Tapoohi v Lewenberg (No 2)

IN THE SUPREME COURT OF VICTORIA	Not Restricted
AT MELBOURNE COMMERCIAL AND EQUITY DIVISION COMMERCIAL LIST

No. 2052 of 2002

F5448

REGINA TAPOOHI	Plaintiff
v
HALINA LEWENBERG	Defendants
(WHO IS SUED PERSONALLY AND IN HER REPRESENTATIVE CAPACITY AS EXECUTRIX OF THE WILL AND TRUSTEE OF THE ESTATE OF THE LATE GILLIAN LOSSAK DECEASED) AND OTHERS
AND
DAVID H DENTON AND ANOTHER	Third parties

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JUDGE:	HABERSBERGER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	5, 6, 11, 12 FEBRUARY 2003
DATE OF JUDGMENT:	21 OCTOBER 2003
CASE MAY BE CITED AS:	TAPOOHI v LEWENBERG [No. 2]
MEDIUM NEUTRAL CITATION:	[2003] VSC 410

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PRACTICE AND PROCEDURE – Pleading – Third party statement of claim – Strike out
application – Whether arguable allegation of law – Summary judgment – Whether arguable
claim.
CONTRACT – Terms of contract appointing mediator – Whether mediator acts for the parties,
advises them, promises to use due care and skill.

TORT – Whether mediator owes duty of care to the parties.

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APPEARANCES:	Counsel	Solicitors
For the Eleventhnamed	Mr J.D. Elliott	Lander & Rogers
Defendant
For the Secondnamed	Mr M.L. Sifris S.C.	Herbert Geer & Rundle
Third Party HIS HONOUR:

Background

The plaintiff in this proceeding, Mrs Regina Tapoohi, and the first defendant, Mrs Halina Lewenberg, are the daughters of Mrs Gillian Lossak who died on 9 January 2001. The deceased left a last Will dated 26 July 1998 under which Mrs Lewenberg was appointed executrix and trustee. By that will the deceased devised certain real estate as follows:
(a) to Mrs Lewenberg the properties known as 7 Charnwood Road, St Kilda and 17 Charnwood Grove, St Kilda; and
(b) to Mrs Tapoohi the properties known as 64 Lumeah Road, North Caulfield and 6 The Avenue, Windsor.
Otherwise, the deceased devised and bequeathed the residue of her estate to be divided equally between her two daughters.
At the date of her death these four properties were not beneficially owned by the deceased. The situation in respect of each property was as follows:
(a)       7 Charnwood Road was registered in the name of the fourth defendant, Davsa Forty-Seventh Pty Ltd ("Davsa Forty-Seventh"), as trustee for the second defendant, EOS Holdings Pty Ltd ("EOS Holdings"), but subject to the rights of the third defendant, EOS Properties Pty Ltd ("EOS Properties") as purchaser under a contract of sale dated 1 June 1995.
(b)      17 Charnwood Grove was registered in the name of EOS Holdings, but subject to the rights of EOS Properties as purchaser under a contract of sale dated 1 June 1995.
(c)       6 The Avenue was registered in the name of EOS Holdings, but subject to the rights of EOS Properties as purchaser under a contract of sale dated 1 June 1995.
(d)      64 Lumeah Road had been sold by the deceased pursuant to a contract of sale entered into in or about November 1999.
Following the death of the deceased, disputes arose between the sisters as to a number of matters, including their entitlements to the estate of their late mother and to the proceeds of sale of 64 Lumeah Road and the conduct by Mrs Lewenberg of the affairs of EOS Holdings, of which company the sisters were directors and equal shareholders. On 25 July 2001, Mrs Tapoohi commenced proceeding No. 6895 of 2001 in this Court against her sister and EOS Holdings ("the earlier proceeding").
On 20 September 2001, the parties to the earlier proceeding attended a mediation with a view to resolving their disputes. The submission to mediation was pursuant to an agreement made between them on or about 24 August 2001; it was not pursuant to any court order. The mediator selected by the parties was Mr George Golvan, one of her Majesty’s Counsel ("the mediator"). At the mediation, Mrs Tapoohi was represented by Mr David Denton of counsel, instructed by her solicitor, Mr Geoffrey Shiff, a principal of Shiff & Co and by an associate partner of the firm, Ms Julia Adams. Mrs Tapoohi was not present at the mediation; she was in attendance by telephone from Israel. Mrs Lewenberg was present; she was represented by Mr James Merralls, one of Her Majesty’s counsel, and by Mr Joseph Tsalanidis of counsel, instructed by her solicitors, her husband, Mr Alex Lewenberg, and her daughter Ms Vivien Lewenberg, who were both principals of Lewenberg & Lewenberg.
At the conclusion of the mediation, the conduct of which will be examined in detail below, a handwritten document entitled Terms of Settlement, was executed by or on behalf of the parties to the earlier proceeding and by a number of other Lewenberg companies and individuals, which or who were affected by the allegations made by Mrs Tapoohi. The execution of the Terms by Mrs Tapoohi was achieved by faxing the document to her in Israel and she faxed back a copy bearing her signature and a notary’s seal. Pursuant to these Terms, Mrs Tapoohi agreed to pay to Lewenberg & Lewenberg on behalf of Mrs Lewenberg the sum of $1.4 million on or before 20 January 2002 in exchange for which the properties at 7 Charnwood Road and 17 Charnwood Grove ("the Properties") would be transferred to her or her nominee. Also, Mrs Tapoohi was, upon settlement, to transfer to Mrs Lewenberg her shares in EOS Holdings and to resign her office as director of that company. The Terms provided for mutual releases and for the parties to consent to orders disposing of the earlier proceeding.
The Proceeding
In this proceeding commenced on 26 June 2002, Mrs Tapoohi sought to set aside or avoid this settlement on a number of bases. All of the ten Lewenberg companies and individuals who were parties to the Terms of Settlement were named as defendants. Mrs Tapoohi contended that the settlement was subject to an express oral term that the parties would seek taxation advice concerning the settlement and that following receipt of such taxation advice the parties would negotiate in good faith the form of any settlement reached ("the express term"). Alternatively, it was pleaded that the parties had not reached a concluded agreement on the matters the subject of the settlement. Alternatively, the term about taxation advice was pleaded as a condition precedent which had to be fulfilled before there could be a concluded agreement on the matters the subject of the settlement, alternatively it was pleaded as a collateral contract, alternatively as giving rise to an estoppel, alternatively as giving rise to an entitlement to rectification of the agreement for mutual mistake. It was also alleged that the failure of Mrs Lewenberg, EOS Holdings, Davsa Forty-Seventh, and Mr Lewenberg to disclose that the Properties had substantial plumbing and electrical problems constituted misleading and deceptive conduct and that this rendered the settlement void or should cause the Court to declare it to be unenforceable.
Mrs Tapoohi also pleaded against one or more of the ten defendants the causes of action the subject of the earlier proceeding and other claims the subject of the Terms of Settlement. These causes of action included alleged contraventions of either s. 232 or s. 461 of the Corporations Act 2001 by oppressive or unfair or discriminatory conduct in respect of the sale by, or on behalf of, EOS Holdings to EOS Properties on excessively generous terms of the properties at 7 Charnwood Road, 17 Charnwood Grove and 6 The Avenue and the use by Mrs Lewenberg of moneys belonging to EOS Holdings to pay her own legal fees, and alleged conduct which had the effect of benefiting financially one or more of the first ten defendants to the detriment of the deceased’s estate and thereby Mrs Tapoohi. Orders were sought for the winding up of EOS Holdings and for the removal of Mrs Lewenberg as the executrix of the deceased’s will and trustee of her estate.
