Rajski v Tectran Corporation Pty Limited

[2003] NSWSC 478

CITATION:	Rajski & Anor v Tectran Corporation Pty Limited & Ors [2003] NSWSC 478
HEARING DATE(S):	26 to 28 May, 2003
JUDGMENT DATE:	30 May 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Mediation ordered.
CATCHWORDS:	MEDIATION - long history of litigation - prior unsuccessful mediations - whether further mediation would be futile - whether Court has jurisdiction to restrain legal practitioners from participating in mediation. HELD: Mediation not futile - Court has jurisdiction to restrain legal practitioners from participating in mediation but no cause for restraint made out.
LEGISLATION CITED:	Evidence Act 1995 (NSW) - s.135 Supreme Court Act 1970 (NSW) - s.110P
CASES CITED:	Black v Taylor [1993] 3 NZLR 403 Grimwade v Meagher [1995] I VR 446 Kooky Garments Ltd v Charlton [1994] 1 NZLR 587
PARTIES :	Leszek Rajski - First Plaintiff Raybos Australia - Second Plaintiff Tectran Corporation Pty Limited - First Defendant Arunta Investments Pty Limited - Second Defendant G.B. Richardson - Third Defendant Gavemer Properties Pty Limited - Fourth Defendant B.P. Jones - Fifth Defendant P.F. Elser - Sixth Defendant W.R.D. Stevenson and the other persons listed in Schedule 1 to the Summons - Seventh Defendants M. Yerushalmy - Eighth Defendant M.F. Brinsden - Ninth Defendant G.J. Cole - Tenth Defendant D.B. Cowper - Eleventh Defendant Scitec Limited - Twelfth Defendant V.L. Wilkinson - Thirteenth Defendant N.R. Carson - Fourteenth Defendant R.A. Stephens and the other persons listed in Schedule 2 to the Summons - Fifteenth Defendants R.J. Bainton - Sixteenth Defendant D.J. Hill - Seventeenth Defendant
FILE NUMBER(S):	SC 5137/00
COUNSEL:	In person - First Plaintiff A. Girard - First to Fourth Defendants D. Hill - Fifth to Seventh Defendants
SOLICITORS:	In person - First Plaintiff K. Rudlow & Co - First to Fourth Defendants Minter Ellison - Fifth to Seventh Defendants

1 At the conclusion of the hearing of this matter on 28 May, I announced the conclusion at which I had arrived and that I would publish my reasons shortly. These are those reasons. 2 By Summons filed on 21 December 2000, Mr Rajski and his co-Plaintiff (“the Rajski interests”) sought specific performance of alleged agreements between the parties to those proceedings to settle fifteen other proceedings between them, some of which have been on foot for twenty-two years. The settlement agreement was said to have been made as a result of a mediation between the parties held in 1993 and 1994. 3 On 12 November 2001, mediation of these proceedings was ordered by the Registrar and Mr H. Jolson QC was appointed mediator. On 23 May 2002, the Fifth to Seventh Defendants (“the Allens interests”) filed a Notice of Motion seeking an order that the mediation continue for a minimum of a further six months. The Rajski interests supported the application, but the First to Fourth Defendants (“the Tectran interests”) opposed it. 4 For reasons which I gave in an ex tempore judgment on 31 July 2002, on 1 August I made an order again referring the proceedings to mediation and appointing Mr Jolson as mediator. I ordered that the mediation continue up to and including 27 September 2002, unless determined earlier by agreement between the parties, by order of the Court or by a certificate of the mediator that it was pointless to continue. 5 By an order made on 10 September 2002, the mediation was extended to 20 December 2002 and Mr G. Charlton was substituted as mediator. 6 On 19 December 2002, Windeyer J granted leave to the Rajski interests to file in Court a Notice of Motion seeking a further extension of the mediation. His Honour ordered that the existing mediation order, which was to expire on the following day, continue in force until determination of the Notice of Motion. 7 The Notice of Motion came on for hearing before me on 25 May 2003. Mr Rajski appeared for the Rajski interests, Mr Hill, solicitor, appeared for the Allens interests, and Mr Girard of counsel appeared for the Tectran interests. Mr Rajski and Mr Hill submitted that there was utility in continuing the mediation proceedings, while Mr Girard submitted that continuing the mediation would be completely futile. He submitted that the mediation process had gone on too long as it was and that the proceedings should go forward to trial as soon as possible. 