 attaching the signed Terms of Settlement.
26 A comparison of the draft Terms of Settlement prepared by Mr Wells on 9 September 2019 and the executed version shows the following material changes were made by the parties, with Mr Spina apparently continuing to act as an intermediary:
(a) the reference in the recitals to Joe being the son of the deceased, and the deceased being the second wife of the parties’ late father was deleted;(b) further (uncontroversial) clauses were added to the recitals;
(c) the draft Terms of Settlement referred to a payment of $150,000 being made to Joe within thirty days, while the final Terms of Settlement referred to a payment of $151,250 being made within ninety days;
(d) the draft Terms of Settlement included a charging clause which permitted Joe to lodge a caveat over the title of the Ferntree Gully property, which was amended to remove any reference to Joe’s entitlement to lodge a caveat; and
(e) the Terms of Settlement included further warranties on Ben’s part which were not included in the draft Terms of Settlement, which are not material to the current application.
27 Significantly, there was no change to the final clause of the Terms of Settlement, which provides as follows:
[Ben] acknowledges that he has had the opportunity to obtain legal advice prior to entering into these Terms of Settlement and that he fully understands all of his obligations pursuant to these Terms of Settlement.
28 Joe also relied upon the affidavit sworn by Mr Spina on 21 August 2020, the contents of which are summarised in part in paragraphs 6 and 7 of these reasons. In addition to the matters referred to in those paragraphs, Mr Spina deposed as follows in response to Ben’s assertions as to Joe’s financial position:
In my professional capacity I provide accounting services to Joe and his wife. I am aware that their residential home property is worth approximately $1,000,000 in value. Their only source of income is obtained from rental properties which are held in a Family Trust and which are of total value of less than $1,000,000. They recently both applied for and were issued with Commonwealth Health Cards, the eligibility for which is dependant upon asset and income tests. Joe and his wife are both in their mid-60s and neither of them have capacity to return to paid employment. They live in modest financial circumstances and have little or no superannuation.
29 Mr Spina exhibited the following documents to his affidavit:
(a) his email of 23 August 2019 to Maddens attaching the signed version of the Settlement Agreement and Release prepared by Ben. The cover email stated as follows:
Benedetto Rodolico has asked my office to forward to you this signed version of the draft agreement dated 21 August 2019.
(b) an email from Maddens to him of 26 August 2019 informing him that ‘[t]he Agreement requires some amendment which we will provide to you shortly’, and suggesting that the parties agree to adjourn the forthcoming directions hearing;(c) a copy of the executed Terms of Settlement; and
(d) a copy of the email from ‘Spina in Rodolico’ to Maddens dated 20 November 2019 (where Ben sought an extension of time to pay the sum due under the Terms of Settlement). He says he knew nothing about this email until Maddens drew it to his attention the following day.
30 Under cross‑examination by counsel for Ben, Mr Spina gave the following evidence:
(a) he sees Joe approximately once every two months, but Ben less regularly;(b) he is Joe’s accountant, and was Ben’s accountant until he ceased work to care for the deceased;
(c) in July and August of 2019 he offered to act as a ‘go-between’ between Joe and Ben. He was not acting on behalf of Joe;
(d) he had two to three face to face visits with Ben at the Ferntree Gully property to discuss the matter;
(e) during the course of the telephone call between Joe and Ben on 21 August 2019, he was at the Ferntree Gully property with Ben. The conversation took place on Ben’s phone, upon which the loudspeaker function was activated. At first there was a heated discussion, then Ben said, ‘Well, what do you want?’ Joe said $200,000 plus costs. There was then more yelling (Mr Spina described this as the ‘Pavarotti festival’), and then Ben said that he would pay $150,000 all in, to which Joe replied ‘done’. There were only two figures mentioned during the course of this conversation: the meeting was not conducted like an auction;
(f) based upon his observations of Ben’s body language, he believed Ben was quite happy with having reached a settlement with Joe;
(g) Mr Spina left the Ferntree Gully property and returned later that evening to have dinner there: in the meantime Ben had downloaded the Settlement Agreement and Release for him (Mr Spina) to pass on to Joe. He witnessed Ben sign the document, which he then passed on to Joe. He believes Maddens took over from there to prepare a formal legal document; and
(h) he met with Ben at his office on five or six occasions after Ben signed the Terms of Settlement to register an ABN for Ben’s tutoring business and to help him to apply for finance to fund the payment to Joe. The need to obtain finance was the reason why Ben required ninety days rather than thirty days to pay the settlement sum to Joe.
