Atkins v iiNet Pty Ltd
[2019] SASC 83
•24 May 2019
SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
ATKINS v IINET PTY LTD
[2019] SASC 83
Judgment of The Honourable Justice Bampton
24 May 2019
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ENDING PROCEEDINGS EARLY - ALTERNATIVE DISPUTE RESOLUTION - MEDIATION
EQUITY - SETTLEMENTS - RECTIFICATION, REVOCATION, RESCISSION AND CANCELLATION
EQUITY - GENERAL PRINCIPLES - MISTAKE
EQUITY - GENERAL PRINCIPLES - UNCONSCIONABILITY, UNCONSCIONABLE DEALINGS AND OTHER FORMS OF EQUITABLE FRAUD
Appeal against a decision of a Magistrate refusing to set aside a settlement agreement – where appellant entered into settlement agreement reached at the conclusion of a Court appointed mediation – whether the Court should exercise its discretion to set aside a settlement agreement.
HELD, in dismissing the appeal – there are no grounds upon which to set aside the settlement agreement.
Harvey v Phillips (1956) 95 CLR 235; Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366; Australia and New Zealand Banking Group v Karam (2005) 64 NSWLR 149; Matsen v Superannuation Complaints Tribunal [2017] FCA 765; Commercial Bank of Australia v Amadio (1983) 151 CLR 447; Petelin v Cullen (1975) 132 CLR 355, applied.
Taylor v Johnson (1983) 151 CLR 422, discussed.
Thorne v Kennedy (2017) 91 ALJR 1260, considered.
ATKINS v IINET PTY LTD
[2019] SASC 83Magistrates Appeal: Civil
BAMPTON J: Paul Atkins issued Magistrates Court proceedings against iiNet Pty Ltd (“iiNet”) alleging that iiNet had failed “to supply vital essential services” pursuant to a mobile plan whilst he and his family were in Russia. Mr Atkins’ wife, Regina Atkins, issued separate Magistrates Court proceedings also alleging breach of contract against iiNet.
On 27 March 2018, a Magistrate referred the parties in the proceedings commenced by Mr Atkins and the parties in the proceedings commenced by Mrs Atkins to the Magistrates Court mediation service for mediation. A Notice of Mediation was sent to the parties stating that the mediation was listed for 14 May 2018 at 2.00 pm. Attached to the notice was the Magistrates Court Practice Direction concerning mediation, conciliation and arbitration.
The course of the mediation
On 14 May 2018, the parties attended the court-ordered mediation. Mr Atkins and Mrs Atkins attended in person. iiNet was represented by its general legal counsel, Mr Antony Moffatt, and a member of its customer service team, Mr Brett Niemann. The mediation commenced at 2.00 pm and concluded at or around 4.30 pm.
During the mediation, the proceedings commenced by Mr Atkins settled and a settlement agreement was signed by Mr Atkins and Mr Moffatt. The proceedings commenced by Mrs Atkins also settled during the mediation and a settlement agreement was signed by Mrs Atkins and Mr Moffatt.
The straightforward one-page settlement agreements each recorded that iiNet was to pay the amount of $300 and that “neither party is to take out any further litigation regarding this matter”. The agreements further recorded that the matter was adjourned to 1 June 2018 for mention only and that should the parties not attend on that date, the proceedings would be dismissed.
The correspondence following the mediation
Following the mediation, at 7.31 pm Mr Atkins emailed Mr Moffatt stating, “As agreed please find below Mrs Regina Atkins account number for both amounts”.
On 18 May 2018, Mr Moffatt emailed Mr Atkins at 12.18 pm stating:
Attached is a copy of the receipt for the required payment following settlement. Brett Nieman has registered the cease recovery action activity on the iiNet systems.
Accordingly iiNet considers that it has completed everything required by the Terms of Settlement and does not intend to attend the adjourned mediation on 1 June 2018.
The payment may take a day or two to show up in your account but I would appreciate your confirming that the matter is finalised once you identify that payment has been made.
The receipt attached to the email records the payment of $600 to Mrs Atkins.
At 1.04 pm on 18 May 2018, Mr Atkins emailed Mr Moffatt saying:
Can I change my mind.
You withheld important information that confirms my case.
We did not have service in July.
You emails and phone SMS clearly confirms iinet deactivated our service, period.
We did not get the service we signed up for.
The data usage was just a red herring.
