Litigation Fund WCX Pty Ltd v Aversa

[2025] NSWSC 469

Supreme Court

New South Wales

Medium Neutral Citation:

Litigation Fund WCX Pty Ltd v Aversa [2025] NSWSC 469

Hearing dates:

25-26 November 2024

Date of orders:

15 May 2025

Decision date:

15 May 2025

Jurisdiction:

Common Law

Before:

McNaughton J

Decision:

(1) The Amended Statement of Claim is dismissed.

(2) The Cross-claim is dismissed.

(3) The plaintiff is to pay the costs of the defendants.

Catchwords:

CONTRACTS – breach of contract – whether binding agreements existed between the parties – whether agreements were lawfully executed on behalf of the plaintiff – s 127 Corporations Act 2001 (Cth) – where plaintiff did not read own affidavit – amended statement of claim and cross-claim dismissed

Legislation Cited:

Competition and Consumer Law Act 2010 (Cth) sch 2, s 243

Contracts Review Act 1980 (NSW), s 7

Corporations Act 2001 (Cth), ss 127, 131

Evidence Act 1995 (NSW), ss 69, 135, 183

Supreme Court Act 1970 (NSW), s 75

Uniform Civil Procedure Rules 2005 (NSW), r 7.1

Cases Cited:

Ling v Pang [2023] NSWCA 112

Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited [2015] HCA 37; (2015) 256 CLR 104

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Litigation Fund WCX Pty Ltd (Plaintiff)
Rosario Aversa (First Defendant)
Antonia Aversa (Second Defendant)

Representation:

Counsel:
DC Eardley (Defendant)

Solicitors:
R Coshott (Director of Plaintiff)
Stacks Collins Thompson (Defendant)

File Number(s):

2022/00317496

Publication restriction:

Nil

JUDGMENT

1. By Amended Statement of Claim, filed 31 March 2023, Litigation Fund WCX Pty Ltd (“the plaintiff”) brings an action against husband and wife, Mr Rosario and Mrs Antonia Aversa (“the defendants”), in relation to litigation funding agreements. The agreements were purportedly made to fund proceedings undertaken by the defendants concerning the construction of the WestConnex motorway in the inner west of Sydney (“the Aversa proceedings”).

2. Mr Robert Coshott is the sole director and shareholder of the plaintiff, a litigation funder. By leave, Mr Coshott appeared for the plaintiff. Leave was required because Mr Coshott no longer holds a practising certificate as a solicitor (see r 7.1(2)(a) of the Uniform Civil Procedure Rules 2005 (NSW)). In relation to this question, an affidavit, sworn 22 November 2024, was read, annexing minutes of a company meeting held on 18 November 2024 authorising Mr Coshott to represent the company in the hearing of this matter.

3. There were three purported litigation funding agreements (in relation to three separate properties) signed by the defendants on 18 September 2019 (with two signed by both defendants and one signed only by Mr Aversa (which reflected the ownership of each of the properties)). They were in relevantly identical terms. For convenience, I will sometimes refer to each of these purported litigation funding agreements as “the agreement”.

4. In essence, the plaintiff claims that the defendants breached the agreement in two respects: first, by failing to gain approval from the plaintiff for changing solicitors conducting the Aversa proceedings (from Murphy Lyons Lawyers to Stacks Collins Thompson), and second, by failing to keep the plaintiff informed of the progress and status of the Aversa proceedings.

5. The defendants filed a defence first raising a threshold issue, disputing that they are each legally bound by the agreement. They otherwise deny the plaintiff’s claims of breach of the agreement.

6. The defendants also filed a Cross-claim first seeking declarations that there is no written agreement or any other agreement between the defendants (the first and second cross-claimants) and the plaintiff (the cross-defendant) pursuant to the inherent jurisdiction of the Court and/or s 75 of the Supreme Court Act 1970 (NSW); or second, that the agreement is void ab initio pursuant to the inherent jurisdiction of the Court or s 243 of the Australian Consumer Law due to misleading and deceptive conduct on part of the plaintiff; or third, that the agreement be set aside pursuant to the inherent jurisdiction of the Court or s 7 of the Contracts Review Act 1980 (NSW) on the basis that they are unjust.

7. The defendants submitted at the hearing that the Cross-claim would only require determination if the Court found, in considering the plaintiff’s case, that the agreement was in force.

8. For the reasons set out below, I have found that the plaintiff’s claims fail at the threshold level. Further, although it is not necessary to do so, I have nevertheless considered (on the hypothesis that the agreement is binding) whether the plaintiff has proved the defendants breached the purported agreement. For reasons also set out below, I have found that the plaintiff has failed to establish the claimed breaches.

9. In relation to the Cross-claim, given my threshold finding, and the stated position of the defendants, the relief claimed by the Cross-claim is no longer sought and I have not dealt with those matters further.

10. Because of the unusual way in which this matter was conducted, I have found it necessary to set out the evidence in some granular detail.

The evidence

11. The proceedings were conducted by the plaintiff in an unorthodox fashion. Although Mr Coshott had filed an affidavit, he did not read it at the hearing. Rather, the only evidence relied upon by Mr Coshott, and admitted into evidence, after argument, was an affidavit of Rosario Cappello, sworn on 29 April 2024. This affidavit relevantly read as follows:

“I am an I T Consultant […]

I have managed the plaintiff’s I T since the plaintiff company was registered in September 2019. I also do internet searching for the plaintiff company when required.

[…]

I printed out the documents in annexure B hereto from the plaintiff’s computer records and from the email records for the email addresses [email protected] and [email protected].

I carried out a search on the ASIC website for the plaintiff company. A printout of the result of that search is annexed hereto and marked C.

I printed out copies of the three Aversa funding agreements which are annexed hereto and marked D.

I printed out copies of counsels’ invoices in the Aversa v RMS proceedings which are annexed hereto and marked E.

I printed out copies of the documents evidencing payment of monies pursuant to the Aversa funding agreements which are annexed hereto and marked F.”

(Emphasis in original.)

12. Although Mr Cappello did not include any indication in the affidavit of what instructions he received or whether he was authorised to make the affidavit, I admitted the affidavit with its annexures, over objection. Pursuant to ss 183 and 69 of the Evidence Act 1995 (NSW), I was satisfied that the documents appeared to be business records, and that pursuant to s 135 of the Evidence Act, the probative value was not substantially outweighed by the danger that the evidence might be unfairly prejudicial but there was a live issue as to what I might ultimately make of the plaintiff’s documents.

13. As can be seen, though, from a systematic setting out of the emails from the plaintiff, when compared to the emails produced by the defendants’ witnesses, in my view, it is clear that there has been a selective production of emails on the part of the plaintiff, with many critical emails omitted from the plaintiff’s tender.

The plaintiff’s evidence

Email correspondence

14. I set out in chronological order the email evidence produced by Mr Cappello in the plaintiff’s case. I have assigned pseudonyms to the names of barristers referred to in the emails.

• Email chains between “Robert Coshott <[email protected]>" and Rosario Aversa:

Date	Time	From	Contents
Wednesday, 11 September 2019	3:27 pm	Email from Robert Coshott	Hi Ross, Jim Lyons has forwarded your emails to us to respond. Murphy Lyons are the lawyers nominated by the litigation funders to act for people who are funded by the litigation funders. If you take up the offer of funding, Murphy Lyons will act for you on your compensation/damages claim. If you take up funding, your full costs exposure will be covered by the litigation funders. Simply put, you will be at no risk. I trust this answers your questions […]
Thursday, 12 September 2019	9:16 am	Email from Rosario Aversa	Hi Robert [Queries about terms of contract.] […] As explained in my previous email, I am just making sure I am not liable for any costs during the whole process. I have 4 properties which are included in this arrangement and if there are any extra costs, then I just can’t afford to proceed. […]
Thursday, 12 September 2019	9:40 am	Email from Robert Coshott	Hi Ross, […] In summary, the 50% is the only obligation on your part. The clauses listed above are no [sic] in addition to the 50%. They are included in the 50%. There are no extra costs. […]
Tuesday, 17 September 2019	12:06 pm	Email from Rosario Aversa	Thanks Robert, Am I able to negotiate the 50% compensation cost since I have 4 properties? […]
Tuesday, 17 September 2019	12:24 pm	Email from Robert Coshott	Hi Rosario, […] I will speak to the funder about whether the 50% is negotiable as you have 4 properties. What reduction in the % are you seeking? […]
Tuesday, 17 September 2019	4:00 pm	Email from Rosario Aversa	Hi Robert, What do you think is fair? I happy with a 10 to 15% reduction on all properties […]
Tuesday, 17 September 2019	4:38 pm	Email from Robert Coshott	Hi Rosario, […] The funder will agree to reduction to 40%, provided it is kept confidential. Assuming 40% is agreed, please amend the schedule to each of the agreements and initial the amendments. Then email signed agreements to me or post to [a PO Box] […]
Thursday, 19 September 2019	11:27 am	Email from Rosario Aversa	Hi Robert, [Attaching signed documents.]
Friday, 20 September 2019	2:47 pm	Email from Robert Coshott	Hi Rosario, Documents received. Copy signed by funder will be sent to you next week. […]

• Email chains between “Robert Coshott <[email protected]>” and Rosario Aversa and in most instances also Mark Shumsky (from Stacks Collins Thompson).