In September 2002, Mrs Tapoohi amended the writ and her statement of claim by adding a claim against an eleventh defendant, her former solicitors, Shiff & Co ("the solicitors"). She alleged that the solicitors had been retained to act for her in the conduct of the earlier proceeding and that pursuant to the retainer the solicitors were instructed to obtain advice as to the taxation implications of any proposed settlement before it was entered into. Mrs Tapoohi alleged that on 20 September 2001 the solicitors advised her to sign the document containing the Terms of Settlement on the basis that "they did not constitute a concluded agreement binding upon her but were subject to a term that" the parties would seek taxation advice concerning settlement of the matters in dispute and thereafter would negotiate in good faith a form of any settlement reached. If the settlement was binding upon her, Mrs Tapoohi alleged that the solicitors were in breach of an implied term of their retainer, or in breach of their common law duty of care to exercise due skill and care, to advise her on all relevant matters, to protect her interests and to comply with her instructions. She further alleged that by reason of the solicitor’s breach of the retainer or their negligent advice she had suffered loss and damage.
By a third party notice filed on 18 October 2002 the solicitors sought contribution from both Mr Denton, the first third party, and Mr Golvan QC, the second third party, pursuant to s. 23B of the Wrongs Act 1958. It was alleged that if the Terms of Settlement did constitute a concluded agreement binding on her, then Mrs Tapoohi had suffered damage as a consequence of a breach by her counsel and by the mediator of a contractual duty and a tortious duty owed by each of them to her and that, by implication, this damage was the same damage that she suffered as a consequence of the solicitors’ breach of duty. Accordingly, it was alleged that the solicitors were entitled to contribution from each of the third parties.
The Application
By a summons filed on 19 November 2002, the second third party sought pursuant to r. 11.14(1) and r. 23.03 of the Supreme Court (General Civil Procedure) Rules 1996 ("the Supreme Court Rules") an order for summary judgment on the third party statement of claim on the ground that the second third party had a good defence on the merits to the claim by the eleventh defendant, alternatively pursuant to r. 23.01(1) an order staying the eleventh defendant’s third party statement of claim against the second third party or giving judgment for the second third party, alternatively pursuant to r. 23.02 an order striking out the eleventh defendant’s third party statement of claim against the second third party.
It was virtually conceded by Mr Sifris SC, who appeared on behalf of the second third party, that the application pursuant to r.11.14(1) was inapplicable. I agree with the submission of Mr Elliott, who appeared on behalf of the eleventh defendant, that reliance on this rule as a basis for a summary judgment application was misconceived.
The mediator’s principal contention invoked r. 23.01(1) or r.23.03, seeking an order that the third party claim against him be stayed or that he have summary judgment in respect of it. On such an application affidavit evidence is admissible. There were two affidavits of Mr Golvan filed in support of the application and two filed in opposition, one by Mr Shiff and the other by Ms Adams. Each of the affidavits of Mr Shiff and Ms Adams concluded with an assertion that the affidavit did not contain an exhaustive account of the deponent’s recollection of the events of the mediation.
These four affidavits, which dealt with the events of the mediation, raised a number of factual conflicts. Moreover, there were many objections as to admissibility of passages in them and much time was spent at the commencement of the hearing arguing their admissibility. For the purposes of an application such as this I must approach the matter on the basis that the facts most favourable to the claim will be established. This means that, in the event of conflict, I must prefer the affidavits filed on behalf of the solicitors. Eventually the parties agreed that the matter should be determined on the basis that the application would be dealt with by relying on the affidavits of Mr Shiff and Ms Adams, the admissibility of the contents of which were, for the purposes of this application only, accepted. These affidavits had been drawn by way of response to the assertions made in the first affidavit filed on behalf of the mediator. Therefore, it was further agreed that the affidavits filed on behalf of the mediator could be referred to "but solely and exclusively for the purpose of making sense of" the affidavits of Mr Shiff and Ms Adams. It was agreed that, otherwise, no reliance was to be placed on the affidavits filed on behalf of the mediator. I proceed on this basis.
I should add one further thing in the context of my stating the basis on which I am to deal with this application. Mr Denton, the first third party, had also issued an application for summary disposition of the solicitors’ claim against him and had filed an affidavit in support of his application. This application was not persisted with. His affidavit, therefore, was not, strictly speaking, one filed in respect of Mr Golvan’s application. Neverthtless, both parties referred from time to time, without objection, to aspects of Mr Denton’s affidavit.
The Conduct of the Mediation
I turn, then, to an examination of the conduct of the mediation in order to understand the nature of the solicitors’ claim against the mediator. As previously stated, the following summary is predominantly based on the affidavit evidence of Mr Shiff and Ms Adams and a number of important allegations are vigorously disputed by Mr Golvan in his affidavits. The true situation will only be established after a trial, should the matter proceed that far.
