Studer v Boettcher

[2001] HCATrans 513

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S298 of 2000

B e t w e e n -

CHRISTIAN JOHANN STUDER

Applicant

and

UWE BOETTCHER

Respondent

Application for special leave to appeal

HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 DECEMBER 2001, AT 2.12 PM

Copyright in the High Court of Australia

MR C.J. STUDER appeared in person.

MR D.L. WILLIAMS:   May it please the Court, I appear for the respondent.  (instructed by Minter Ellison)

MRS E. STUDER:   Your Honour, I ask for leave to talk on my husband’s behalf.  He has problems with the English language.

HAYNE J:   Yes, go ahead, Mrs Studer.

MRS STUDER:   This application is based on the decision of the Court of Appeal which accepted that considerable pressure had been applied on the applicant by the respondent but that this was no undue influence.

CALLINAN J:   Where do we find that in the book, Mrs Studer, that considerable pressure was found to have been applied?

MRS STUDER:   It was not quoted, your Honour.  It is on page 52.  The correct quotation is that the respondent:

acted professionally and properly in the interests of the appellant in bringing considerable pressure to bear on him to settle ‑ ‑ ‑

CALLINAN J:   But the judge was also satisfied that that was done in your husband’s best interests.

MRS STUDER:   Yes, your Honour, that was the decision.  If I have leave to say what I have made notes, in consideration that English is my second language.

HAYNE J:   Yes, you go ahead. 

MRS STUDER:   The special leave question, I believe, is based on his Honour Justice Fitzgerald’s decision or opinion saying “Since there is no clear boundary between permissible persuasion and impermissible coercion”.  The applicant submits that it is up to the highest court in Australia to make a ruling that would constitute a clear boundary.  We say that the question is whether pressure generally applied by lawyers on clients is in accord with contemporary community values, and particularly in a case like the applicant’s case where he depended more than in a usual way on his legal adviser.  If I may come to that point a little bit later.

The third point we then address is whether damages flow from the pressure on the applicant considering that he would not have had to bring proceedings but for the pressure.  In the court below the applicant’s claim that pressure was applied on him was accepted by the finding of the trial judge that the pressure did not overbear his will was not disturbed.  What other reason is there to put considerable pressure on a client than to change his mind?  Is changing one’s mind by applying pressure not an act of overbearing the other’s will?  Either a man agrees and signs a contract voluntarily, in which case there is no need for pressure, or he is pressured, in which case he has not signed voluntarily.

The New English Dictionary and Thesaurus explains “persuasion” as influence, an inducement by argument.  In contrast it says “to coerce”, as to compel, “coercive” as compelling and “pressure” as “a compelling force and constraint, “compelling”, to obtain by force, and “constraint”, a condition that restricts freedom.  The applicant submits this would support that “considerable pressure” is closer to “impermissible coercion” than to “permissible persuasion”.  There cannot be any justification for anyone to apply pressure on another person, but the trial judge was of the opinion that:

it still is the rule that it is proper and appropriate for solicitors to put pressure on clients to do what is, in the lawyer’s view, in the clients’ own interest.

I refer to page 15.  I am told that Sir Anthony Mason said in 1994:

Nothing is more likely to bring about an erosion of public confidence in the administration of justice than the continued adherence by the courts to rules and doctrines which are unsound and lead to unjust outcomes.

The judgment appealed from not only is unjust but it collides with the very heart of the mediation process that agreement is entirely voluntary.  A doctor cannot pressure me to take a certain medication because in his view it is in my own interest.  Why should lawyers have the power to put pressure on clients?  Legal practitioners are already in an influential and powerful position when dealing with the average client.  This influence and power should not be increased in the interest of a balanced and fair relationship between them.

Usually a client is in a vulnerable position in his dependency on a lawyer’s professional knowledge, but the position of a client is further undermined when lawyers have the power to put pressure on their clients to accept a settlement by claiming it is in their best interest.  It is clear from this case that for a client to prove later that he did not agree with it, that the settlement was not in his best interest and that he signed due to the pressure, is very difficult.  As a settled case cannot be reopened, one can only consider what would have been a fair settlement for all parties by applying common sense.