Applicable legal principles
31 The relevant legal principles governing applications of the current kind are, for present purposes, not in dispute. It is settled law that when the parties have signed a written agreement, they are bound by its terms, unless the agreement is liable to be set aside on the grounds of fraud, misrepresentation, mistake, duress and/or unconscionable conduct. Only the latter two categories are relevant to the current applications.
32 The learned authors of ‘Cheshire & Fifoot’s Law of Contract’[16] (‘Cheshire & Fifoot’) describe the elements of duress as follows:
33 There is some conflict in the authorities as to whether an otherwise lawful action, such as bringing civil proceedings or threatening to bring civil proceedings, can amount to illegitimate pressure: I shall assume for present purposes that lawful conduct may, in some circumstances, amount to illegitimate pressure.[18]
34 The question of whether an agreement can be set aside on the grounds that it had been procured by unconscionable conduct is not capable of precise definition, being a continually evolving area of the law. However, the learned authors of Cheshire & Fifoot[19] have distilled the essential elements as follows:
35 Whether a transaction should be set aside on the basis that it has been procured by unconscionable conduct is a fact based enquiry, focusing upon the attributes of the parties to a transaction, the surrounding circumstances, and the nature of the transaction itself. What amounts to a ‘special disadvantage’ is often contestable, and has not been exhaustively proscribed, although age, infirmity, education, command of English, and capacity to comprehend the terms of a transaction and its consequences are often relevant factors.[21] The common thread is that the relevant weakness ‘seriously affects the innocent party’s ability to safeguard their own interests’.[22] Mere inequality of bargaining power is not enough.[23] Neither is the fact that compliance with the terms of an agreement would cause the weaker party hardship.[24]
36 Significantly for the purposes of the current applications, the fact that a party has not obtained legal advice with respect to the transaction sought to be impugned, or does not have access to legal advice prior to entering into the relevant transaction, does not, without more, mean that party suffers from a special disadvantage. Rather,
[t]he absence of legal advice may in a given case be a circumstance of factual importance in determining whether a special disability exists.[25]
37 I have been unable to locate any Australian authority which has found that the absence legal advice has given rise to a special disadvantage absent some other indicia of special disability or vulnerability, such as illness, lack of proficiency in English, or emotional dependence upon the ultimate beneficiary of the transaction.
38 By way of example, in Permanent Mortgages Pty Ltd v Vandenbergh,[26] the plaintiff sought to enforce a mortgage to secure the payment of a debt owed to it in respect of a loan advanced to the defendants, being a son and his elderly mother. The son dealt with the plaintiff on behalf of the defendants in respect of the loan. At the time of the loan, the son was experiencing financial difficulties, which he concealed from his mother. The son used the majority of the loan to pay off his creditors, and the defendants subsequently defaulted on the loan payments. The mother then sought orders that the loan and mortgage were void, in part on the basis that the mother had a special disadvantage sufficient to establish unconscionable conduct on the part of the plaintiff. Murphy J found that a lack of legal advice was an element indicating the existence of a special disadvantage on the part of the mother, but was one of a number of such indicia, including that the mother:
(a) had a lack of understanding of the nature of and effect of a mortgage and the true commercial setting of a transaction;(b) was misled by the son as to his financial problems;
(c) had no capacity to repay the debt and was wholly reliant on her son to service the debt; and
(d) was particularly susceptible to her son’s duplicity as she was elderly, without a partner and had no close friends or confidants.[27]
39 The proposition that lack of legal representation can, of itself, amount to a special disadvantage was rejected by Sloss J in Commonwealth Bank of Australia v Stephens,[28] by Robb J of the Supreme Court of New South Wales in Valenzuela v Commonwealth Bank of Australia,[29] and, most recently, by Holmes CJ in Collins v Queensland;[30] where her Honour stated as follows:
Mr Collins did not adduce any evidence on which I could make a finding that he was subject to any special disadvantage. His affidavit said nothing as to his financial position. He made the allegation in his submissions that he lacked financial and legal resources but did not provide any detail, let alone suggest that this position had been conveyed to the respondent. He had been unrepresented earlier in the litigation, and one might infer from that, as the respondent acknowledged in its Points of Defence, that he had not sufficient means to afford legal representation at a trial or in interlocutory proceedings; but that could by no stretch of the imagination amount to special disadvantage. Nor had the respondent any reason to suppose the existence of any such disadvantage.[31][emphasis added]
40 A survey of the authorities indicates that the absence of legal representation or lack of independent legal advice is merely a factor that may compound other indicia of special disadvantage, rather than providing a basis, on its own, for concluding that a person was under a special disadvantage.[32]
41 One of the reasons why the term ‘unconscionability’ is so malleable, and why reasonable minds will differ as to whether a particular transaction is infected by it, is that it has a normative dimension: while the term ‘moral obloquy’ is falling out of favour as lacking practical content, unconscionable conduct has been described as:
...conduct that is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience.[33]
42 Accordingly, the fact that one party to a transaction feels under some commercial or other pressure to reach an agreement is generally not enough for there to be a finding that there has been unconscionable conduct. There must be some unconscientious taking of advantage of the opportunity posed by the weaker party’s vulnerabilities by the party seeking to uphold or enforce the bargain procured by that conduct.