Date	Time	To / From	Contents
Friday, 18 December 2020	6:47 pm	Email from Robert Coshott to Rosario Aversa	Hi Ross, I will take you up on your offer to sit in at your meeting with Mark Shumsky. Thank you. Please let me know when and where it is to take place and I shall be there.
Monday, 21 December 2020	9:28 am	Email from Rosario Aversa to Robert Coshott and Mark Shumsky	Hi Mark As we discussed on phone on Friday, ok to have a meeting to discuss as requested. Happy to do at my house this week after 3pm any day except Thursday. Please let me know best day suits you and confirm. […]
Monday, 21 December 2020	10:05 am	Email from Mark Shumsky to Robert Coshott and Rosario Aversa	Hi Ross, Free afternoons for me to meet at your place are Monday 28th and Wednesday 30th December. Depending on how things go today and tomorrow, this Wednesday might be fine also.
Monday, 21 December 2020	10:36 am	Email from Rosario Aversa to Robert Coshott and Mark Shumsky	Hi Mark Tomorrow or this Wednesday is fine for me. Please confirm when ready. Hi Rob, Please also let me know if your ok for tomorrow or Wednesday. Thanks Ross
Monday, 21 December 2020	5:57 pm	Email from Robert Coshott to Rosario Aversa and Mark Shumsky	Let us do Wednesday.
Wednesday, 23 December 2020	9:35 am	Email from Rosario Aversa to Robert Coshott and Mark Shumsky	Sorry guys, Due to xmas commitments can’t do today. Can we please do next Tuesday or Wednesday anytime. Robert, Mark Please confirm best day and times for you. Thanks Ross
Wednesday, 23 December 2020	9:56 am	Email from Mark Shumsky to Rosario Aversa and Robert Coshott	Hi Ross [That’s] fine, thanks. Next Tuesday I’m in the city during the day, but I can come see you around 4-5pm, otherwise next Wednesday. Regards Mark
Wednesday, 23 December 2020	12:26 pm	Email from Rosario Aversa to Robert Coshott and Mark Shumsky	Hi Mark OK with next Tuesday at 4pm Robert You ok with that Regards Ross
Wednesday, 23 December 2020	2:16 pm	Email from Robert Coshott to Rosario Aversa and Mark Shumsky	Hi Rosario, Tuesday at 11:00am is good for me. Regards, Robert
Monday, 18 January 2021	8:56 am	Email from Robert Coshott to Rosario Aversa and Mark Shumsky	Good morning Gentlemen, I await Mark’s advice as to time and place for the meeting. Regards, Robert
Monday, 18 January 2021	9:21 am	Email from Mark Shumsky to Rosario Aversa and Robert Coshott	Good morning, I was planning on Friday 4pm for this meeting. Please let me know if that suits you. Kind regards Mark Shumsky
Monday, 18 January 2021	9:39 am	Email from Rosario Aversa to Robert Coshott and Mark Shumsky	Hi Mark All good for me. Happy to have at my place. Regards Ross
Monday, 18 January 2021	11:05 am	Email from Robert Coshott to Rosario Aversa and Mark Shumsky	Hi all, Friday at 4 at Rosario’s place is good for me. Regards Robert
Friday, 22 January 2021	10:02 am	Email from Mark Shumsky to Rosario Aversa and Robert Coshott	Hello Gentlemen, I will need to postpone this afternoon’s meeting. Apologies for that, however we are expecting new important information and our reports should be ready early next week. In addition, we should receive a response from Crown solicitors on a couple of points of law and a report from counsel by Monday or at the latest on Wednesday. This will enable an informed meeting which I propose we have either Thursday or Friday at 4pm at Haberfield. I hope either Thursday 28th or Friday 29th will suit you both. Let me know which you prefer. Robert, I might call you with a few additional questions before the meeting, if that’s OK. Kind regards Mark Shumsky
Friday, 22 January 2021	10:50 am	Email from Rosario Aversa to Robert Coshott and Mark Shumsky	Hi Mark Happy with both Thursday and Friday after 3pm Regards Rosario
Friday, 22 January 2021	11:08 am	Email from Mark Shumsky to Rosario Aversa and Robert Coshott	Hi Ross I would prefer Thursday as I have other meetings in the area that same afternoon. Would 3.30pm be ok? We might need an hour or so. Regards Mark Shumsky
Friday, 22 January 2021	1:08pm	Email from Robert Coshott to Rosario Aversa and Mark Shumsky	Gentlemen I await with interest the important information, response from crown solicitor, and report from counsel. May I suggest that Mark email copies of the important information, crown solicitor’s response and counsel’s report asap before the meeting. 4pm on Friday 29 Jan is good for me.. Regards, Robert
Wednesday, 27 January 2021	1:40 pm	Email from Robert Coshott to Rosario Aversa and Mark Shumsky	Gentlemen, As I have not received any of the important information, the response from the state crown solicitor, or the report form counsel, I assume that it has not been received by Mark. Given that the proceedings are back before the Court on 8 February 2021 to fix the hearing date, I propose that the meeting proceed on Friday as arranged in any event. Regards Robert
Friday, 29 January 2021	9:28 am	Email from Robert Coshott to Rosario Aversa only	Hi Ross, Regardless of whether Mark cancels again, we should have a chat at 4. I will be at your place at 4. Regards, Robert
Saturday, 30 January 2021	9:40 am	Email from Robert Coshott to Mark Shumsky Cc: Rosario Aversa	Good morning Mark, Further to the meeting yesterday. I have reported the outcomes of the meeting. In order for the funder to further consider its position, you are asked to advise on Monday by email on Monday which of the two offered methods of remuneration you/your firm prefer. Mark: it is suggested you review the terms of the funding agreement as regards the consequences for the Aversas of the course which you propose. You will see it is not in their interests. It would result in their losing the good prospects of a “bonanza”. As regards the representative (class) action, I have spoken to the proposed lead plaintiffs and they have confirmed that they do not want Mr XX to be involved. Regards, Robert [Emphasis in original.]
Tuesday, 2 February 2021	9:23 am	Email from Robert Coshott to Mark Shumsky Cc: Rosario Aversa	Good morning Mark, What is the position with counsel? Regards, Robert
Tuesday, 2 February 2021	1:33 pm	Email from Mark Shumsky to Robert Coshott Cc: Rosario Aversa	Good day Robert. YY has declared his conflict of interest and declines to act. He is aware of the matter. He provided advice to Crown Solicitors for RMS/TfNSW in respect of WestConnex. So he will not and cannot act. I’ll call you tomorrow. Mark Shumsky
Wednesday, 3 February 2021	9:04 am	Email from Robert Coshott to Mark Shumsky only	Hi Mark, YY was obviously the man for the job. The RMS has a record of briefing the top silks to advise to ensure they cannot act against them. Please email ZZ ([email address]) and AA ([email address]) to see if they are available to act. ZZ has acted in a case against the RMS previously and should have no conflict of interest problem. If available, send them copy of the Amended List Statement to see if they will act and if so provide available dates. Do not mention proceedings are litigation funded as this may cause their fee expectations to increase markedly. Do not mention my involvement as this may cause ZZ to take on the case even if he believes he is not right for it. Regards, Robert
Thursday, 4 February 2021	7:57 pm	Email from Robert Coshott to Mark Shumsky and Rosario Aversa	Good evening Gentlemen, It appears that XX does not want to grace us with his reasons why having a separate hearing of the liability is not the way to go. Not what we want in a senior counsel. It is unfortunate that the RMS has effectively excluded YY from taking our brief. However, we have other good alternatives in ZZ or AA to brief. Given we are back before the court next Wednesday, I suggest that Mark chase up whether our two alternatives are available and what are their available dates in March, April, May for a one day hearing. Mark should chase the Crown Solicitor for consent to hearing the liability separately and ask for their counsel’s available dates in March, April, May for the one day hearing. We will then be able to see which available dates suit both sides and ask the court to fix the hearing of the earliest of those dates suitable to the court Ross – do you agree? Mark – let us talk once you have counsel’s availability. Hopefully this will be tomorrow or Monday. Regards, Robert
Wednesday, 3 February 2021	10:22 am	Email from Mark Shumsky to Robert Coshott	No problem, Robert. Mark Shumsky
Wednesday, 3 February 2021	12:25 pm	Email from Robert Coshott to Mark Shumsky	Thanks
Friday, 5 February 2021	12:35 pm	Email from Mark Shumsky to Robert Coshott	Hi Robert. I have received a response from AA and looks like [his] availability is ok. We went through the basic info AA needs. He is doing a capacity/conflicts check and get back to me today or Monday. He wants to know who we have or who will be junior counsel. I left that question to discuss later subject to his response.
Friday, 5 February 2021	1:44 pm	Email from Mark Shumsky to Robert Coshott	Good afternoon, We will seek clarification on those points re separate hearing. As for reasoning for the quantum report. What was being sought I understood was a misappropriation of our clients proprietary interests. It boils down to principles and maxims of equity. The remedy is not “damages” as most might understand it. It is equitable relief for breach of trust and/or breach of fiduciary duty, that is remedy based on an resulting from the consequences of RMS’s “wrongdoing”. The substrata subdivisions and subsequent acquisitions by RMS were illegal. Account of Profits is a remedy that can be granted in cases where defendants have profited from their wrongs. It is the principal remedy for breach of fiduciary duty and breach of obligations of confidence. I have dug up some of the cases and authorities used by Michael Evans SC in and Hon Michael Kirby et al and in various texts that Account of Profits is underutilised by lawyers in AU and in other countries where common law and law of equity are utilised. We shall discuss after news of counsel’s availability.
Friday, 5 February 2021	4:39 pm	Email from Robert Coshott to Mark Shumsky	Mark, Who are you seeking clarification from? If you do not intend to get a date for a separate liability hearing on 10th, please advise immediately so the funder can take such steps as it considers appropriate. Robert.
Friday, 5 February 2021	7:53 pm	Email from Robert Coshott to Rosario Aversa Cc: Mark Shumsky	Good evening Rosario and Antonia, You will recall that last Friday I made the funder’s position clear. It wished the liability question to be listed for hearing first and separately from the quantum of damages. I note that you wished to have a written advice from XX as to why you should not proceed with the liability question first. As far as I know, XX has not provided the required written advice. Consequent upon the non-advice, we urged Mr Shumsky to explore the availability of other senior counsel to appear on the liability hearing. It appears that AA is available. Unfortunately, an email received from Mr Shumsky today has given the funder great concern that on Wednesday 10 Feb he will not be seeking a hearing date for the hearing of the liability question. It must be assumed that this is on your instructions. He has not responded to our request that he advise what his intention is for the 10th. If, on Wednesday 10th, a hearing date is not fixed for the liability question, the funder will exercise its right to terminate the funding agreement. The consequence of this would be that you either find alternative funding, fund the proceedings yourselves, or seek to reach an agreement with the RMS as discussed last Friday. Any such agreement should make provision for your liability to the funder. If you wish to discuss this with me, I am available between now and Wednesday to do so. You have my number. I personally regret it has come to this. I hope this can be resolved. Best regards, Robert
Friday, 5 February 2021	7:56 pm	Email from Robert Coshott to Mark Shumsky	Mark, The funder has requested that you provide an itemised bill of costs for your work to date. Please note that the lump sum remuneration option is no longer on the table. Robert
Tuesday, 9 February 2021	12:07 pm	Email from Robert Coshott to Rosario Aversa and Mark Shumsky	Gentlemen, It is regrettable that neither of you has responded to my recent emails, nor provided information as to your intentions regarding the progress of this matter. It must be assumed that, unless advised to the contrary, that a date for hearing of the liability question separately from the quantum will not be obtained tomorrow. A review of correspondence and events since October last year when Mark took over conduct of the proceedings confirms that clause 8 of the Funding Agreements has not been complied with on several occasions. This gives rise to the funder being entitled to give notice of breach under clause 9.5 of the Funding Agreement. Such a notice under each relevant Funding Agreement is being prepared will follow later today. Regards, Robert
Tuesday, 9 February 2021	4:16 pm	Email from Robert Coshott to Rosario Aversa. Cc: Mark Shumsky	Hi Ross, Herewith is Notice of Breach as foreshadowed in the email of earlier today. Regards, Robert [Annexing Notice of Breach.pdf]