8 A number of issues were raised in the course of the hearing. First, the parties endeavoured to put in issue what had transpired in the mediations which had been ordered on 12 November 2001 and 1 August 2002, and sought to adduce a substantial volume of evidence directed to that issue. Mr Rajski and Mr Hill sought to demonstrate by this evidence that the Rajski interests and the Allens interests had not been at fault in the breakdown of the mediation and that the Tectran interests had acted unreasonably. The Tectran interests wished to prove exactly the opposite, in support of the submission that any further mediation would be futile. 9 For the reasons which I gave in an ex tempore judgment delivered on 26 May, I refused to admit certain evidence directed to this issue. In my view, the evidence tendered was not admissible under s.110P(4) and (5) of the Supreme Court Act 1970 (NSW). I will not repeat here what I said in that judgment. 10 The next issue was whether Mr Richardson, who is the controller of the Tectran interests, should be ordered to attend a mediation, if it were ordered. Mr Girard submitted that the state of Mr Richardson’s health would not permit him to attend without grave, perhaps mortal, risk. It was said that the stress on Mr Richardson of a personal confrontation with Mr Rajski would be extremely high. In support of his submission, Mr Girard tendered a medical report in respect of which a confidentiality order has been made. I will not, therefore, disclose any of the detail of that report. It is sufficient to say that the condition from which Mr Richardson is suffering is not immediately life-threatening but that travel and significant stress would have an adverse impact on him. 11 I indicated to Mr Girard that although the medical report was admitted into evidence without objection, I could not give it substantial weight if it were the only evidence upon which the Tectran interests relied. This was because the report was written six months ago and was founded upon a number of assumptions as to the conditions in which a mediation would take place. The difficulties raised by some of those assumptions are readily capable of resolution. 12 Mr Girard then elected to call Mr Richardson to give evidence. If I may say so, that evidence was most valuable. First, as to Mr Richardson’s condition, it revealed that Mr Richardson, while frail, is not physically or mentally disabled from participating in the mediation process. Indeed, it revealed Mr Richardson as a highly intelligent and articulate person who was able to take an active interest in his business affairs and who travelled to Sydney on occasion to do so. Frequent travel or travel over long distances is extremely tiring to him, but he is by no means confined to his bed or to his home. 13 Second, Mr Richardson’s evidence revealed, in my opinion, that despite the long and bitter litigation in which he has been engaged with Mr Rajski, his judgment is not blinded by animosity and he is open to a reasonable means of settlement of all the litigation, if such a means may be found. At first he said that he regarded a mediation as “absolutely futile, a completely futile exercise and a waste of time and money” . Then he said that he was not prepared to mediate unless all the “tangle” of complex litigation between the parties was dealt with and resolved completely. 14    Mr Girard asked Mr Richardson what was his attitude to a mediation to explore whether all the litigation between the parties could be resolved finally. He gave this evidence:
“Q: … Now, do you see any advantage in mediation on that basis, as distinct from Mr Rajski simply putting whatever proposals he may have to you in a without prejudice letter? Do you understand the question?
A: Yes, I understand the question fully. I think it would be very advantageous for Mr Rajski to write such a letter. … I believe it would be advantageous for Mr Rajski and his associates to put together such a letter, but I must confess that I do believe that things can sometimes be moved forward by direct face to face meeting, if the people concerned can work together in a proper, shall we say, civilised way, towards a solution to a problem that is ongoing. What I am saying is that I believe that has the possibility of moving things forward further than just correspondence.”