In the applicant’s case there was ample evidence that made it clear that the settlement was not fair and that he had not voluntarily agreed to it.  The applicant went into the mediation on the advice that a payment of $30,000 would be sufficient to compromise the claim.  Two days before the mediation, Steve Walmsley, counsel at that time for the applicant, concluded even that less than $10,000 should do.  When during the 10 hours of mediation the respondent, as accepted by the court below, put considerable pressure on the applicant, the result was a settlement payment to the plaintiff of $130,000.

HAYNE J:   I know I am interrupting you, but may I do so.  What exactly is said in the trial judge’s judgment to be the pressure that was put on your husband?  I can identify at page 7 of the application book what is said to be part of the pressure as being the statement that the mediator was not available after a certain time and that the counsel and solicitor would withdraw, but what is the pressure that is said to have been brought to bear on your husband?

MRS STUDER:   From the evidence from my husband, there was over these hours the pressure put on him that he had to settle because there was a further solicitor to be joined, the costs would blow out and, even if he would win against the plaintiff, he would be ending penniless. 

HAYNE J:   Various things were said to him which you might think were intended to persuade him that one course rather than the other course was preferable.  Is that what is meant by “pressure”?

MRS STUDER:   No, your Honour, that is not everything.  It took 10 hours because my husband was not prepared to accept the offered settlement and this was by several reasons that had to do with the advice he had previously received from the respondent before the mediation.  But when my husband did not accept it and after many hours it was clear he would not, because he said he wanted to leave the mediation, he needed to have time to consider what was put to him, the respondent threatened that he would withdraw if he is not settling.  I know that the respondent in court said it had to do with his annual leave but, your Honour, there was evidence placed before the Court of Appeal and it was available during the trial of a letter that the respondent wrote to the Law Society prior to the proceedings in which he acknowledged that he threatened to withdraw and he says he believes he had good reason.  The reason is coming down to the point of a financial issue, that my husband had no money to pay him, that there was the property that he took as a security.  So it had nothing to do what he later said because of his annual leave.

If I may go further with that point that in court the respondent said, “The most important factor for the applicant to settle was the prospect of further costs if the solicitor Forbes would join”.  An important aspect of the case was the applicant’s particular dependency on the respondent.  He not only depended on him because of his professional knowledge, but he depended on him because he needed him to communicate in his native language, but more so he depended on this financial agreement with the respondent that allowed him to have legal representation deferring the fees until the case was over.  It was a matter of a contract between the respondent and the applicant.

It would appear that during the mediation the respondent became aware that depending upon the level of success of the other party, his own security may not be sufficient to cover his fees.  Whilst there is evidence that the applicant was willing to take a risk in relation to the possible outcome of a court hearing, the respondent was not prepared to take that risk in relation to the payment of his fees.  Under the circumstances of the retainer, any threat that his legal adviser would withdraw was sufficient to alarm a man in the position of the applicant to coerce his will.  But the evidence that the applicant was particularly vulnerable to the respondent’s pressure and that this pressure was not devoid of self‑interest did not get sufficient attention.

Your Honours, the important point that we actually wanted to bring as a reason for special leave is, first, the general issue on pressure placed on clients by lawyers and of course the particular issue considering some clients’ particularly dependency.  Some clients are more receptive to pressure.  The question to the High Court is:  is it still acceptable that lawyers put pressure on clients?  Is considerable pressure, undue influence – these are the questions.  If considerable pressure would have been considered as undue influence, from there would then come the point:  what is the damage?  We then could have dealt with the damage, but during the trial the question of damage was not really dealt with.  While his Honour Justice Young made some comments, he himself says he did not deal with this question in regard of damage because he was of the opinion there was no pressure that has influenced the applicant.

If I may say something in regard of the settlement being unfair, the payment of $130,000 was 62 per cent of the proceeds from the sale of the land for a lease that covered 20 per cent of the property and for which the plaintiff had paid $11,000 and had, according to her own evidence, an owner‑built house worth $20,000.  In comparison, the applicant had paid $82,000 for the property and had further invested more than $100,000.  If I may elaborate on the point that the claim was - there was pressure applied. Was pressure, undue influence?  If it was undue influence, would the applicant have agreed to it or not?  This is a hypothetical question that we cannot answer, as we could not reopen the old settled case.