15. The Notice of Breach of Funding Agreement dated 9 February 2021, which was annexed, reads as follows:

“NOTICE OF BREACH OF FUNDING AGREEMENT

To: Rosario Aversa and Antonia Aversa

TAKE NOTICE that you are in breach of the Funding Agreements entered into by you on 18 September 2019 in regard to proceedings against the Roads and Maritime Services/Transport for New South Wales, namely clause 8 of those agreements and you are required to rectify those breaches within fourteen (14) days of this notice.

Particulars of Breaches

Failed to keep the Funder advised of the progress and status of the proceedings, namely what occurred and what orders were made at the directions hearing in November 2020; what your intention was regarding the orders to be made at the directions hearing on 10 February 2021; what orders will sought [sic] at the directions hearing on 10 February 2021

Failed to consult and consider the views of the Funder in relation to any material issues arising from the conduct and/or progress of the proceedings, namely regarding the separate hearing of the liability question before the hearing of the quantum of damages

Failed to provide and instruct your solicitors to provide such information from time to time to the Funder as may be reasonably required by the Funder in relation to the proceedings

Failed to instruct your solicitors to make available to the Funder its file for inspection at all times”

16. The notice was signed, apparently by Mr Coshott, with the signature block reading “Director, Litigation Fund WCX Pty Ltd”.

17. The following email correspondence then occurred between Mr Coshott, Mr Shumsky and Mr Morris:

Date	Time	To / From	Contents
Tuesday, 9 February 2021	5:12 pm	Email from Robert Coshott to Mark Shumsky	Hi Mark, Please eft the $50,000.00 put into trust to be held a show of good faith back to the bank account from where they came as a show of good faith is no longer required in light of recent events and the termination of the Funding Agreements which will likely occur shortly. Regards, Robert Coshott Director, Litigation Fund WCX Pty Ltd.
Tuesday, 23 February 2021	5:02 pm	Email from Christopher Morris (from Stacks Collins Thompson) to Robert Coshott	Dear Sir, Please find our letter of today’s date attached. Kind regards, Christopher Morris Solicitor

18. The letter addressed to Robert Coshott, WCX Pty Limited, dated 23 February 2021 from Christopher Morris, Solicitor, reads:

“[…]

Dear Sir,

R and A Aversa v Roads and Maritime Services and Registrar General

We refer to the Notice of Breach of Funding Agreement dated 9 February 2021 and served on our office.

We confirm that our client is seeking independent legal advice in relation to the abovementioned Notice of Breach and requires an additional fourteen days to provide a response. We request that you please refrain from taking further action during that period.”

19. The next day, the following email was sent:

Date	Time	To / From	Contents
Wednesday, 24 February 2021	1:41 pm	Email from Robert Coshott to Rosario Aversa [I note that the email address for Robert Coshott is “Michael Coshott ”]	Termination of Funding Agreement Dear Ross, Attached is Notice of Termination of Funding Agreement. Regrettably, the Funding Agreement is now at an end. If you have any tax invoices for costs upto today from Stack Collins Thompson you may claim these under the agreement by emailing copies thereof to this email under cover of your claim for funding in respect thereof. You will be aware that any further funding provided pursuant to the agreement will be added to the total amount already payable by you under the agreement. Unfortunately, your choice not to respond to recent communications has left no choice but to terminate the agreement. Should you wish to seek fresh funding, we would be happy to consider this in light of the circumstances that exist at that time. The representative action is proceeding without awaiting a result in your case which is unlikely to be any time soon if at all. Best wishes, Robert Coshott, Director [Annexing signed notice of termination.pdf]

20. Annexed to the above email was a document containing the following:

“NOTICE OF TERMINATION OF FUNDING AGREMEENT

To: Rosario Aversa and Antonia Aversa

TAKE NOTICE that the Funding Agreements entered into by you on 18 September 2019 in regard to proceedings against the Roads and Maritime Services/Transport for New South Wales pursuant to clause 9.5 of the agreement are terminated.”