On or about 24 August 2001 the solicitors acting for the parties to the earlier proceeding verbally agreed to appoint Mr Golvan as the mediator of the proposed mediation. Subsequently, Mr Lewenberg telephoned Mr Golvan and advised him that he had been appointed to act as the mediator of the Commercial List proceeding between Mrs Tapoohi and Mrs Lewenberg. By a letter dated 3 September 2001, the mediator wrote to the parties a letter in which he confirmed his nomination as mediator and proposed a preliminary conference. His letter contains the following passage:
"I confirm that the aim of the Mediation Conference is to assist the parties in reaching a settlement of their dispute by the involvement of an impartial mediator. It is not the role or function of a mediator to impose a settlement on the parties. It is up to the parties to arrive at their own resolution of the dispute. The purpose of the mediator is to assist the parties to define the issues, eliminate obstacles to successful communication, explore settlement alternatives, and generally work with the parties to achieve a negotiated resolution."
By a letter dated 4 September 2001, the solicitors for Mrs Tapoohi wrote to Mr Golvan confirming his appointment "to act as mediator in the proceedings".
A preliminary conference was held on 5 September 2001. It was attended by Mr Denton, Mr Shiff and Ms Adams representing Mrs Tapoohi and by Mr Merralls QC and Mr Tsalanidis of counsel and Mr Lewenberg and Ms Lewenberg representing Mrs Lewenberg and EOS Holdings, the defendants in the earlier proceeding. Mr Denton informed the mediator that Mrs Tapoohi was a lawyer who had been educated in Australia. As she now resided in Israel she wished to participate in the mediation by telephone. The mediator stated that he wanted Mrs Tapoohi to come to Australia for the mediation but Mr Shiff said that her instructions were that she would not. The use of video facilities was then discussed. It was agreed to commence the mediation at 11.00 a.m. to accommodate the time difference between Australia and Israel.
Mr Merralls outlined the nature of the property dispute between Mrs Tapoohi and Ms Lewenberg including that there were company structures involved in the ownership of the properties; that there was litigation pending over the conduct of the companies; that there was disagreement as to how the property should be divided up and finally that the resolution of the dispute must take into account taxation implications. Either Mr Denton or Mr Shiff, or possibly both, stated that they agreed with Mr Merralls’ summary of the dispute.
By a letter dated 7 September 2001, the mediator confirmed the directions made at the preliminary conference. Pursuant to those directions, the parties exchanged Position Statements.
The mediation itself took place on 20 September 2001. As previously stated, Mr Denton, Mr Shiff and Ms Adams represented Mrs Tapoohi. Mr Merralls, Mr Tsalanidis, Mr Lewenberg and Ms Lewenberg represented the defendants. Mrs Lewenberg attended the mediation.
The mediation began with Mr Golvan explaining the role and purpose of the mediation process at a joint session of all those present at the mediation. Then followed statements of position from Mr Denton and Mr Merralls. Mrs Lewenberg also gave a short presentation. Mr Merralls read Mrs Lewenberg’s Position Paper dated 19 September 2001 which included the statement that:
"A financial resolution of the dispute between the parties will require an adjustment to be made between the parties’ rights taking into account, amongst other things, the values of the properties, the existence of the terms contracts and taxation implications such as capital gains tax."
Mr Denton said that he concurred with this statement.
Following the opening statement, Mr Golvan sought to identify the areas of difference between the parties. Mr Golvan then met with parties in private sessions and negotiations towards a possible settlement commenced. It was during one of those private sessions that Mr Shiff indicated to Mr Golvan words to the effect that:
"Any agreement reached will need to be subject to getting proper tax advice because it was on any view a matter involving complex corporate and trust structures and unusual terms contracts."
At approximately 2.00pm, Mr Lewenberg left the mediation conference because of overseas travel commitments.
During the course of negotiations what was called by Mr Shiff "a commercial settlement proposal" was put forward on behalf of Mrs Tapoohi. It involved a transfer to Mrs Tapoohi, or her nominee, of the properties at 7 Charnwood Road and 17 Charnwood Grove and the payment by Mrs Tapoohi of a sum of money. This proposal had not been raised previously. Rather, the parties had contemplated Mrs Lewenberg paying Mrs Tapoohi a sum of money and the properties being transferred to Mrs Lewenberg or her nominee. The new proposal came about as a result of lengthy telephone discussions between Mrs Tapoohi in Israel and her legal advisers, following which Mr Shiff told Mr Golvan, in private discussions, that his client had changed her strategy and her proposal was to take a transfer of the properties and pay Ms Lewenberg $1 million. Mr Shiff reiterated to Mr Golvan the need for tax advice before an agreement could be concluded. Mr Shiff told Mr Golvan that Mrs Tapoohi was not willing to enter into a binding agreement at the mediation as the matters required expert tax advice. It was suggested by Mr Shiff that the parties would discuss the agreement again, after tax advice had been obtained. Mr Golvan was informed that the tax issues involved capital gains tax, GST, stamp duty and income tax. Mrs Tapoohi’s lawyers all indicated to Mr Golvan that they were not revenue specialists and were not confident about giving any such tax advice. Mr Golvan expressed his view on the stamp duty issues relating to the transfer of the properties, but this did not result in either Mr Shiff or Mr Denton forming a definite view.
At approximately 8.00pm the parties reached agreement in principle concerning the commercial settlement proposal, which provided that the properties would be transferred to Mrs Tapoohi in return for the payment of $1.4 million and that Mrs Tapoohi would relinquish her interest in the family companies. Mr Shiff said that these were the only matters agreed and that many others remained outstanding. At this point Mr Merralls left the mediation.