I put it in my submission that there were also important facts that were wrong.

HAYNE J:   We have of course read the written submissions, Mrs Studer.

MRS STUDER:   Yes.  If I could say this, one of the most important wrong facts was the plaintiff’s actual basis for her claim.  It was said it was based on the applicant obtaining something by fraud in that she had lifted her caveat to allow him to be registered.

HAYNE J:   I think we understand that there was a very considerable dispute about what had happened or not happened in relation to the land, but our immediate focus is on the settlement that was reached rather than the dispute that lay behind the settlement.

MRS STUDER:   Yes, your Honour, but would it not be also not only the settlement reached but the way it was reached, if I may submit that?

HAYNE J:   We would understand, I think, that your husband would say that he had an answer to all of the allegations that were made against him in the principal case.  He would say he had a complete answer to this which should have led him to win the principal dispute, but we are focused on the settlement and that is all we are concerned with today.

MRS STUDER:   Yes, your Honour, on the settlement and what we said why it happened.  I still find this the most important point, that this settlement was reached due to pressure.

HAYNE J:   Yes, I think we understand that is the nub of the point.

MRS STUDER:   Sorry, if I reiterate, your Honour, but for a lay person it is – I mean, I have looked at ‑ ‑ ‑

HAYNE J:   That is why I am telling you that I think we understand the point, so that we can communicate.

MRS STUDER:   I just want to get across to the High Court what I believe is in the public interest, and that is whether considerable pressure constitutes undue influence, your Honour.

HAYNE J:   The pressure here consisted of statements made intended to persuade your husband to settle, statements that were made in the course of a 10‑hour mediation.  That is the pressure we are concerned with, is that right?

MRS STUDER:   Yes, your Honour.

HAYNE J:   I think we understand that is what we are talking about.

MRS STUDER:   And in consideration why his will was overborne by that, because it has to do with his dependency.  One of the wrong facts I believe is also wrong in law, and that is when the Court of Appeal said that the applicant had induced the plaintiff via his solicitor to remove the caveat for him to become the registered owner.  The plaintiff herself said that she was tricked into lifting her caveat and she said she lifted her caveat on the advice of her solicitor and in the office of the solicitor, Smith, who acted for both the vendor and the purchaser.

As the removal of a caveat on a property title is in the interest of a property owner if he wants to sell, the solicitor in this function was the vendor’s solicitor who induced the lessee to remove the caveat.  This solicitor, Graeme Smith, that he acted for both parties does not change the fact that the vendor has to provide a free title if he wants to sell.  It was indeed a pressing issue for the vendor ‑ ‑ ‑

CALLINAN J:   Mrs Studer, we cannot go into all of these facts at this stage.

MRS STUDER:   Okay, sorry.

CALLINAN J:   We cannot, and it is not really in your interests to try to go into the detail of them.

HAYNE J:   We have to focus on the settlement and I think we understand what you say about that issue.

MRS STUDER:   We say that it has come into existence due to considerable pressure.

HAYNE J:   We understand that point.

MRS STUDER:   And we say that considerable pressure is undue influence and this is what we think is reason for special leave because a ruling that any pressure whatsoever constitutes undue influence is therefore in the public interest.  We also say that the judgment appealed from may provide lawyers with an escape after their abuse of clients’ vulnerability and makes mediation a trap for the unwary.  Thank you, your Honours.

HAYNE J:   Thank you, Mrs Studer.  Yes, we need not trouble you, Mr Williams.

The trial judge, having heard the witnesses give their evidence, concluded that the settlement of which the applicant complains was not brought about by what his Honour described as any “undue pressure” by the respondent.  That finding was based on evidence that what was alleged to be the “pressure” consisted only of statements intended to persuade the applicant of the wisdom of settling the dispute which were statements made over an extended mediation.

The use of the word “pressure” understood outside the context of the evidence in this case may be apt to be misunderstood.  The finding made by the trial judge in the context of the case before his Honour was a finding that was open to him.  It was not disturbed on appeal to the Court of Appeal.  An appeal to this Court would enjoy insufficient prospects of success to warrant a grant of special leave. 

Accordingly, special leave is refused and refused with costs.

AT 2.35 PM THE MATTER WAS CONCLUDED