(Emphasis in original.)

21. The notice was signed, apparently by Mr Coshott, with the signature block reading “Director, Litigation Fund WCX Pty Ltd”.

22. The final email was sent in reply as follows:

Date	Time	To / From	Contents
Wednesday, 24 February 2021	1:59 pm	Email from Robert Coshott to Christopher Morris	Re: 200458: R and A Aversa v Roads and Maritime Services and Registrar General: Dear Sir, The Funding Agreement has been terminated. Yours faithfully, Robert Coshott

Other material relied upon by the plaintiff

23. Also annexed to Mr Capello’s affidavit was what appears to be a bank statement from the Commonwealth Bank for dates between 3 and 22 September 2020 inclusive, albeit with no usual statement details other than the initials “CDIA” and what appears to be a BSB and account number. It shows two entries on 3 September 2020 for payments out of the account of $4,950.00 and $27,270.00 with descriptions “Aversa fees RR” and “Aversa fee XX” respectively.

24. Also produced are tax invoices or receipts from:

1. XX headed “Aversa v RMS” dated: 13 March 2020 for $9,817.50; 1 April 2020 for $13,777.50; 21 August 2020 for $27,270.83; 18 September 2020 for $12,155.00.

2. RR in relation to “Rosario Aversa v Roads and Maritime Services” dated as issued on: 17 March 2020 for $3,458.13; 11 June 2020 for $5,458.76; 24 July 2020 for $13,846.28 and $6,716.88; 28 August 2020 for $4,950.00; 21 September 2020 for $1,540.00.

3. Two more banking related documents the import of which is unclear.

The purported agreements

25. As noted, there were three purported agreements (in relation to three separate properties): two signed by both of the defendants and one signed only by Mr Aversa (which reflected the ownership of each of the properties). As further noted, they were in relevantly identical terms and are sometimes referred to in this judgment, for convenience, as “the agreement”. The agreement included the following relevant provisions.

26. Recitals A and B are in the following terms:

“A. The Clients and the Funder enter into this Agreement under which the Funder will fund Proceedings in relation to damages against Roads and Maritime Services or its successor resulting from the acquisition of substratum and construction of a tollway adversely affecting property owned by the client (‘the Proceedings’).

B. The Clients and the Funder have agreed that this funding transaction referred to in recital A will be governed by the provisions of this Agreement.”

27. Clause 1.1 defines “Firm” to mean:

“[T]he legal practice instructed by the clients as specified in Item 4 of the Schedule.”

28. Clause 1.1 defines “Proceedings” to mean:

“(a) any demand or claim made by the Client; and

(b) any court proceedings commenced by the Client pursuant to such a demand or claim

(c) Any Action to enforce the result of the proceedings including the cost & disbursement relating to the sale of the Property”

29. Under the heading, Warranties and Representations, cl 3(f) reads:

“(f) All statements and information their [sic] instructions to their solicitor are and will be accurate and not misleading to the best of the knowledge and belief of the Clients after making all reasonable enquiries.”

30. Under the heading, Representatives and Conduct of Proceedings:

“8.1 Firm to be instructed

The Clients acknowledge and agree, subject to clause 8.2, that the Firm unless terminated by agreement with the Clients (in which case the termination and any replacement for the Firm must be first approved by the Funder), will continue to be instructed by the Clients in all matters relating to Proceedings, any Appeal therefrom and any Examination the subject of a Funding Transaction and that the Clients have the right to direct, conduct and conclude the Proceedings or any Appeal therefrom by way of settlement. If the clients breach this Clause or discontinue the Proceedings they will forthwith pay to the Funder an amount of $350,000.00 and repay it to all monies advanced by the Lender.

8.2 Client’s undertakings

Notwithstanding the provisions of clause 8.1, the Clients undertake to and will:

(a) keep the Funder advised of the progress and status of any Proceedings, any Appeal therefrom and any Examination which is the subject of the Funding Transaction;

(b) consult with and consider the views of the Funder in relation to any material issues arising from the conduct and/or progress of the Proceedings, any Appeal therefrom n [sic] and in particular, in relation to any offer of settlement;

(d) provide and instruct their solicitors to provide such information from time to time to the Funder as may be reasonably required by the Funder in relation to the Proceedings, any Appeal therefrom which is the subject of a Funding Transaction and will instruct the Firm to make available to the Funder its file for inspection at all times.

8.3 Provision of other information

The Clients agree to disclose to the Funder upon such information coming to his knowledge, all information received from time to time which may have a material impact on the Proceedings, any Appeal therefrom which is the subject of the Funding Transaction, or the continuation of payments under this Agreement.”

31. Item 4 of the Schedule stated “(‘Firm’ Solicitors)” followed by the name of the previous solicitor in the Aversa Proceedings.

32. Under the heading, Termination of Funding Transaction:

“9.1 Termination of Funding Transactions

Each Funding Transaction will continue, subject to clause 9.2, until the Repayment Date therefor.

9.2 Ability to terminate early without cause

Subject to clause 9.3, the Funder may at any time terminate a Funding Transaction on the giving of reasonable notice in writing, such notice to be no less than a reasonable period to enable the Clients to source alternate funding for the Proceedings or any Appeal therefrom (but not exceeding 60 days from the date of the notice terminating the Funding Transaction). The obligations of the Funder under this Agreement in respect of the Funding Transaction will continue until the termination of the Funding Transaction.

9.3 When Funder cannot terminate Funding Transaction

The Funder may not terminate a Funding Transaction pursuant to clause 9.2 if an Appeal in the relevant Proceedings is filed.

9.4 Finalisation of Proceedings

If Proceedings (or any Appeal therefrom) which are the subject of the Funding Transaction which has been terminated pursuant to clause 9.2 or by the Clients pursuant to clause 9.5 are finalized by way of settlement, judgment or otherwise and a Final Amount is received by the Client, the Clients agree to repay to the Funder any amounts paid by the Funder from the Final Amount, provided however, that if the Final Amount is less than the aggregate of Costs & disbarments [sic] paid by the Funder plus any Applicable GST, the Clients will not be required to repay to the Funder any amount in excess of the Final Amount less any Applicable GST.

9.5 Termination for breach

The Clients or the Funder may terminate a Funding Transaction immediately by notice in writing to the other party if the other party is in breach of any term of this Agreement and such breach is not remedied within 14 days of written notice by the party not in breach advising the breach and requiring its rectification. For the purposes of this clause 9.5, a breach of a term of this Agreement by the Funder includes the Funder’s failure to make payment in terms of clause 4.2 or to provide security in terms of clause 7.2. […]”

33. Under the heading, Clients’ Other Obligations:

“The Clients must:

(a) conduct Proceedings which are funded by the Funder in a proper, skilful, diligent and efficient manner;

(b) where appropriate, consult with the Funder as to the identity and use of consultants, advisors and legal representatives proposed to be engaged in Examinations or Proceedings;

(c) not act or omit to act in a manner which results in any of the information or statements made by her [sic] being incorrect without the prior written consent of the Funder; or

(d) not apply any funding paid by the Funder under a Funding Transaction except in payment of Costs.

(e) quantify and collect any party and party costs orders made in the clients’ favour and pay the monies so collected to the Funder within 14 days of receipt thereof.”

34. Under the heading, Dispute Resolution:

“If a dispute arises out of or relates to this Agreement or a Funding Transaction, or the breach, termination, validity or subject matter of a Funding Transaction, or as to any claim in tort, in equity or pursuant to any statute or law concerning this Agreement or a Funding Transaction, the Funder and the Clients agree to settle the dispute by expert determination administered by the Australian Commercial Disputes Centre (ACDC) and in such case the following provisions apply:

(a) A party claiming that a dispute has arisen, must give written notice to the other party (“recipient”) specifying the nature of the dispute.

(b) On receipt by the recipient of the notice specified in paragraph (a), the Funder and the Client must within 7 days of such date of receipt meet to seek to resolve the dispute.

(c) If the dispute is not resolved within such 7 day period or within such further period as the Funder and the Client agree, then the dispute is to be referred to ACDC.

(d) The expert determination shall be conducted in accordance with the rules and guidelines of the ACDC including the procedures to be adopted, the process of selection of the expert and the costs involved.”

35. Under the heading, Notices:

“15.1 Form of Notice

All notices and other communications by a party shall be in writing and signed by the party or a director, secretary or other duly authorised officer or the solicitor of the party giving such notice or communication.”