43 Relevantly, once the party seeking to set aside the agreement has established that the other party has acted unconscionably, the onus shifts to the other party to demonstrate that the transaction was ‘fair, just and reasonable’.[34] Should this issue arise in the current case, Joe would be required to establish that the terms of the Terms of Settlement, in particular, the amount of the settlement sum, were fair and reasonable in the circumstances, which would require some evaluation of the likely prospects of success of Joe’s claim for further provision from the estate should the matter proceed to trial, although not with the degree of analysis required to finally determine Joe’s claim should it have gone to trial.
Discussion and conclusions
44 There is considerable overlap between Ben’s claim that he signed the Terms of Settlement under duress, and Ben’s claim that his assent to the Terms of Settlement by reason of the unconscionable conduct of Joe and/or his agents. Essentially, Ben’s case is that:
(a) he was afflicted by grief and depression following the death of his mother in 2016, which is something that was known, or should have been known to Joe and Mr Spina;(b) he inexplicably lost his legal representation in May 2019, and could not afford to obtain new solicitors prior to the directions hearing on 23 July 2019;
(c) at the directions hearing, Mr Wells threatened Ben with an application to remove him as the executor of his mother’s estate if he did not obtain legal representation, which he understood as a threat to remove him from his home;
(d) as a result of this threat, he was under a great deal of stress, and contacted his cousin, who was not an accredited mediator, but was cloaked with the authority of a mediator by Maddens;
(e) he had no information or legal advice which he could utilise to evaluate the offer of $150,000 made by Maddens on behalf of Joe, and whether the settlement sum represented a fair settlement;
(f) he felt that he had no choice other than to accept Joe’s offer, as he thought that otherwise he would be kicked out of his home and left on the streets because he was unable to get a lawyer;
(g) he now that the mediator and Joe’s lawyers took advantage of his vulnerability and lack of legal representation to pressure him into an unfair settlement; and
(h) he now believes that it was an unfair settlement. While he did not expressly put it this way, I can infer from his evidence (which embodies both evidence of what occurred and submissions as to the implications of these matters) that Joe’s financial position meant that his claim for further provision from the estate of the deceased was weak, and as such, his claim was not worth as much as Ben was required to pay in accordance with the Terms of Settlement. If Joe had fully and properly disclosed his financial position prior to the parties entering into the Terms of Settlement, he would have made a more informed decision regarding whether to agree to the Terms of Settlement.