Mr Moffatt replied at 1.21 pm saying: “I can only suggest that you discuss that question with your lawyer”.
Mrs Atkins’ notice of discontinuance of her proceedings was forwarded to the Court and copied to iiNet by email on 18 May 2018 at 3.25 pm.
Mr Atkins’ interlocutory application seeking to set aside the settlement agreement
On 24 May 2018, Mr Atkins filed an interlocutory application and affidavit in support in the Magistrates Court seeking to strike out or set aside the settlement agreement he had signed alleging he and his wife did not understand the mediation. He asserted that they were bullied and intimidated, that he suffers a chronic anxiety panic attack disorder, post-traumatic stress disorder (“PTSD”) and specific learning disabilities and that the mediator should have stopped the mediation until she was satisfied that he was in a fit state to make decisions. He also alleged iiNet’s representative said he would lie in court because the Atkins could not prove their cases.
Mr Moffatt filed an affidavit on 2 August 2018 responding to the matters deposed to in Mr Atkins affidavit (“the Moffatt affidavit”).
At a directions hearing on 10 August 2018, Mr Atkins was ordered by a Magistrate to file any affidavits with further medical reports upon which he sought to rely within six weeks. Mr Atkins provided the following reports:
1Report of Dr Nick Ford dated 22 May 2018.
2Report of Michelle Gorgula dated 23 February 2018.
3Report of Dr Timothy Hill dated 7 May 2018.
Following the hearing of the interlocutory application seeking to set aside the settlement agreement on 18 September 2018, the Magistrate gave ex tempore reasons dismissing the application.
The appeal
On 13 November 2018, Mr Atkins filed a notice of appeal against the Magistrate’s dismissal of his application. The appeal is by way of rehearing and the question for determination is whether the Court should exercise its discretion to set aside the settlement agreement.
Mr Atkins relies on a number of grounds of appeal including duress, unconscionable conduct, failure to consider relevant matters, and non est factum. Mr Atkins seeks orders setting aside the decision of the Magistrate, permitting him to amend his claim, and a date for trial.
The reports relied on by Mr Atkins
The reports listed above, provided by Mr Atkins in support of his application, describe his extremely traumatic childhood and his ongoing suffering.
Dr Nicholas Ford, a psychiatrist, stated in his report dated 22 May 2018 that Mr Atkins suffers from chronic PTSD due to the “quite extreme abuse experienced at the hands of [Mr Atkins’s] father, and foster carers”. Dr Ford is of the opinion that Mr Atkin’s PTSD “significantly compromises [Mr Atkins] in dealing with legal situations”.
Mr Atkins also obtained a report from Michelle Gorgula, a clinical psychologist, dated 23 February 2018. Ms Gorgula assessed Mr Atkins as having the specific learning disability, dyslexia, with moderate to severe impairment in reading. Ms Gorgula stated that assessment of Mr Atkins “identified very significant strengths in perceptual reasoning ability and a reasonably high level of verbal ability” and indicated that he has a reasonably high level of intellectual abilities.
Dr Timothy Hill, a psychologist, in his report dated 7 May 2018 agreed that Mr Atkins suffers PTSD as a result of his childhood trauma and that he has dyslexia.
I accept the opinions of Dr Ford, Ms Gorgula and Mr Hill. Mr Atkins suffers PTSD and has dyslexia. Mr Atkins also told me during the hearing of his appeal that he has medication for schizophrenia which is helping him immensely and that he can think clearly.
I accept, as described by Ms Gorgula, that Mr Atkins’ dyslexia compromises his reading comprehension skills and his ability to retain the information he reads. I accept that reading requires significant cognitive effort on his part and that he is likely to re-read information a number of times to accurately comprehend the information. I accept that Mr Atkins would rely on the opportunity to work through problems visually and his specific learning disability can exacerbate difficulties he has with comprehension of information, retaining numbers, sequencing information and as a result processing information requires great effort.
Consideration
The High Court in Harvey v Phillips[1] said that a settlement order is similar to a contract which cannot be set aside unless there are grounds on which it can be said to be void for example illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake or undue influence. In other words, a party to a settlement agreement cannot ask the Court to set aside the agreement because they have had a change of mind or because of they are of the view that they did not get a good enough deal.
[1] (1956) 95 CLR 235 at 243-244.