36. Under the heading, Address for service, it was provided that notices and communications may be delivered by hand or sent by post or email in a manner specified in the agreement.

The defendants’ evidence

37. The defendant relied on the following evidence: an affidavit of Mark Shumsky affirmed 15 March 2024 with annexures; an affidavit of Mrs Antonia Aversa affirmed 14 March 2024, with annexures; an affidavit of Mr Rosario Aversa affirmed 14 March 2024, with annexures; and an affidavit of Christopher John Morris affirmed on 8 February 2023. All but Mr Morris were cross-examined.

Mark Shumsky – Solicitor

Evidence in chief of Mark Shumsky

38. Mark Shumsky was called first. He relied upon his affidavit, affirmed on 15 March 2024, in which the following was set out.

39. Mr Shumsky (“MS”) received a telephone call from Mr Coshott (“RC”) on or about 13 September 2020 and they had a conversation to the following effect:

RC: “I am Robert Coshott and am organising funding for litigation concerning Westconnex against the NSW Government. I would like you to take over carriage of the litigation. Could you please meet with me at Due Mondi Society Café in the city tomorrow? Could you please also contact XX who is Senior Counsel in the matter.’

MS: “I will see you tomorrow at the café at Phillip Street”

(Emphasis in original.)

40. The two men met as arranged on 14 September 2020 and there was a “lengthy conference” which included a conversation with the words to the following effect:

MS: “I have been asked to take over carriage of the Aversa matter and the firm that I work for is Stacks Collins Thompson. I understand that there must be a large file in the matter and I will be seeking to take over the file from [the previous solicitors].”

RC: “The litigation funder confirms your firm’s remuneration, the funder will guarantee payment of your invoices as soon as they are issued to the clients. The litigation funder also fully indemnifies the clients in the event of any adverse costs orders.”

(Emphasis in original.)

41. Mr Shumsky then produced a series of emails many of which, notably, had not been tendered in the plaintiff’s case.

42. On 14 September 2020, at 1:16pm, Mr Shumsky received an email request from Mr Coshott requesting that he prepare a retainer agreement for Mr and Mrs Aversa which reads:

“Hi Mark,

The test case plaintiffs are:

Rosario Aversa and Antonia Aversa

The defendants are:

Roads and Maritime Services (now Transport for NSW) and the Registrar General

The case number is 2019/00314755

Please prepare a retainer agreement to commence on 1 October 2020 for signature by the plaintiffs.

An NDA will be provided for signature once we know who is to be entering into it.

Once we know the terms of your remuneration, an agreement will be entered into with the litigation funder.

I await the retainer agreement and advice re: remuneration etc..

Robert”

43. On 15 September 2020 at 9:26am, Mr Shumsky received an email from Mr Coshott at 9:26am which reads:

“Good morning Mark,

The Aversas’ address for the Costs Agreement is […] Street, Haberfield 2045.

Regards,

Robert.”

44. On 16 September 2020 at 4:37pm, Mr Shumsky wrote to Mr Coshott attaching a draft costs agreement, and stating, “It will obviously need tweaking and details added as to fee estimates. I will be guided by you in that respect. It should also address barristers fees, is there a set amount, do I need to ask XX about that?”

45. On 17 September 2020 at 8:36am, Mr Shumsky received an email from Mr Coshott thanking him for the draft costs agreement and stating, “As discussed, your commencement date will be first week of October”.

46. On 17 September 2020 at 10:49am, Mr Shumsky received an email from Mr Coshott stating:

“We have to bring the change-over forward. We shall do it asap next week.

I am meeting with the Aversas and the many other owners who have signed up on Saturday. The Aversas are happy to change to you. The others will be also.

[…] Best we meet on Monday in CBD if this is convenient to you. I will bring the signed Aversa Costs agreement with me. […]”

47. On 17 September 2020 at 11:53am, Mr Shumsky received a further email from Mr Coshott stating:

“Please contact XX [Senior Counsel] and inform him you are taking over the Aversa/WestConnex proceedings.”

48. On 18 September 2020 at 7:53am (elsewhere recorded as 7:52am), Mr Shumsky sent an email to Mr Coshott confirming the date and time of their next meeting, reporting that the matter had been stood over for two weeks, and that he had spoken with XX the previous afternoon. He also stated:

“I will need to obtain the file from Jim, inform the Registry of the changeover and get me on the record asap in order to start working on the matter with XX and RR [Senior and Junior Counsel].

Shall I contact Jim today, or wait until Monday?

See you Monday morning.”

49. On 18 September 2020 at 8:16am, Mr Coshott sent an email to Mr Shumsky stating:

“I will bring you the full file (electronic) on Monday.

The action needed for the directions can be worked out on Monday. at our meeting.

Attached is a partially completed Notice of Change which you can file and serve electronically on the crown solicitor, the Registrar General, and [the previous solicitor] as soon as you want.

See you Monday.”

50. Attached to the email was a Notice of Change of Solicitor.

51. Mr Shumsky and Mr Coshott met on 21 September 2020 as arranged during which they had a lengthy conversation which included words to the following effect:

MS: “We will need to prepare new orders and a draft calendar for filing and we will need to attend to serving and filing further documents including Notices to Produce. The matter is listed for a Directions Hearing on the 29 September 2020. We will obtain the files from the previous solicitors, inform the Registry of the changeover, and start working on the matter with barristers XX and RR. We must file proposed Orders before 10AM Friday, otherwise we could be facing a guillotine Order.”

RC: “I’m giving you files that I have for the matter. I will email a copy of your clients’ signed agreement with the funder. I suggest that your firm might want to agree to an offer that the funder will pay you $1,000,000 from the proceeds of the proceedings, but even if you are not successful, the funder will pay you for all provision of legal services provided for Mr and Mrs Aversa.”

MS: “We usually do not work on a contingency basis and our firm’s policy is to issue invoices for work done which we propose to do on a monthly basis and progress payments are due on that basis.”

(Emphasis in original.)

52. On or about Monday 21 September 2020, Mr Shumsky received a costs agreement signed by Rosario and Antonia Aversa. It was marked as signed on 18 September 2020.

53. On 21 September 2020 at 3:22pm, Mr Shumsky received by email from Mr Coshott a copy of the Aversa signed funding agreement, which was described as the template for all the funding agreements.

54. On 21 September 2020 at 4:53pm, Mr Shumsky sent an email to Mr Coshott, including the following:

“Could you also send me the Aversa’s telephone number and email address, if they have one. I need it for the record to register them in system [sic] as clients.”

55. Mr Coshott provided these details by email on 22 September 2020 at 8:22 am.

56. Mr Shumsky had a telephone conversation with Mr Aversa (“RA”) on or about 22 September 2020 to the following effect:

MS: “Our firm will be taking over the carriage of this matter from your previous solicitors […]. I have received your signed costs agreement and want to confirm you agree.”

RA: “Yes we agree for you to take over from Murphy Lyons thank you. About a year ago, we entered into a Litigation Funding Agreement with Litigation Fund WCX Pty Ltd. Robert Coshott had asked us to sign it and promised that all the funding for the case would be covered by the funder, including any costs in case the matter was not successful.”

57. On 23 September 2020, Mr Shumsky emailed Mr Coshott confirming he had spoken with Mr Aversa, and to the barristers, and that he would call Mr Coshott the following day to discuss the proposed directions, to confirm the e-court filing and also “other related matters in more detail”.

58. Between 18 September 2020 and 5 February 2021, Mr Shumsky corresponded with Mr Coshott via regular emails to provide updates regarding the progress of the Aversa proceedings. In 2020, these included the following:

1. 21 October 2020 at 7:46pm (MS to RC):

“Can we meet tomorrow morning I need your assistance on a few more issues, please. Can we meet at 8:30am at the usual place?

I’d like to secure the funders and ask them to deposit $50k for the Aversas into our trust account. Who should I email with the request? Can you help me also with issues with counsel.

If I ask XX to meet us will you come with me to explain proposed course with him and also to explain the question of engaging experts.

There is no confirmation received that Defendants concur with the motion. […] did not sound positive. In any case as we discussed proposed directions will be filed via e-court tomorrow.

Let me know if 8:30am is OK for tomorrow […].”

2. 21 October 2020 at 8:04am (RC to MS):

“I cannot make it tomorrow in town.

Please let me know what the $50k is for and I will speak to funders.

What did [previous solicitor] want from you?”