45 Joe’s response to Ben’s allegations can be summarised as follows:
(a) Ben is clearly an intelligent man, with post graduate qualifications, readily capable of understanding the Terms of Settlement, and his obligations under the Terms of Settlement;(b) the negotiations got under way at Ben’s initiative, with the encouragement and assistance of Mr Spina, a family member, who acted as a neutral intermediary with the objective of resolving the dispute within the family;
(c) the fundamental term of the Terms of Settlement, being the settlement sum, was negotiated by Ben and Joe in Mr Spina’s presence. Joe made an offer and Ben made a counter offer, which Joe accepted;
(d) the various drafts of the Terms of Settlement were exchanged and negotiated between the parties over the course of more than three weeks, largely by way of email correspondence, with Mr Spina continuing to act as an intermediary;
(e) at no time up to and including the date upon which Ben requested an extension of time on 20 November 2019 did Ben assert that he did not understand the Terms of Settlement or his obligations under the Terms of Settlement, or contend that he was not bound by the Terms of Settlement;
(f) the Terms of Settlement contained an express warranty on the part of Ben that he had an opportunity to seek legal advice regarding his entry into the Terms of Settlement;
(g) the Terms of Settlement were conventional in substance and form, and no pressure was exerted by Joe or his lawyers or Mr Spina (who in any event, was not Joe’s agent) to reach agreement with Joe and enter into the Terms of Settlement;
(h) at no time prior to the execution of the Terms of Settlement had Ben or his former lawyers taken issue with the adequacy of Joe’s disclosure of his financial position; and
(i) accordingly, there is no basis to set aside the Terms of Settlement: Ben has simply had a change of heart.
46 In order to resolve the issues in this application, it is necessary for me to, first, evaluate the credibility of the evidence relied upon by the parties in order to resolve any conflict of evidence between the parties, and, once having done that, evaluate whether, on the balance of probabilities, Ben executed the Terms of Settlement under duress, and/or by reason of the unconscionable conduct of Joe and/or his agents.
47 There were relatively limited factual disputes between the parties. Both parties agreed as to what was said by Mr Wells at the directions hearing on 23 July 2019, although Ben characterised Mr Wells’ statements as an implied threat to remove him from his home. Both parties agreed that a telephone conversation took place between Ben and Joe in Mr Spina’s presence on 21 August 2019, although Ben disagreed with Mr Spina’s version as to what was said. There was no dispute that there were further exchanges of correspondence between the parties between 21 August 2019 and the date of the execution of the Terms of Settlement.
48 However, to the extent that it is necessary to resolve any factual conflicts for the purpose of the applications, I prefer the evidence of Mr Spina to the evidence of Ben. I accept that Mr Spina was a disinterested neutral party in this matter, acting in what he considered to be in the interests of both parties to resolve the dispute between them. No doubt, as an accountant experienced in giving commercial advice, he would have some understanding of the costs of protracted litigation, and the burden those costs impose upon ordinary people. He provided assistance and counsel to Ben both before and after the parties’ entry into the Terms of Settlement. While I do not consider Ben to have given deliberately false evidence, his evidence was somewhat coloured by his strong emotions and his perception that Joe’s claim was unmeritorious and unjustified, and that the settlement was unfair.
49 In any event, the only real factual dispute between the parties was what was said during the course of the telephone conversation between Ben and Joe on 21 August 2019, and how the settlement sum was arrived at. Mr Spina said that Joe made the first offer of $200,000 plus costs, to which Ben responded with a counter offer of $150,000 ‘all in’, which was accepted by Joe. Ben says that he made the first offer of $100,000, and the offer of $150,000 was made by Maddens two days later. However, Ben’s version of events is inconsistent with the contemporaneous documents, which supports a conclusion that the sum of $150,000 inclusive of costs was agreed on 21 August 2019, as the Settlement Agreement and Release was emailed to Joe on 21 August 2019, presumably after the telephone conversation that day. In any event, not much turns on this factual dispute for the purposes of these applications indeed, on Ben’s version of events, reaching agreement on the settlement sum proceeded at a more leisurely pace than on Mr Spina’s version of events.
50 In order to establish that the agreement documented by the Terms of Settlement was procured by duress, Ben would need to show that Joe (and/or his agent) had used illegitimate pressure to effectively compel Ben to enter into a settlement agreement involving a payment to Joe. The conduct said to be illegitimate pressure was the threat by Mr Wells (Joe’s agent) to make an application to remove him as the executor of his mother’s estate, which he interpreted as a threat to remove him from the Ferntree Gully property, that is, his home. While Ben in his evidence made frequent references to being ‘under duress’, and ‘under pressure’ when he signed the Terms of Settlement, he did not point to any other specific instances of conduct by or on behalf of Joe which amounted to illegitimate pressure on Joe’s part, save for perhaps bringing the proceeding itself.
51 While each case generally turns on its own facts, a threat to issue a civil proceeding (or by extension, an application within a civil proceeding) is generally not considered by the authorities to amount to ‘illegitimate pressure’, unless the proceeding or action is brought maliciously, I am prepared to accept for present purposes that a threat of civil action may amount to illegitimate pressure in certain circumstances (see paragraph 33 of these reasons).