15    Mr Richardson’s frankness and common sense attitude gave me the strong impression that he was concerned essentially with achieving a commercial settlement to all litigation, that he was not driven by an ulterior motive, and that he would have a valuable personal contribution to make if a mediation were ordered. 16    The question then became: is Mr Rajski genuine in his desire to settle the litigation; does he wish to resolve all aspects of the dispute with the Tectran interests and the Allens interests once and for all so that he, Mr Richardson and the Allens interests can be seen to share a common objective. 17    I am satisfied that I should accept Mr Rajski’s repeated assertions that he does, indeed, now earnestly desire to resolve every proceeding, claim and dispute with the Tectran interests and the Allens interests in which he has been involved over the last twenty-two years. I do so for the following reasons. 18    First, I said to Mr Rajski in the course of the hearing that if I were otherwise satisfied that it was proper to order mediation, I would only do so upon condition that he gave an undertaking to the Court not to commence or continue any legal proceeding or complaint to a disciplinary body or authority arising out of the conduct of the mediation thus far. An apprehension in that regard on the part of the Tectran interests and their legal advisers was given as a substantial impediment to mediation in the past. In my view, that apprehension was not fanciful. It seemed to me that there was no prospect of a further mediation being successful if the Defendants, as well as their legal advisers, had to negotiate in a climate of fear as to possible legal or disciplinary consequences. 19    Mr Rajski was very willing to give such an undertaking. Indeed, he made useful suggestions in the drafting of it so as to widen the scope of its operation. It seems to me that this is a significant demonstration of good faith on his part. 20    Second, when I ruled against the admission of evidence tendered by Mr Rajski going to his allegation that the Tectran interests and their legal advisers had been to blame for the breakdown of mediation so far, he was at first considerably upset. Yet he was able to compose himself and brought himself to accept that what had happened was ‘water under the bridge’ and that what was important was to see whether a way forward could be found. While Mr Rajski strongly regarded himself as wronged by the Tectran interests and their legal advisers, he was prepared to accept my ruling and move on. This, too, I regard as highly significant. 21    Third, Mr Hill assures me, and I accept, that he and his clients are convinced that Mr Rajski does, indeed, wish to resolve all litigation and that this is the reason that his clients seek further mediation at not inconsiderable cost to themselves. 22    I have concluded that, if certain preconditions are met, there is a sufficient prospect that a further mediation can be successful to justify another reference under s.110K. In reaching this conclusion I have taken into account the long history of this litigation, the bitter animosity which it has generated, the failure of two previous mediations not including the mediation ordered on 1 August 2002, and Mr Rajski’s volatile and often confrontational manner. 23    On the other hand, I have taken into account that if the litigation is not settled, fifteen separate proceedings will doubtless continue in Court indefinitely, not to mention other proceedings which they will probably spawn. The drain on the parties, their resources and the resources of the Court has been incalculable and will continue to be so, unless this litigation is stopped. This circumstance in itself militates in favour of giving mediation another chance, even if that chance is more slender than would warrant a mediation order in proceedings between other parties in other circumstances. 24    Second, I take into account that Mr Rajski says that he is worn out by the litigation and wishes to go on with the rest of his life. His appearance and demeanour in Court gives credence to that assertion. His capacity to regain his self-control, with effort, during the course of the hearing suggests that he is capable of persevering with his intention to bring mediation to a successful conclusion. 25    Third, the conditions in which the mediation takes place can be structured to improve its prospects of success. Mr Richardson’s attendance is, in my view, of critical importance. Arrangements can be made to hold mediation sessions in a location in reasonable proximity to Mr Richardson’s home so that he is not unduly fatigued by travel. The location should not be in his home, as has been suggested, because I think that the presence of a considerable number of strangers in his home is likely to cause Mr Richardson additional stress. 