3. 28 October 2020 at 1:28pm (RC to MS):

“What’s the news?”

4. 28 October 2020 at 5:05pm (MS to RC):

“We have attended to the Notice.

Matter listed for directions on Tuesday for the purpose of setting down a timetable for hearing.

Last Thursday we requested that $50 thousand be deposited into trust.

We are still waiting for your deposit of funds to our Trust account.

The details of the account for the deposit are:

[…]

Robert, the Aversa [sic] have clearly instructed the funds should be deposited as soon as possible.

We can then further discuss the matter and ongoing requirements.

After the deposit is made we should meet up and discuss.”

59. As set out above at [58(2)], on 21 October 2020, Mr Shumsky emailed Mr Coshott requesting that $50,000 be provided for the Aversa Proceedings, and Mr Coshott replied asking about the purpose for which the funds were required. On 22 October 2020 at 4:28pm, Mr Shumsky replied:

“Robert,

The $50K in trust is to ensure our fees and disbursements for the Aversa matter. It is the usual practice for my firm to have monies in trust for a matter.

In addition it will satisfy concerns of the clients and potentially any 3rd parties in respect of the funder’s capacity to cover future costs or adverse costs orders.

Will appreciate this taken care of quickly so I am free of funder issues dragging me down. The details of the account for the deposit are:

[…]”

60. On 28 October 2020 at 5:25pm, Mr Coshott emailed Mr Shumsky stating, “thanks for the update. will advise when funds transferred”.

61. On 4 November 2020 at 12:36pm, Mr Shumsky emailed Mr Coshott stating, “Have funds transfer been arranged yet? Please let me know. I need to let the clients know asap.” Later that day Mr Coshott replied to Mr Shumsky stating that he was awaiting Foreign Investment Review Board approval of a much larger amount “which includes the $50K for [him]” and that it “[s]hould be in bank by early next week”.

62. On 9 November 2020 at 9:31 am, Mr Shumsky received an email from Mr Coshott requesting a letter addressed to the Foreign Investment Review Board. This was provided to Mr Coshott later that day.

63. Between 15 December 2020 and 17 December 2020, Mr Shumsky’s firm received amounts in its trust account that totalled an amount of $50,000 in three transfers.

2021 email exchanges

64. Mr Shumsky also set out email exchanges between Mr Shumsky and Mr Coshott (which were also included in the evidence tendered by the plaintiff, set out above) on 2 February 2021 at 9:23am ^[1] , 2 February 2021 at 1:33pm; 3 February 2021 at 9:05am; 3 February 2021 at 10:22am; 4 February 2021 at 7:58pm; 5 February 2021 at 12:36pm; and 5 February 2021 at 1:44pm.

29 January 2021 meeting

1. It can be noted that sometimes the emails produced have a one minute discrepancy which I infer is due to the time settings of the machines from which the emails were printed.

65. Mr Shumsky set out in his affidavit that on 29 January 2021 he attended an in-person meeting with Mr and Mrs Aversa and Mr Coshott at the Aversa’s home in Haberfield. He said the three other attendees were present throughout the entirety of the meeting which began at 4.30pm and concluded at 6.45pm. Mr Shumsky said that he did not recall the precise words spoken at the meeting, but in broad terms the following matters were discussed:

“i) At the commencement of the meeting I outlined the progress of the Aversa proceedings to date and summarised the orders made by the Supreme Court in the Aversa Proceedings over the previous three months.

ii) I confirmed that the next directions listing in the Aversa Proceedings was set for 10 February 2021 and that our way forward should be guided by Counsel.

iii) I identified the main issues to be discussed during the meeting, including the issuing of a Notice to Produce to the other parties, the continued engagement of Counsel and their advice concerning the Aversa Proceedings and the issue of ongoing funding of the Aversa Proceedings.

iv) I discussed issues that were being disputed by the other parties to the Aversa Proceedings, which included the terms of an amended Notice to Produce, the need to obtain expert evidence regarding quantum, the scope of the expert evidence, the extent of discovery to be produced and provided to the expert(s) and the content of my letter to the other parties sent in November 2020.

v) I discussed advice by Counsel to date and confirmed that both XX and RR had strongly recommended that we engage experts to provide an expert report at present. Counsel also indicated they were opposed to seeking separate hearings regarding the question of liability and quantum which was an option open to us.

vi) We discussed the funding of the Aversa Proceedings. We discussed whether the litigation funding agreement signed by Mr and Mrs Aversa and Litigation Fund WCX was still enforceable given that the agreement containing termination dates which had since passed.

vii) We discussed the importance of Mr and Mrs Aversa having security for costs in place in the event an adverse costs order was made against them. I discussed that previously Mr Coshott had suggested a figure of $250,000 if the matter runs to the end of the year.

viii) I indicated that security is normally done by having funds in our solicitors trust account. I further indicated that we were expecting a sum of $250,000 to be deposited after funding of that amount was obtained from overseas sources by the funder.

ix) I noted that the costs agreement estimated costs of $300,000 including disbursements and that didn’t include costs incurred prior to Stacks being engaged.

x) I noted that Counsel has indicated that they were fully paid up to a date last year.

xi) I outlined work that had been performed by Stacks to date. I discussed that we would need to obtain expert evidence regarding matters of valuation and an assessment of profits by Westconnex. I further discussed that an expert analysis would be required to quantify the value of leases granted by the RMS in relation to the project. I also noted that the Notice to Produce sought information relating to the value of the leases.

xii) Regarding engaging an expert, I discussed that their area of expertise would need to be in accountancy, assessment and analysis of profits and in valuation. I indicated that we anticipated the evidence will address issues of quantum of damage flowing from the acquisition of Mr and Mrs Aversa’s substrata lands.

xiii) I discussed that Stacks Collins Thompson was also collaborating with solicitor Christina Joy who was a principle of CJV law firm and was also a convenor of the Leichhardt Against WestConnex action group. I discussed that I had been communicating with her and that Ms Joy had knowledge of the RMS acquisition, M4-M5 and Transurban contract matters and related matters. I indicated my view that my collaboration with Ms Joy had been somewhat useful in assisting my understanding of what documents we might seek.

xiv) Mr Coshott stated he believes the experts put forward by XX were in his opinion not required at this stage. I noted that Mr Coshott had initially suggested the names of the experts as being the best people for the matter. I further noted Mr Coshott had sourced them and corresponded with the experts.

xv) I then went on to discuss Counsel’s advice which acknowledged potential problems with the Notices to Produce. I confirmed that the first defendant had raised concerns in correspondence and filed a Notice of Motion seeking to set aside the Notice to Produce. The Notice of Motion sought to set aside the Notice to Produce on the grounds of confidentiality, irrelevance and public interest immunity.

xvi) I discussed the above Notice of Motion at length, including the relevant Supreme Court practice note and whether it is applicable to the documents sought in the Notice to Produce. I discussed that it may be necessary to seek the Court’s leave to proceed given the restraints imposed on orders for discovery prior to service of lay evidence. I confirmed Counsel had advised that we should seek leave and that it is likely that leave would be granted.

xvii) Mr Coshott stated he has concerns that XX [Senior Counsel] and junior counsel RR have not been competent in the matter given Mr and Mrs Aversa were obliged to file an amended Statement of Claim. Mr Coshott suggested that I should approach alternative Counsel, YY seeking his opinion and advice. I replied that I had made enquiries however he would not be available for some time.

xviii) I confirmed we would have a conference with XX who would be returning from leave in the near future. I stated the view and Mr and Mrs Aversa agreed that we should wait for our existing Counsel to report and advise before we further consider whether to seek alternative counsel. Mr Coshott suggested that if YY is unavailable then ZZ ought to be approached.

xix) I discussed the issue of legal costs incurred to date. I noted that Stacks Collins Thompson had received $50,000 which almost fully covered work performed to date.

xx) I discussed future costs and the need for monies to be deposited into trust. I confirmed that we had recently written a letter addressed to the Foreign Investment Review Board confirming that funds to be obtained from overseas sources by the litigation funder were to be used for these proceedings. I described the content of that letter.

xxi) I discussed that we were expecting to receive $250,000 into our trust account in relation to these proceedings, not just the $50,000 we had received. Mr Aversa stated he would expect that more funds would be required given there will be future counsel fees, expert fees and potentially the other side’s legal costs if we lost the case. I agreed that was an important issue and that the funder would need to disclose its ability to fund these proceedings and any adverse costs order.

xxii) Mr Coshott confirmed the funder was aware that the costs of both parties could exceed $500,000.