Duress
Mr Atkins alleges that he and his family had been the subject of a death threat made by Mr Moffatt at some point before the mediation. Mr Atkins submits that the interaction between Mr Atkins, his wife, and Mr Moffatt at the mediation resulted in his wife bursting into tears. Mr Atkins further submits that, due to Mr Moffatt needing to leave the mediation to catch a flight to Sydney, the mediation was rushed.[2] Finally, Mr Atkins submits that the mediator told him that he had to settle at the mediation and that the mediator’s conduct impacted upon his decision to settle at the mediation.
[2] Mr Atkins made submissions from the bar table that Mr Moffatt had scheduled a flight at 6:00 pm on the date of the mediation, which would have required him to leave the mediation at 4:30 pm in order to arrive at the airport one hour prior to the departure time.
Mr Moffatt strenuously denies in the Moffatt affidavit the allegation that he made any death threats. Mr Atkins explained to me during the hearing of the appeal that the threat he alleged was made by Mr Moffatt occurred when he received an anonymous phone call and it was while he was in the mediation “sitting there, looking at him, I realised, in my opinion, it was him ... which scared me”. Mr Atkins acknowledged to me that he had no proof of a death threat being made by Mr Moffat.
In Universe Tankships Inc of Monrovia v International Transport Workers Federation,[3] Lord Scarman explained that there are two elements of duress: “(1) pressure amounting to compulsion of the will of the victim; and (2) the illegitimacy of the pressure exerted”. The development of the law of duress encompasses threatened or actual unlawful conduct:[4]
The vagueness inherent in the terms “economic duress” and “illegitimate pressure” can be avoided by treating the concept of “duress” as limited to threatened or actual unlawful conduct. The threat or conduct in question need not be directed to the person or property of the victim, narrowly identified, but can be to the legitimate commercial and financial interests of the party. Secondly, if the conduct or threat is not unlawful, the resulting agreement may nevertheless be set aside where the weaker party establishes undue influence (actual or presumptive) or unconscionable conduct based on an unconscientious taking advantage of his or her special disability or special disadvantage, in the sense identified in Commercial Bank of Australia Ltd v Amadio.
It will suffice to consider whether any pressure was exerted on Mr Atkins illegitimately.
[3] [1983] 1 AC 366 at 400. Though his Lordship was in dissent, this articulation of the elements has been universally adopted, see Australia and New Zealand Banking Group v Karam (2005) 64 NSWLR 149.
[4] Australia and New Zealand Banking Group v Karam (2005) 64 NSWLR 149 at 168 per Beazley, Ipp and Basten JJA cf the contemplation of lawful act duress in Thorne v Kennedy (2017) 91 ALJR 1260 at [26]–[29] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ and at [70]–[73] per Nettle J.
Mediations can be stressful encounters, especially for unrepresented litigants, but that is not sufficient to amount to duress. Any time pressure which Mr Atkins may have perceived is also not enough to amount to duress at law.
Mr Atkins accepted during the appeal hearing that he had been provided with a copy of the Magistrates Court Practice Direction concerning Mediation, Conciliation and Arbitration. The Practice Direction appears in the form set out at Annexure A to these reasons. The Practice Direction makes it clear that “[m]ediation is voluntary and therefore any party may withdraw at any time” and that “[t]he mediator may adjourn the mediation if s/he has the view that the there [sic] is good cause”. It is inherently unlikely that the mediator would have said anything to Mr Atkins at the mediation which contradicted the information in the Practice Direction.[5]
[5] Matsen v Superannuation Complaints Tribunal [2017] FCA 765 at [24] per Perry J.
Mr Atkins has not established that any pressure placed on him was illegitimate.
Unconscionable conduct
Mr Atkins relies on the doctrine of unconscionability as a further ground upon which the settlement agreement should be set aside. The doctrine of unconscionability allows the Court to set aside a transaction where one party to the transaction was under a special disability; and the other party was aware of the special disability; and that other party took advantage of the first party’s special disability in procuring the transaction.[6]
[6] Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 459 per Gibbs CJ and at 474 per Deane J.