Mr Shiff said in his affidavit that when agreement in principle had been reached he said to Mr Denton and Ms Adams that he thought they had done enough for the day. Mr Denton agreed. Both Mr Denton and Mr Shiff said that they did not want to stay late. Mr Shiff said in his affidavit that he was hungry, tired and worn out and did not think that he could deal constructively with the many outstanding issues.
Shortly thereafter, there was a discussion between Mr Golvan and Mr Shiff and Ms Adams. Mr Golvan stated in substance that everyone was to return to the main room so that they could get something down for the parties to sign. Mr Golvan indicated to Mr Shiff that terms of settlement would be drawn up, which Mr Shiff understood to mean that Mr Golvan was going to reduce to writing the terms of the commercial settlement proposal that had been reached in principle. Either Mr Shiff or Ms Adams said to Mr Golvan words to the effect that it was late. In the ensuing discussion Mr Golvan said such things as:
"You have got to stay, you have got to do the terms of settlement
tonight."
"No, we are doing it now. We are signing up tonight as that is the way
that I do it, that’s how I conduct mediations."
"Given the acrimony between these two sisters we must go away with something that is written. It is in the interests of all the parties to sign up tonight."
These statements were made forcefully. Both Mr Shiff and Ms Adams took them as a direction from the mediator. Mr Shiff stated that he told Mr Golvan that he was not comfortable with signing that night. Ms Adams said Mr Shiff told Mr Golvan that it had been their intention to leave the mediation at that stage.
Mr Denton also indicated to Mr Golvan that he wished to leave the mediation, however, according to Mr Denton, Mr Golvan asked him to stay to "get down in writing the bones of the commercial agreement." Mr Denton stayed on as requested.
As a result of Mr Golvan’s statements, Mr Denton, Mr Shiff and Ms Adams joined the remaining lawyers in the conference room. Mr Shiff said in his affidavit that he "decided to defer to Golvan's advice". He said that he knew Mr Golvan was an experienced mediator and that "his firmness of position weighed heavily on me". He regarded what Mr Golvan had said "as a direction from the mediator about which, effectively, I did not have any choice". Mr Shiff also said that he relied heavily upon both Mr Golvan and Mr Denton agreeing "to proceed to reduce the agreement in principle (to the extent that there was one) to writing because of their experience in these matters". Ms Adams stated that but for Mr Golvan’s insistence that terms of settlement be signed that night, she would have departed the mediation when the agreement in principle was reached regarding the transfer of the properties and the payment of $1.4 million.
When he parties had reassembled, Mr Golvan said:
"We will now put together the terms of settlement and I will dictate
them."
He also said that someone was needed to write down the terms and Ms Lewenberg agreed to do this. Mr Golvan then proceeded to dictate the proposed terms of settlement. Mr Shiff attempted to raise with Mr Golvan that all terms were subject to seeking taxation advice. Mr Denton and Ms Adam confirmed this. However, Mr Golvan interrupted Mr Shiff and stated that he wished to continue to dictate the terms. Despite Mr Golvan’s assertive dictation of the terms, Mr Shiff reluctantly offered limited observations regarding the terms. Mr Shiff did not accept that the legal representatives of the parties really contributed to the drafting by making alterations to the terms. According to Mr Shiff, Mr Denton and Mr Tsalanidis effectively took no active role in the drafting process. Mr Shiff also stated that Mr Golvan went into far more detail than he had expected in dictating the Terms of Settlement.
Part of the Terms of Settlement included the transfer of shares in EOS Holdings from Mrs Tapoohi to Mrs Lewenberg. When Mr Golvan came to this issue in his dictating, the question of price was raised by him. Ms Lewenberg stated that the amount of consideration for the shares had not yet been addressed. Mr Shiff replied that the amount of consideration could be not be dealt with until advice on the tax implications was sought. Mr Golvan suggested that a figure of $1.00 be provided as nominal consideration for the share transfer. Mr Shiff stated that it was "all subject to review". Although no-one said that the figure of $1.00 was appropriate it was inserted in the Terms. Mr Shiff regarded the insertion of the nominal figure as an indication that there was no binding agreement between the parties, a position that he understood Mr Golvan and Ms Lewenberg to accept because he recollected stating to both of them that he needed to obtain tax advice in relation to the appropriate amount of consideration before any amount could be agreed upon.