xxiii) We discussed the prospects of the proceedings. Mr Coshott stated he had a letter from XX stating not only were the prospects of success reasonable, they were very strong. Mr Coshott stated it was rare for a Queens Counsel to express such a strong view.

xxiv) Both Mr Aversa and I stated words to the effect that if the potential adverse costs order is $500,000 plus, we need to ensure that Mr and Mrs Aversa are protected and that we need to be confident the funder is willing and able to cover those costs in the event of an adverse costs order. Mr Coshott stated that can be achieved by way of cash at bank.

xxv) Mr Coshott stated the funding agreement doesn’t impose an obligation on the funder to provide costs up front. There is also no obligation to disclose its financial status or to provide security. Mr Coshott further stated that pre-payments were a matter of discretion for the funder and that the funds obtained from overseas are held in an Australian bank account.

xxvi) Mr Aversa asked Mr Coshott for evidence of available funds and assets. Mr Coshott stated he would ask the funder about further funding.

xxvii) Mr Coshott said the funders were very unhappy that approximately $150,000 had already been paid to XX and RR. He stated it is time to change counsel. I said that would be very difficult if not impossible without alternative counsel having first been engaged. Mr and Mrs Aversa agreed with my statements. Mr Coshott agreed new counsel would first need to be acquired however asked that I make follow up phone calls to YY.

xxviii) Mr Coshott asked with words to the effect ‘how much does your firm want and need to continue?’. I said I will talk with our firm’s director and that we might need to issue an updated costs agreement. Mr Coshott said the estimate should be detailed and set out the basis for a further request for funding.

xxix) Mr Coshott stated ‘the Funders’ will insist that the issue of liability and quantum be separated and dealt with a[t] separate hearings. He stated the liability question should be dealt with first. He stated his view that if the liability question went against the Aversa[s] there would be no need to incur expenses proving quantum. He stated determining liability first would facilitate the ‘just, quick and cheap resolution of the real issues’. He stated his view that would save considerable court time and costs, particularly with reference to expert evidence. He stated that if liability was determined in our favour, that would remove a major obstacle to settling the proceedings.

xxx) Mr Coshott went on to say words to the effect that as a ‘test case’, a declaration of liability would be important to the around 3000 other property owners affected by the compulsory acquisition of the substrata of their properties. I acknowledged that considering separating the question of liability and quantum should be seriously considered, however, that Counsel had advised that seeking to do so would not be a good idea

xxxi) Mr Coshott said words to the effect ‘the separation of liability issue is necessary and those are the directions for orders that the Funders will require Mr Shumsky to obtain from the Court at the next hearing’.

xxxii) Mr and Mrs Aversa asked me to get back to them after discussions with Counsel take place next week.

xxxiii) Mr Aversa said even though he and Mrs Aversa had previously heard assurances from Mr Coshott that they would be fully financially covered in all circumstances, they now feel there is uncertainty as to what could happen if the Funders decide to terminate or if the Funders have the discretion to turn around and say they are not happy with progress or with the course of legal representation.

xxxiv) Mr Coshott replied that if Mr and Mrs Aversa had any concerns it was open to them to terminate the agreement although they should keep in mind they might lose the chance at a “bonanza”. He further stated they would be liabile to return the funds that had been provided to them so far in the amount of around $200,000.

xxxv) Mr and Mrs Aversa instructed me to attempt to enter into a more secure agreement with Mr Coshott or Litigation Fund WCX Pty Ltd if required and try to […] ensure there would be no risk to them as plaintiffs.

xxxvi) Mr Aversa said ‘I am hopeful a settlement can be reached with the RMS that avoids incurring a lot of extra costs’.”

66. Mr Shumsky went on to say that the meeting concluded at 6:45pm. He created a file note of the meeting recording what was discussed. Mr Shumsky produced that typed file note.

67. He said it was his usual practice to contemporaneously record all his activities relating to a given matter on practice management software maintained by his employer and that “time record” is automatically added to invoices issued to the clients for a particular matter. He recorded his work in relation to the Aversa proceedings in accordance with his usual practice.

68. The relevant invoice records that he spent 22 units (one unit equalling six minutes) which indicates he spent 2 hours and 12 minutes attending the meeting.

Following the 29 January 2021 meeting

69. On Saturday 30 January 2021, Mr Shumsky received an email from Mr Coshott, copied to Mr Aversa. It stated:

“[…] Further to the meeting yesterday.

I have reported the outcomes of the meeting.

In order for the funder to further consider its position, you are asked to advise on Monday by email on Monday which of the two offered methods of remuneration you/your firm prefer.

Mark: it is suggested you review the terms of the funding agreement as regards the consequences for the Aversas of the course which you propose. You will see it is not in their interests. It would result in their losing the good prospects of a ‘bonanza’.

As regards the representative (class) action, I have spoken to the proposed lead plaintiffs and they have confirmed that they do not want XX to be involved.”

70. I note in passing that the references by Mr Coshott to “the funder” in the third person, and that he has purportedly “reported” the outcomes of the meeting to the funder is a most curious use of language given that Mr Coshott is the sole director and shareholder of the funder (the plaintiff in this case). The above example is not the only example of this curious language.

71. On 2 February 2021 at 9:23 am, Mr Coshott emailed Mr Shumsky asking, “What is the position with Counsel?”. That day, Mr Shumsky replied as set out above in the emails produced by the plaintiff that YY had a conflict of interest. Further emails about counsel (concerning their advice and seeking alternative counsel) were exchanged on 3, 4 and 5 February 2021, again as set out above in the emails produced by the plaintiff.

72. Mr Shumsky set out the emails exchanged between him and Mr Coshott on 5 February 2021 at 4.40pm, 7:54pm and 7:56pm; and 9 February 2021 at 12:08pm and 4:16pm as set out by the plaintiff in his evidence above.

132. I find that the plaintiff has failed to establish the first alleged breach of contract.

Second alleged breach of contract – failure to keep plaintiff informed

135. The pleadings read, relevantly:

“[23] Under the terms of the Joint Agreement and the Ross Agreements, the Defendants provided the following undertakings to the Plaintiff:

a. The Defendants would keep the Plaintiff advised of the progress and status of the Aversa Proceedings.

b. The Defendants would consult with and consider the views of the Plaintiff in relation to any material issues in the Aversa Proceedings.

c. The Defendants would instruct [the previous solicitors] to provide information to the Plaintiff in relation to the Aversa Proceedings.

Particulars

i. Clause 8.2 of the Joint Agreements and the Ross Agreement.

[24] In breach of the Joint Agreements and the Ross Agreement, the Defendants and their lawyers, Stacks, failed to:

a. advise the Plaintiff of the progress and status of the conduct of the Aversa proceedings;

b. consult with, or consider the view of, the Plaintiff in relation to conduct of the Aversa Proceedings; and

c. provide information to the Plaintiff in relation to conduct of the Aversa Proceedings.

Particulars

i. Email dated 20 October 2020 timed at 9:23am (Coshott/Shumsky).

ii. Email dated 28 October 2020 timed at 1:27pm (Coshott/Shumsky).

iii. Email dated 15 December 2020 timed at 7:14am (Coshott/Shumsky).

iv. Email dated 17 December 2020 timed at 6:49pm (Coshott/Shumsky).

v. Email dated 5 February 2021 timed at 4:39pm (Coshott/Shumsky).

vi. Email dated 9 February 2021 timed at 12:07pm (Coshott/Aversa and Shumsky).

[25] On 9 February 2021, the Plaintiff gave written notice to the Defendants that they were in breach of the Joint Agreements and the Ross Agreement and required the Defendants to rectify those breaches within fourteen (14) days of the date of the written notice (Notice of Breach).

Particulars

i. Document entitled ‘Notice of Breach of Funding Agreement’ dated 9 February 2021 and signed by Robert Coshott, director of the Plaintiff.

[26] The Defendants did not rectify the breaches stated in the Notice of Breach within 14 days or otherwise.

[27] [Deleted]

[28] As a result of the Defendants failure to rectify the breaches stated in the Notice of Breach by 23 February 2021, the Plaintiff terminated the Joint Agreements and the Ross Agreement pursuant to clause 9.5 of the Joint Agreements and the Ross Agreement.

Particulars

i. Document entitled ‘Notice of Termination of Funding Agreement’ dated 24 February 2021 and signed by Robert Coshott, director of the Plaintiff.