52 I do not doubt for one moment that Ben felt under a great deal of pressure as a result of Joe making his claim for further provision against the estate of the deceased, and the situation in which he found himself in August 2019. While the evidence regarding Ben’s financial position was not detailed or precise, it appear that, despite his advanced qualifications, his connection to the labour market over recent years has been tenuous. He frequently referred in his evidence to having no funds to pay lawyers, at one stage saying that he only had $400 available to pay for legal advice. The only substantial asset of the estate was the home in which he lives, and any award of further provision to Joe would inevitably necessitate its sale unless he was able to obtain finance to fund a payment to Joe. While there was no expert report in evidence regarding Ben’s medical condition, he says that he suffered from severe depression.
53 However, any action for duress focuses more upon the conduct of the alleged perpetrator than the attributes and/or perceptions of the alleged victim of duress. It could not be said that the mere issue of this proceeding amounted to illegitimate pressure on the part of Joe. I will comment upon the merits of Joe’s claim later in these reasons, but for present purposes it is enough to say that Joe had a bona fide claim against the estate. He was an eligible person within the meaning of s 90 of the Act, being a step‑son of the deceased, and, while the deceased’s will expressly stated that she had specifically excluded Joe and his brother Mimmo from taking any benefit under her will, she provided no reason why. Further, the sole asset of the estate was the family home, previously jointly owned by the deceased and Joe’s father. It could not be said that issuing this proceeding amounted to illegitimate pressure on the part of Joe: it was the only thing he could do to press what was a bona fide claim to part of the assets of the estate. As observed by Tadgell JA in McKay v National Australia Bank[35] ‘The proper use of legal process does not constitute duress. Thus, the threat to institute a civil action in good faith cannot constitute duress ...’.[36]
54 As for the alleged threat by Mr Wells to remove him as an executor of the estate, Ben conceded that no express threat was made by Mr Wells to the effect that he would be thrown out of his home. The only action foreshadowed was an application to remove Ben as an executor should he not obtain legal representation.
55 Mr Wells, understandably, did not give evidence, given that he represents Joe, and, in any event, it was not entirely clear prior to the hearing itself the extent to which Ben sought to rely upon Mr Wells’ statements in Court on 23 July 2019 for the purposes of alleging that his assent to the Terms of Settlement was procured by duress. Mr Wells did not dispute that at the hearing on 23 July 2019 he foreshadowed making an application to remove him as the executor of the deceased’s estate.
56 I do not consider that Ben has established that he entered into the Terms of Settlement as a result of illegitimate pressure on the part of Joe or his agents. First, as noted above, the mere fact of issuing this proceeding, for the purpose of making a bona fide claim against the estate of the deceased, cannot amount to illegitimate pressure. Secondly, even if it can be accepted that the bringing of a civil proceeding, or an application in a civil proceeding, can amount to illegitimate pressure, in my view, Mr Wells foreshadowing an application to remove him as an executor is as consistent with a legitimate purpose as it is with an illegitimate purpose.
57 The ‘threatened’ action needs to be viewed in the context in which the alleged threat was made. It was made at a directions hearing where Ben, the sole beneficiary of the estate as well as its executor, had failed to comply with directions made for the filing and service of affidavits in opposition to Joe’s claim.[37] A judicial mediation had been cancelled owing to Ben’s lack of legal representation, and the material on the Court file indicates that Ben was attempting to rely upon his ill health and lack of legal representation to delay the progress of the proceeding. Given that Ben was the sole beneficiary of the deceased’s will, and the sole asset of the deceased estate was the home in which he lived, Joe’s lawyers may well have (quite reasonably) reached the conclusion that Ben was not actively engaging with Joe’s claim, and that, if not assisted by legal advice, Ben would be unwilling or unable to exercise his powers and duties as executor objectively and independently. Further, if the matter was not resolved reasonably promptly, the estate, which was modest in size, was at risk of bearing substantial legal costs.