Mr Shiff said that after the Terms of Settlement had been drafted they were read "briefly" by both Mr Denton and himself and some minor changes were made. On the contrary, Mr Denton said that he left the mediation without reading or advising on the draft Terms of Settlement. According to Ms Adams, she and Mr Shiff reviewed the Terms of Settlement in private. She said that she did not read the Terms "thoroughly" on that night because she believed that "what was being agreed was only an agreement in principle and not a legally binding agreement". Mr Denton did not join in this private discussion because he had by then left the mediation. According to Mr Shiff, there was no objection to Mr Denton’s departure as Mr Shiff did not believe he had to obtain any further instructions from Mrs Tapoohi in relation to a binding agreement.
Ms Adams said that she faxed the Terms of Settlement to Mrs Tapoohi in Israel, on the direction of Mr Golvan. Mr Shiff and Ms Adams discussed the Terms of Settlement with Mrs Tapoohi by telephone. No further amendments were made. The Terms were returned, signed by Mrs Tapoohi.
At the conclusion of the mediation, Mr Golvan provided each party with a copy of the Terms of Settlement, signed by all parties to the Settlement, including the signature of Ms Vivien Lewenberg on behalf of Mr Lewenberg. Mr Golvan then terminated the mediation conference. At this point Ms Adams had a conversation with Ms Vivien Lewenberg, who expressed her concern that her client would be "burdened with tax issues because Tapoohi was an overseas resident." In response, Ms Adams stated that Ms Lewenberg’s position would be taken into account once the tax issues had been considered. This conversation took place in the same room in which the Terms of Settlement were prepared.
Thus, Mr Shiff maintained that, at the mediation, he repeatedly informed Mr Golvan that Mrs Tapoohi was not willing to enter into a binding agreement as the matters required expert tax advice that the legal representatives for Mrs Tapoohi were not qualified to provide.
Both Mr Shiff and Ms Adams agreed that that the Terms of Settlement did not contain the express term. Mr Shiff said that he expected that Ms Lewenberg would have recorded the requirement, indicated by Mrs Tapoohi’s legal representatives, that tax advice was still to be obtained and was a condition of the Terms of Settlement. However, Mr Shiff stated that given the late hour and the length of time taken to conduct the mediation he failed to observe, when reading over the Terms of Settlement, that such a condition was not included. Mr Shiff did not realise the omission of this condition until some period of time after the mediation’s conclusion. Mr Shiff accepted that he did not state to Mr Golvan that there was an express term which had to be included in the Terms of Settlement, but rather indicated to Mr Golvan repeatedly that the Terms were subject to the parties getting tax advice and that once that advice was obtained the Terms required further discussion. Ms Adams said that she did not notice the failure to include the express terms in the Terms of Settlement on the night of the mediation.
According to Mr Shiff, at no time during the mediation did he contemplate that a binding agreement would be entered into. If he had thought that the Terms of Settlement would be considered a binding agreement, Mr Shiff would not have put the document to Mrs Tapoohi. He only did so in reliance on Mr Golvan's firmly expressed views.
Mr Shiff stated that he was aware of Mr Golvan’s reputation, when conducting mediations, of being extremely determined to get the parties to reach settlement. However, Mr Shiff said that he did not expect that this approach would result in an agreement being prepared which did not reflect what had been agreed between the respective parties.
Following the receipt of taxation advice, it was considered that the figure of $1.00 for the price of the shares in EOS Holdings would have undesirable taxation consequences for Mrs Tapoohi. Attempts by her lawyers to have the price varied failed. The commencement of this proceeding followed.
Striking Out the Third Party Statement of Claim - Rule 23.02
The central thrust of the attack by the second third party on the contribution claim brought against him was that even if all of the debateable issues were assumed to be decided in favour of the eleventh defendant, the case against the mediator could not succeed on the version of events put forward by Mr Shiff and Ms Adams and that there should be summary judgment for the second third party. Although the strike out application pursuant to r.23.02 was therefore not the main part of the submissions made by the second third party, it is logical to deal with it first. Such an application must be determined by an examination of the pleading without reference to the affidavits filed in this application[1].
[1] Rule 23.04(2)
In paragraph 3 of the third party statement of claim, it is pleaded that the second third party is and was at all material times:

"(a) a barrister carrying on a practice in the State of Victoria;
(b) one of her Majesty's counsel;
(c) a senior barrister specialising in commercial litigation and related matters;
(d) an expert mediator and, further or alternatively, a person who holds and held himself out as an expert mediator."

Central to the matters argued before me are the terms of the mediator’s retainer, as pleaded in paragraph 18 of the third party statement of claim. Notwithstanding its very unusual terms, I must accept for present purposes the following allegation concerning the contract which was entered into:
"… on or shortly after 24 August 2001 the Parties retained Golvan for reward to act for them and advise them as a mediator at the Mediation."
Mr Elliott recognised that it was a matter of debate whether or not it was the role of a mediator to advise. He submitted that it had never been determined by a court whether a mediator was still acting as a mediator if he or she stopped acting as a pure facilitator and started advising the parties. Nevertheless, that was the agreement which had been pleaded. Furthermore, Mr Elliott submitted that it was pleaded in the third party statement of claim that there were a number of occasions when Mr Golvan "positively advised" the plaintiff through Mr Shiff.
In paragraph 19 of the third party statement of claim the solicitors allege certain implied or imputed terms of the contract entered into between the mediator and the parties to the 2001 proceeding. These are that the mediator would:

"(a) exercise all the due care and skill of a senior barrister specialising
in commercial litigation and related matters;
(b) exercise all the due care and skill of a senior expert mediator;
(c) reasonably protect the interests of the Parties;

(d)

not act in a manner patently contrary to the interests of the Parties, or any of them;
(e) act impartially as between the Parties;

(f)

carry out his instructions from the Parties by all proper means; and further or alternatively

(g)

not coerce or induce the Parties into settling the Earlier Proceeding when, at the relevant time or times, there was a real and substantial risk that settlement would be contrary to the interests of the Parties, or any of them."