Mr Atkins relies on the fact that iiNet was represented by a senior lawyer at the mediation for the purposes of establishing this ground. Mr Atkins further submits that he and his wife were “bullied” in the mediation and that they were “rushed through” due to Mr Moffatt needing to catch a flight at 6.00 pm. Mr Atkins also relies on his dyslexia as establishing a special disability.
iiNet submits that dyslexia does not rise to the level of a special disability for the purposes of unconscionable conduct. iiNet further relies on the Moffatt affidavit wherein Mr Moffatt deposes to the fact that, once the settlement agreement had been reduced to writing, it was read aloud either by, or to, Mr Atkins. Mr Atkins also confirmed during the hearing of the appeal that his wife read the settlement agreement to him at the mediation.
I am satisfied that iiNet did not take advantage of Mr Atkins’ dyslexia.
I accept that Mr Atkins may well have suffered stress at the mediation and that he may well have experienced the symptoms of the conditions he suffers as detailed in the reports he has provided to the Court. However, that does not render iiNet’s entry into the settlement agreement unconscionable as a matter of law.
Failure to consider relevant material
Mr Atkins submits that there has been a failure by the Magistrate and the mediator to consider factors relating to his mental state at the time of entering into the settlement agreement. In particular, Mr Atkins submits that the Magistrate and the mediator failed to consider his dyslexia and his PTSD. Mr Atkins contends that the mediator should have stopped the mediation because of his mental state. Mr Atkins further submits that the reports filed in support of his application before the Magistrate had been “totally ignored”.
The Moffatt affidavit indicates that the mediator was aware of Mr Atkins’s dyslexia and had taken steps to ensure that provisions were made to accommodate his dyslexia. While the mediator may not have had specific evidence of Mr Atkins’s PTSD and dyslexia, the structured environment of the mediation would have enabled the mediator to accommodate the fact that Mr Atkins was self‑represented and any difficulties encountered by him by virtue of his mental state and dyslexia. I note in this regard Mr Atkins informed me that the mediator said to him:
‘You look unwell, do you want to stop the meeting’ … And I said no. But I was delusional, there’s no point asking a drug addict is he on drugs, he’s going to say no. So to give credit to the mediator she did ask me, do you want me to stop this meeting.
Further, on my assessment the Magistrate considered the reports relied upon by Mr Atkins in detail in her reasons in determining whether there were grounds set aside the settlement agreement.
Mistake
Mr Atkins also submits that the settlement agreement should be set aside for mistake. So far as mistakes are concerned, the High Court has said:[7]
… a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension.
[7] Taylor v Johnson (1983) 151 CLR 422 at 432 per Mason ACJ, Murphy and Deane JJ.
The doctrine of non est factum permits the Court to set aside an agreement for mistake where three elements are established, namely (1) that the person seeking to invoke the doctrine is a member of the classes of person to whom the doctrine applies or otherwise is unable to have any understanding of the purport of a particular document; (2) that the document signed by the party seeking to invoke the doctrine was radically different from what he or she believed it to be; and (3) that his or her failure to read and understand it was not due to carelessness on his or her part.[8] Ordinarily, the doctrine is available only to “those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing”.[9] The onus on the party seeking to invoke the doctrine is a heavy one.[10]
[8] Petelin v Cullen (1975) 132 CLR 355 at 359–360 per Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ.
[9] Petelin v Cullen (1975) 132 CLR 355 at 359 per Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ.
[10] Petelin v Cullen (1975) 132 CLR 355 at 360 per Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ.
Mr Atkins submits that he did not understand the settlement agreement, that he informed the mediator that he did not understand what was happening, and that he laboured under the false impression that the agreement reached at mediation would go back before the Magistrates Court for finalisation.
iiNet submits there that the mediation process and the settlement agreement were explained to Mr Atkins by the mediator. iiNet further contends that Mr Atkins’ actions in providing his bank account details to iiNet to facilitate payment of the settlement monies, and arranging for the discontinuance of his wife’s claim against iiNet demonstrate that he understood the settlement agreement.
It is clear that Mr Atkins is not suffering from blindness or illiteracy. Mr Atkins submitted from the bar table that it takes him a while to understand documents and that he is only able to take in so much information before he is unable to understand anymore. Although it might take Mr Atkins longer than someone who does not have dyslexia to understand material presented to him, he was able to prepare and collate the documents for this appeal and refer accurately to them; he is quite clearly not in the class of persons to which the doctrine is directed.
The settlement agreement was read to Mr Atkins prior to his signing it. I am satisfied that Mr Atkins comprehended what was read to him, taking into account his actions following the signing of the settlement agreement. Mr Atkins’ actions in providing his bank account details to iiNet to facilitate payment of the settlement monies and the settlement of his wife’s claim at the same mediation are significant factors against a finding that Mr Atkins entered the settlement agreement under a serious mistake about its contents in relation to a fundamental term.