[29] By reason of the matters pleaded in paragraphs 12 to 28, the Defendants are in breach of the Joint Agreements and the Ross Agreement and the Plaintiff claims all amounts paid to the Defendant under the Joint Agreements and the Ross Agreement.

[30] By reason of the matters pleaded in paragraphs 12 to 28, the Defendants are liable to pay the Plaintiff $350,000.00 under each of the Joint Agreements and the Ross Agreement.

[31] The Plaintiff claims the sum of $800,000.00 from the Defendants jointly and severally, and $400,000.00 from the First Defendant solely (being the total of all amounts paid to the Defendants and the amounts owing to the Plaintiff if the relief claimed in paragraph 30 above was granted.

[32] By reason of the matters pleaded in paragraphs 12 to 28, the Plaintiff claims in accordance with its rights under the Joint Agreements and the Ross Agreement, the Percentage of the Net Final Amount if the Defendants receive any amounts from a judgment, settlement, orders or the sale of property in the Aversa Proceedings (subject to any reduction required to prevent double recovery in respect of the relief

[…]”

(Emphasis omitted.)

136. First, it can be observed that the documents referred to in particulars (i), (iii) and (iv) under [24] of the Amended Statement of Claim are not in evidence. That means that the only evidence particularised by the Plaintiff to prove the contended breaches are three emails (set out again here for convenience):

• Email dated 28 October 2020 timed at 1:27pm [or 1:28pm] (Coshott/Shumsky)

Date	Time	To / From	Contents
Wednesday, 28 October 2020	1:27pm [or 1:28pm]	Email from Robert Coshott to Mark Shumsky	What’s the news?

• Email dated 5 February 2021 timed at 4:39pm (Coshott/Shumsky):

Date	Time	To / From	Contents
Friday, 5 February 2021	4:39 pm	Email from Robert Coshott to Mark Shumsky	Mark, Who are you seeking clarification from? If you do not intend to get a date for a separate liability hearing on 10th, please advise immediately so the funder can take such steps as it considers appropriate. Robert.

• Email dated 9 February 2021 timed at 12:07pm (Coshott/Shumsky):

Date	Time	To / From	Contents
Tuesday, 9 February 2021	12:07pm	Email from Robert Coshott to Rosario Aversa and Mark Shumsky	Gentlemen, It is regrettable that neither of you has responded to my recent emails, nor provided information as to your intentions regarding the progress of this matter. It must be assumed that, unless advised to the contrary, that a date for hearing of the liability question separately from the quantum will not be obtained tomorrow. A review of correspondence and events since October last year when Mark took over conduct of the proceedings confirms that clause 8 of the Funding Agreements has not been complied with on several occasions. This gives rise to the funder being entitled to give notice of breach under clause 9.5 of the Funding Agreement. Such a notice under each relevant Funding Agreement is being prepared will follow later today. Regards, Robert

137. The plaintiff’s contention is thus a failure by the defendants to:

1. advise the plaintiff of the “progress and status” of the proceedings;

2. “consult with, or consider the views” of the plaintiff in relation to the conduct of the proceedings; and

3. “provide information” in relation to conduct of the proceedings.

138. The clause of the contract relied upon by the plaintiff to ground the breach is cl 8.2 of the agreement which I also set out again for convenience. It reads:

“8.2 Client’s undertakings

Notwithstanding the provisions of clause 8.1, the Clients undertake to and will:

(a) keep the Funder advised of the progress and status of any Proceedings, any Appeal therefrom and any Examination which is the subject of the Funding Transaction;

(b) consult with and consider the views of the Funder in relation to any material issues arising from the conduct and/or progress of the Proceedings, any Appeal therefrom n [sic] and in particular, in relation to any offer of settlement;

(d) provide and instruct their solicitors to provide such information from time to time to the Funder as may be reasonably required by the Funder in relation to the Proceedings, any Appeal therefrom which is the subject of a Funding Transaction and will instruct the Firm to make available to the Funder its file for inspection at all times.”

139. The plaintiff submits that the failure of either Mr Shumsky or Mr Aversa to provide answers to the three emails proves the breach.

140. The defendants submit that if the whole of the evidence is taken into account, it can be seen that the defendants did consult with and consider the views of the plaintiff and provided regular updates to Mr Coshott which amply satisfied the terms of the agreement.

141. Whether or not any breach of cl 8.2 has been made out must be viewed in light of the whole agreement, the purpose of the transaction, and the objects which it was intended to secure. The meaning of the terms in cl 8.2 must be understood in terms of what a reasonable businessperson would have understood those terms to mean in that context.

142. The purpose of the agreement as a whole was for the plaintiff to provide funding to the defendants for their proceedings. The proceedings were those of the defendants. It was for the defendants to instruct the solicitors, and to direct, conduct and conclude the proceedings, or any appeal, by way of settlement. Whilst the defendants were obliged to keep the plaintiff advised of the progress and status of the proceedings, as well as consult with and consider the views of the plaintiff, the agreement did not contemplate the plaintiff directing, conducting or concluding the proceedings.

143. Further, whilst the agreement obliged the defendants (and for them to instruct their solicitors) to provide information to the plaintiff, that was stipulated as “from time to time” and “as may be reasonably required”. This requirement imports an objective component. In my view, it is reasonable, in the context of the agreement as a whole, to read this obligation as meaning that the defendants were to provide sufficient information at sufficiently regular intervals for the plaintiff to be able to provide its views in a meaningful way in relation to the proceedings.

144. On the evidence set out above, when looked at as a whole, the defendants, together with their solicitor, provided information in relation to the proceedings on a very regular basis. It is clear that the information provided to the plaintiff meant that it was well aware of the course the proceedings were taking. It is also clear that the information provided to the plaintiff meant that it had sufficient opportunity to provide its views as to the course of the proceedings.

145. Not only were there email exchanges at regular intervals, there was a lengthy meeting on 29 January 2021 at the defendants’ home attended by Mr Coshott.

146. In relation to that meeting, I accept the evidence of Mr Shumsky that he typed a file note as to the discussion at the meeting within a short time after the meeting, and that it provided a substantively accurate account of what was said. That Mr and Mrs Aversa were of the view that the meeting went for a shorter time than that recorded by Mr Shumsky does not indicate to me that the essential accuracy of Mr Shumsky’s file note is not to be accepted. Mr Shumsky is a solicitor whose practice it is to type up file notes of meetings. Mr and Mrs Aversa made no file note and had no reason to recall the length of that meeting until well after it occurred. I accept that impressions of length of time can be inaccurate, especially in these types of circumstances.

147. Further, as to the difference in the account of Mr Shumsky compared to that of the Aversas as to whether Mrs Aversa was present for the whole of the meeting, I note the following. It is clear from the evidence that of Mr and Mrs Aversa, Mr Aversa was the active party in relation to this litigation and Mr Aversa spoke on behalf of them both. This is clear not only from Mr Shumsky’s file note but also from Mr and Mrs Aversa’s evidence and the email evidence. Mrs Aversa stated in terms (see [88] above) that after signing the agreement she did not have any further involvement in the litigation and let Mr Aversa handle everything related to it. There is no evidence to suggest Mrs Aversa took any active part in the meeting at all. Accordingly, that she was recorded as present for the whole time when she may not have been, does not, in my view, undermine the accuracy of the substance of the file note.

148. I also infer that Mr Coshott’s evidence in relation to his account of the meeting at which he was present, which was not put before the Court, would not have assisted his case.

149. In all the circumstances, I accept the substance of the content of Mr Shumsky’s file note as a correct account.

150. As a consequence, I am of the view that the meeting on 29 January 2021, along with the emails set out above from Mr Shumsky to Mr Coshott, amounted to sufficient provision of information in accordance with the agreement.

151. The plaintiff has failed to satisfy me on the balance of probabilities that the defendants breached the agreement as contended.

152. As the defendants did not breach the agreements, they therefore did not fail to rectify any purported breaches stated in the Notice of Breach.

153. I find that the plaintiff has failed to establish the second alleged breach of contract.

Conclusion

154. I have concluded that the plaintiff has failed to make good its claims and that the Amended Statement of Claim should be dismissed with costs.

155. Given my primary finding that the plaintiff has failed to prove that any agreements were in existence and the indication by the defendants at the hearing, the relief claimed by the Cross-claim is no longer sought and the Cross-claim is dismissed.

Orders

156. I make the following orders:

1. The Amended Statement of Claim is dismissed.

2. The Cross-claim is dismissed.

3. The plaintiff is to pay the costs of the defendants.

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Endnote

Decision last updated: 15 May 2025