58 In any event, no such application was made, and approximately four weeks passed before Ben commenced to make overtures to Joe through Mr Spina, and a further few weeks elapsed prior to the execution of the Terms of Settlement. This timeframe is inconsistent with a claim that Ben acted under duress, as is the fact that he was the instigator of the settlement discussions with Joe. Ben may well have felt compelled to attempt to reach a settlement with Joe, by reason of the circumstances in which he found himself, but that feeling of compulsion did not arise by reason of any illegitimate pressure on the part of Joe or his lawyers, noting that Maddens had no direct communication with Ben at all until November 2019.
59 For completeness, I do not consider that any conduct of Mr Spina gave rise to any actionable duress. First, the evidence makes it clear that he acted as an intermediary between the brothers – he did not represent Joe. Further, while no doubt Mr Spina was keen to see a settlement reached, I accept that his motive for doing so was his genuine concern to resolve the dispute within the family. In any event, Ben did not give evidence that he felt pressured or overborne by Mr Spina.
60 For substantially similar reasons, I am not persuaded that the Terms of Settlement should be set aside on the grounds of unconscionable conduct on the part of Joe and/or his agents. In particular, I do not consider that Joe or his lawyers were aware of, or should have been aware of, any special disability on Ben’s part. While Ben says he was depressed, he did not rely upon any expert evidence to that effect at the hearing of the current applications. He did exhibit medical certificates to his affidavit filed on 22 July 2019, in support of an application for an adjournment, which evidenced the opinion of his general practitioner that he was suffering from severe depression, and that he received a Disability Support Pension, but it is not clear whether this affidavit was served upon Joe’s solicitors.
61 Further, it would appear that Joe and Ben were estranged, such that Joe would not necessarily have any direct knowledge of the state of Ben’s mental health. While Mr Spina was aware that Ben was isolating himself from the family, he spent some time with Ben prior to the execution of the Terms of Settlement, and formed the view that Ben understood what he was doing. In any event, as stated earlier in these reasons, Mr Spina did not act on behalf of Joe. In any event, there is nothing in the evidence to support a contention that Ben’s depression was so disabling that he could not comprehend the Terms of Settlement, or his obligations under the Terms of Settlement.
62 Accordingly, Ben’s vulnerabilities during the relevant period included his poor mental health, his precarious financial position and his lack of legal representation. The evidence is unclear as to whether Joe and/or his lawyers were aware, or fully aware of his health status or his financial position, as Ben had not served any affidavit evidence in opposition to Joe’s claim in this proceeding. Any knowledge on the part of Mr Spina of Ben’s health or financial position cannot be sheeted home to Joe or his lawyers, for the reasons advanced above. In any event, Mr Spina must have been satisfied, or at least confident, that Ben’s income would be sufficient to service a home loan of $150,000, as he introduced Ben to a bank lending officer known to him to facilitate Ben obtaining funds to pay the settlement sum.
63 As noted earlier in these reasons, an absence of legal representation, or access to legal advice may well contribute to a special disadvantage suffered by a party to a transaction, but the weight of authority tells against the mere absence of legal representation or advice as being a determinative factor in determining whether a party to a transaction suffers from a special disadvantage.
64 Ben’s vulnerabilities at the time the Terms of Settlement were executed also have to be considered in the context of Ben’s intelligence and advanced qualifications, in circumstances where the Terms of Settlement documented a relatively simple transaction. While Ben could not be expected to intuitively understand what would be a fair and reasonable settlement of Joe’s claim in this proceeding, the range of outcomes at trial were readily capable of calculation. Joe claimed thirty per cent of the estate, or approximately $210,000. The most favourable outcome to him would be to get the full value of his claim, plus costs. The worst outcome would be that his claim was dismissed, and he would have to pay Ben’s costs. Accordingly, the zone in which negotiations would take place was reasonably predictable, even to a lay person. Further, the Terms of Settlement document and its various iterations were not complex documents, and indeed Ben showed himself to be more than capable of negotiating with Maddens the final form of the Terms of Settlement.
65 Accordingly, I do not consider that Ben suffered a special disadvantage in his dealings with Joe and his lawyers. But even if he did, I do not accept that Joe and his lawyers took unconscientious advantage of any such vulnerability. First, it appears that Ben had no direct dealings with Joe’s lawyers between the directions hearing on 23 August 2019 and the email of 20 November 2019: at all relevant times, Mr Spina acted as the intermediary between the parties. There was a reasonably lengthy period of time between the telephone conversation between Ben and Joe on 21 August 2019 and the execution of the Terms of Settlement on 14 September 2019. Maddens showed themselves during that period to be open to negotiations regarding the detail of the Terms of Settlement during that period, and activity to progress the proceeding had been suspended. While I accept that Ben felt under pressure to assent to the Terms of Settlement, I repeat my earlier conclusion that the pressure arose out of the circumstances in which Ben found himself, not any conduct of Joe or his lawyers.