Conclusion
Mr Atkins presented his case on appeal in an articulate and intelligent manner. He made clear submissions, followed the arguments made by counsel for iiNet, and responded to the questions I asked of him. In my view, with extra time and support in reading documents and checks to make sure he comprehends what is being said or what he has read, Mr Atkins is capable of understanding the effect of straightforward documents and legal proceedings.
I accept that Mr Atkins may wish that he had not entered into the settlement agreement. I accept that Mr Atkins may have felt pressure to settle his claim at the mediation and is unhappy with the mediation process. However, having undertaking an assessment of the evidence and the arguments on appeal there are no grounds available as a matter of law upon which to set aside the settlement agreement.
I dismiss the appeal.
ANNEXURE A – MEDIATION PRACTICE DIRECTION
11.(1) What is the process of mediation?
Mediation is a process in which the participants, with the assistance of a mediator, identify the issues in dispute, develop options, consider alternatives and endeavour to reach an agreement. A mediator has no advisory or determinative role in relation to the content of the dispute. The mediator will make the process clear before it commences.
(2)What are the benefits of mediation?
Mediation gives parties to a dispute an early opportunity to settle the dispute in private - saving costs, time and stress.
It encourages effective communication under the direction of an impartial mediator, and is often more conducive to maintaining ongoing relationships.
(3)Prior to mediation
When the Court refers a matter to mediation the parties must indicate if they wish to choose a mediator from the Court panel and notify that choice to the Manager Mediation Unit within 7 days. The Manager Mediation Unit shall contact any chosen mediator or if none is chosen s/he shall nominate one and contact the mediator to arrange a time and place for the mediation to occur and notify the parties of that time and place.
The parties must file all discovered documents with the Court 7 days before the mediation. A party may be excused from filing documents if it would be considered unduly onerous to do so. See rule 71(6) of the Rules.
(4) What happens during the mediation?
The mediator will begin by explaining the process and any ground rules.
The mediator will give each party a chance to explain what they think the problem is. All parties will be given an opportunity to be heard and to respond.
The mediator will assist the parties to identify the key issues in dispute.
The mediator may talk to the parties separately to clarify issues and discuss settlement options. These private sessions are confidential and the mediator will not disclose anything said in those sessions without consent.
Parties can request to speak to the mediator privately and confidentially at any time during the mediation.
Mediation is voluntary and therefore any party may withdraw at any time.
(5)Confidentiality
Anything discussed during the mediation cannot be used in a trial of the matter. The mediation will not be recorded. See section 67C of the Evidence Act 1929 and section 27(3) of the Magistrates Court Act 1991.
However, an agreement reached at mediation may be produced in a hearing, for example, if the other party does not comply with the terms of the settlement.
By entering the mediation process the parties agree that they must not disclose to others what was said or done during mediation or disclose any confidential documents produced in the process. They may in addition be asked to sign a confidentiality agreement.
At the conclusion of the mediation, the notes of the parties and/or their legal representatives must be provided to the mediator, who will destroy them. The notes will not be kept on the Court file.
(6)Cost of Mediation
The costs of the mediator will be 2% of the amount claimed (for claims between $25,000 and $100,000) or $500 (for claims under $25,000).
See
The mediator’s costs will be paid by the parties in equal shares unless the Court orders otherwise.
The costs of mediation are to be paid directly to the Court not less than 14 clear days before the date fixed for the mediation.
If the parties do not have the means to pay for mediation, the Court may provide mediation at no cost.
(7)Recording the outcome
If the parties reach agreement on any aspect of the matter, including any factual matters that are agreed, the mediator will assist the parties to record the agreement before leaving the mediation.
The mediator may adjourn the mediation if s/he has the view that the there is good cause. If this is to a date beyond the next court date the mediator must report the adjournment and reason for it to the Court before that court date. Once the mediation is complete the mediator must report to the Court:
that the mediation took place;
any agreement made;
any other matters that the mediator considers appropriate; and
forward her or his invoice for the scale or other fee ordered by the Court.
All communication by the mediator to the Court will in first instance be to the Manager Mediation Unit.
(8)Further information
Rule 72 of the Magistrates Court Rules provides more detail on some of these matters.
See
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