26    Undue stress on Mr Richardson can also be alleviated by ensuring that he and Mr Rajski are not compelled to confront each other directly at a mediation session in which Mr Richardson participates unless and until the mediator is satisfied that such a meeting, if desirable, can take place without undue risk of emotional outbursts. 27    Fear on the part of legal advisers of legal and professional disciplinary repercussions which has dogged earlier mediations, should be much abated by the “mirror” undertakings to the Court to be given by all parties as a condition of a further mediation order. The terms of those undertakings have been discussed in the course of the parties’ submissions. If the undertakings are given by all parties, that in itself will demonstrate a willingness by all concerned to produce a climate in this mediation which is more conducive to success than has previously been the case. 28    Finally, without reflecting in any way upon the present mediator, the parties have indicated that it would be desirable to procure the services as mediator of the Hon T Morling QC. That the parties have now been able to agree upon Mr Morling as an acceptable mediator, despite earlier disagreement is in itself a promising sign. 29    For these reasons, I propose to make an order referring the proceedings to mediation. The parties suggest that, as Mr Morling is to be the mediator, I should order a fresh mediation rather than extending further the present mediation in which Mr Charlton is mediator. I think this is a sensible course. The mediation extended by order Windeyer J will, therefore, lapse immediately upon the taking effect of the order which I propose to make for a new mediation. 30    I will order that the mediation extend for three months, provided that it may be terminated in the same way as was provided in the mediation order made on 1 August 2002. In view of the complexity of the litigation, less than three months for mediation is likely to cause difficulty. On the other hand, in view of the past failed attempts at mediation and the long history of the litigation, longer than three months is not justified. 31    I will make an order requiring the personal attendance at mediation sessions of Mr Richardson, on terms which provide for his medical condition. Those terms have already been discussed in the course of the parties’ submissions. 32    I turn now to Mr Rajski’s application for an order restraining Tectran’s legal advisers from participating in the mediation process. The Court has jurisdiction to make an order restraining barristers or solicitors from acting in particular legal proceedings. That jurisdiction is part of the inherent jurisdiction of the Court to do all things necessary to ensure the due administration of justice and to protect the integrity of the judicial process: see e.g. Grimwade v Meagher [1995] I VR 446; Black v Taylor [1993] 3 NZLR 403; Kooky Garments Ltd v Charlton [1994] 1 NZLR 587. 33 In my view, a mediation ordered under Pt 7B of the Supreme Court Act is just as much a part of the administration of justice by the Court as are proceedings in the courtroom. The jurisdiction of the Court to protect the integrity of its administration of justice therefore extends to the making of an order restraining named legal practitioners from participating in a mediation, if a sufficient case for such an extreme order is made out. 34 No such case has been made out here. Mr Rajski endeavoured at first to make out such a case by relying upon what was allegedly said and done by Tectran’s legal advisers in the course of the previous mediations. However, I held that such evidence was inadmissible under s.110P(4) and (5) of the Supreme Court Act . It followed that if a case for restraint of the Tectran legal advisers was to be made out, it would have had to be proved by evidence obtained outside the mediation process. This Mr Rajski did not endeavour to do. 35    In any event, I think it fair to say that as the proceedings progressed, Mr Rajski came to accept that a ‘finger pointing exercise’ in relation to what had occurred in the past would not be productive and he concentrated on demonstrating that, whatever had happened in the past, there would now be utility in further mediation. The application to restrain Tectran’s legal advisers therefore fell by the wayside and was not pressed in his final submissions. As I have said, Mr Hill did not seek such a restraint. 36    I have stood these proceedings over to 2 June for the receipt of the undertakings to the Court which I have sought as a condition of making a mediation order and for further discussion of the proposed Short Minutes of Order. If the undertakings are given, I will make orders in accordance with the Short Minutes of Order, as may be modified by further discussion. 37    My present view is that the costs of this Notice of Motion should be costs in the cause, but I will hear the parties as to costs if they so desire.
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Last Modified: 06/02/2003