66 For completeness, I do not consider the fact that Mr Spina is not a legally qualified, accredited mediator, or Joe’s lack of financial disclosure are particularly relevant to the question of whether the Terms of Settlement should be set aside. First, there is no legal requirement that a person acting as a mediator be legally qualified, or have accreditation. Many mediators are legally qualified, but accreditation merely indicates to the public and the legal profession that the mediator has undergone specialised training. This point goes nowhere.
67 As for the allegation that Joe failed to fully disclose his financial position prior to the parties’ entry into the Terms of Settlement, while only limited disclosure was made in Joe’s first affidavit, there was ample opportunity for Ben’s previous solicitors to press the matter. In any event, the limited disclosure made was sufficient to show that Joe’s claim to the assets of the estate was not as strong as Ben’s, as discussed further in the following section of these reasons.
68 However, if I am wrong in finding that Ben’s agreement to the Terms of Settlement was not procured by unconscionable conduct, it would be necessary for Joe to negate such a finding by establishing that the settlement sum was, in the circumstances, fair, reasonable and just. In order to evaluate the fairness and reasonableness of the settlement, it is necessary to undertake a ‘desk top’ evaluation of Joe’s claim, which follows.
69 The only parties with any entitlement to the assets of the estate were Ben, Joe, and their brother Mimmo (who has made no claim). However, while Joe’s claim was clearly not vexatious or fanciful, given that he was an eligible person within the meaning of the Act, I do not consider it to have been a particularly strong claim. First, Joe would have to show that the deceased had a moral obligation to make adequate and proper provision for him, in circumstances where he had been independent from his parents for many decades, had assets (together with his wife) valued in the order of $2 million, and there appears to have been limited contact between him and the deceased in the years prior to her death. On the other hand, Ben, notwithstanding his qualifications, was in some need, had been his mother’s primary carer for many years, and the only asset of the estate was his home. The law does not require a testator to treat all children, particularly adult children equally, and the Court will give substantial weight to the wishes of the testator, as expressed in the testator’s will. On balance, Ben had a better claim to the assets of the estate than Joe.
70 Considered against that background, Joe’s initial offer to accept $200,000 plus costs represents the very outer limits of what Joe might expect to obtain after a full trial of his claim. Accepting $150,000 inclusive of costs represented a substantial compromise on that position, but in my view, an offer of that magnitude was, having regard to the strength and weaknesses of Joe’s claim, a generous offer, which is no doubt why Joe accepted Ben’s offer so promptly. However, while the settlement sum was generous, it was not so generous so as to be unfair and unreasonable, given that it was inclusive of costs (which appear to have been inflated by Ben’s conduct in avoiding service and refusing to engage with Maddens in the period leading up to the directions hearing on 23 July 2019), and given that the settlement sum represented approximately twenty per cent of the assets of the estate.
71 Further, while the settlement sum was probably generous to Joe, Ben’s entry into the Terms of Settlement conferred a number of benefits upon Ben. While there was limited direct evidence on the point, it seems that Ben believed (possibly with the benefit of Mr Spina’s advice) that he could raise funds from a loan secured by the Ferntree Gully property to fund the payment of the settlement sum to Joe, such that he could remain in his home. Also, the settlement provided him with certainty, and foreclosed the possibility that he would be forced to defend Joe’s claims at trial without legal representation, with the attendant risk that Joe might be awarded a sum greater than $150,000, and obtain an order for the payment of substantial legal costs by the estate. As observed by Whelan JA in Doggett v Commonwealth Bank of Australia,[38] in the context of an allegation that a settlement agreement had been procured by duress:
The Bank’s conduct cannot become illegitimate merely because it can be demonstrated that [the customer’s claim] would otherwise have succeeded. The essence of all settlements is the resolution of uncertainty. Meritorious claims and unmeritorious claims are compromised. The merits of a compromised claim might be relevant to a duress argument but it cannot be determinative of the issue.[39]
72 Ben’s application to set aside the Terms of Settlement will be dismissed, and judgment should be entered in favour of Joe in accordance with the Terms of Settlement. I shall hear further from the parties on the form of orders, the calculation of interest, the question of costs, and whether a temporary stay of execution is warranted in the circumstances.
[1] In order to distinguish between the parties, I will use their (Anglicised) first names in these reasons. No disrespect is intended. I refer to the parties’ cousin, Mr Benedetto (Ben) Spina, as ‘Mr Spina’, to avoid confusion between him and Ben.
[2] The deceased was actually Joe’s step-mother, his biological mother having died in childbirth in 1955.
[3] Probate of the deceased’s will dated 23 January 2007 was granted on 26 June 2018.
[4] Ben has post-graduate qualifications in engineering, and had completed two years of a degree in medicine prior to suspending his studies to care for the deceased.
[5] The implication being that there had been some collusion on the part of Ben’s solicitors with Joe and/or his solicitors, which is a rather remarkable proposition.
[6] According to the Court file. Contrary to Ben’s evidence, there is no record of any directions hearing being listed for or held on 24 August 2019, which, in any event, was a Saturday.
[7] During the course of Mr Spina giving evidence at the hearing of the applications, I queried the exact nature of the language used by Ben when making his counter-offer to Joe. Mr Spina gave evidence that Ben said words to the effect that “I will pay you $150,000 all in”.
[8] The final version of the Terms of Settlement executed by the parties on 14 September 2019.
[9] According to the Terms of Settlement, the payment to Joe was due to be made on or around 14 December 2019. Notwithstanding the reference to ‘Ben Spina’ in the signing clause of this email, Mr Spina did not send this email. Rather, it was sent from Ben’s email address. Ben agrees he sent this email, and described the sign off as ‘an Italian thing’.
[10] This must be a reference to the directions hearing held on 23 July 2019.
[11] ‘The law firm’ referred to by Ben is Maddens Lawyers, Joe’s solicitors (‘Maddens’).
[12] The Terms of Settlement was dated 14 September 2019, which was a Saturday.
[13] Presumably Friday 23 August 2019.
[14] By reason of rule 42A.01, only a party who is represented by a solicitor may issue a subpoena compelling the production of documents to the Court prior to trial.
[15] Mr Spina gave evidence that he believed that this hearing was adjourned by consent to enable the parties to finalise the terms of settlement. The Court file does not include any consent orders, but there was no further hearing until 13 December 2019.
[16] NC Seddon & RA Bigwood; Lexis Nexis Butterworths (Eleventh Australian Ed, 2017).
[17] Ibid, 776.
[18] See, for example, Westpac Banking Corp v Cockerill [1998] FCA 43; (1998) 152 ALR 267, 269.
[19] NC Seddon & RA Bigwood; Lexis Nexis Butterworths (Eleventh Australian Ed, 2017).
[20] Ibid, 829.
[21] Commonwealth Bank of Australia v Amadio [1983] HCA 14; (1983) 151 CLR 447 (‘Amadio’).
[22] Australian Securities and Investment Commission v Kobelt (2019) 93 ALJR 743.
[23] Ibid, 462.
[24] Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315 at [26].
[25] Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10; (2010) 41 WAR 353 [232], referring to the decision of the High Court in Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457.
[26] Ibid.
[27] Ibid, 332-336.
[31] Ibid [37].
[32] See, for example, Aboody v Ryan [2012] NSWCA 395; Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 415; Nemeth Australian Litigation Funders Pty Ltd [2114] NSWCA 198; HG & R Nominees Pty Ltd v Fava [1997] 2 VR 368; and Geelong Building Society (in liq) v Thomas and anor (Unreported, Supreme Court of Victoria, BC9601710, 30 April 1996).
[33] Australian Securities and Investments Commission v Kobelt (2019) 93 ALJR 743 per Gageler J at [92].
[34] Amadio, 474.
[36] Ibid, 690.
[37] On 9 April 2019, Englefield JR made orders that Ben file and serve any affidavits upon which he intended to rely by 10 May 2019. Ben filed two affidavits on the afternoon of 22 July 2019, the day before the directions hearing, but it is not clear whether they were served.
[38] [2015] VSCA 351; (2015) 47 VR 302.
[39] Ibid [82].
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