In paragraph 20 it is alleged that, by reason of his retainer by the parties to the earlier proceeding, the mediator owed to them common law duties of care in similar terms. These tortious duties are said to arise from the agreement between the parties to refer their disputes to mediation and from their agreement with the mediator that he should "act for them and advise them as a mediator at the Mediation".
Turning first to the contractual obligations, it is important to note that in this pleading the contractual obligations are said to be implied or imputed as a matter of law from the retainer itself, the terms of which are set out in paragraph 18. Mr Elliott submitted that, as a matter of pleading, all of the terms were justifiable. He referred to the views expressed by Deane J in Hawkins v Clayton[2] concerning the application of the requirements for implication set out in BP Refinery (Westernport) Pty Ltd v Hastings Shire[3] to cases where the contractual terms have been left largely unarticulated by the parties:
"Care must be taken to avoid an automatic or rigid application of the ordinary cumulative criteria for determining whether a term should be implied in a written contract to a case where the contract is oral or partly oral or where it is apparent that the parties have never attempted to reduce their agreement to complete written form: cf. Hospital Products Ltd v United States Surgical Corporation ((1984) 156 CLR 41 at 121). The cases in which those criteria were laid down or accepted as the cumulative ingredients of an overall test were concerned with the question whether a term should be implied in a normal contract which was complete upon its face: see, in particular, BP Refinery (Westernport) Pty Ltd v Hastings Shire Council ((1977) 52 ALJR 20 at 26; 16 ALR 363 at 376); Secured Income Real Estate (Australia) Ltd v St. Martins Investments Pty Ltd ((1979) 144 CLR 596); Codelfa Construction Pty Ltd v State Rail Authority of N.S.W. ((1982) 149 CLR 337). In such cases, the insertion of an additional term effectively involves an alteration to what the parties have formally accepted as the complete written record of the compact between them. As the judgment of Mason J in Codelfa ((1982) 149 CLR at 345-347) (Stephen and Wilson J [sic] concurring with his Honour's comments on this aspect of the case) clearly indicates, the cumulative criteria formulated or accepted in such cases cannot be automatically applied to cases such as the present where the parties have not attempted to spell out all the terms of their contract but have left most or some of them to be inferred or implied. Where that is so, there is no question of effectively altering the terms in which the parties have seen fit to embody their agreement; the function of a court is, as Lord Wilberforce pointed out in Liverpool City Council v Irwin ([1977] AC 239 at 254): 'simply … to establish what the contract is, the parties not having themselves fully stated the terms.' In the performance of that function, considerations of what is 'reasonable', 'necessary to give business efficacy to the contract' and 'so obvious that 'it goes without saying' ' (BP Refinery (Westernport) Pty Ltd ((1977) 52 ALJR 20 at 26; 16 ALR 363 at 376); The Moorcock ((1889) 14 PD 64 at 68); Shirlaw v Southern Foundries (1926) Ltd ([1939] 2 KB 206 at 227) may be of assistance in ascertaining the terms which should properly be implied in the contract between the parties. There will not, however, be the need or the justification for the law to refuse to imply any imputed term which does not clearly satisfy all such requirements. This is particularly so where, as here, the contract has passed from the executory stage and has been executed by one or both parties."[4]
[2] (1988) 164 CLR 539
[3] (1977) 180 CLR 266 at 283
[4] (1988) 164 CLR 539 at 571-572
Mr Elliott also referred to a passage from the joint judgment of Gleeson CJ, McHugh, Gummow and Hayne JJ in Astley v Austrust Ltd[5] in support of the allegation that it was a term of the retainer that the mediator would "exercise all the due care and skill of a senior expert mediator". Their Honours said:
"The implied term of reasonable care in a contract of professional services arises by operation of law. It is one of those terms that the law attaches as an incident of contracts of that class … It is part of the consideration that the promisor pays in return for the express or implied agreement of the promisee to pay for the services of the person giving the promise. Unlike the duty of care arising under the law of tort, the promisee in contract always gives consideration for the implied term. And it is a term that the parties can, and often do, bargain away or limit as they choose."
[5] (1999) 197 CLR 1 at 22
I therefore reject the submission that the term pleaded in paragraph 19(b) of the third party statement of claim should be struck out. Its current wording does, however, result in a minor amendment being required to the pleading. Term (b) currently refers to the care and skill of "a senior expert mediator" whereas in paragraph 3 it is pleaded that Mr Golvan was "an expert mediator". One or other of these phrases will have to be amended so that there is no discrepancy between them.
Mr Sifris submitted that term (a) would not be implied because Mr Golvan was acting as a mediator and not as a barrister. Mr Elliott submitted that the experience of Mr Golvan as a senior barrister was relevant to the standard of care and skill expected of him when acting as a mediator. It helped to define the duty owed by Mr Golvan. After all, this was not a case of a lay person mediating a neighbourhood dispute. He further submitted that the pleading contained no complaint about Mr Golvan as barrister. So understood I think term (a) can stand, although it may have been clearer if term (a) had been deleted and term (b) had had added at the end the words "who was also a senior barrister specialising in commercial litigation and related matters".
It was further submitted that I should strike out terms (c) and (d). This I will not do, given the allegation, which I must accept, that the retainer of the mediator was one to act for the disputing parties and to advise them. There seemed to be no dispute that terms (e) to (g) were likely to be implied terms of the mediator's retainer. With respect to term (g), it was not suggested that it is any part of a mediator’s function to coerce the parties or any party to settle its dispute. This is not to say that some encouragement from the mediator would be always out of place, but the decision to settle must always be the free decision of the disputant. The point taken on behalf of the mediator was that the term as pleaded was objectionable inasmuch as it imported the idea that the obligation not to do so arose only where there was a real or substantial risk that the settlement would be contrary to the interests of the parties or any of them. But where the contractual term conceded is wider than that pleaded, this will not assist the present application.
Turning to the question of tortious duties, Mr Sifris submitted that there was no duty of care on the part of the mediator. He argued that foreseeability of harm alone was not sufficient to establish any duty in relation to conduct causing pure economic loss. Something more was required. He submitted that there must be some relationship or connection between the parties that calls for protection in the form of a duty by the one party to the other. Mr Sifris further submitted that, proximity having been rejected by the High Court in Perre v Apand Pty Ltd[6] as the test for establishing a duty of care, there was no clear principle that determined liability for economic loss. He referred to a passage from the judgment of Chesterman J in Natcraft Pty Ltd v Det Norske Veritas[7], which he said he relied on as setting out the correct approach to cases such as this. His Honour said:
[6] (1999) 198 CLR 180
[7] [2000] QSC 348 at [45]
"There is no clear principle which serves to determine liability for economic loss. See Perre v Apand Pty Ltd (1999) 198 CLR 180 at 194, 197 and 209. Probably all that one can say is that to determine whether a duty to take care to avoid economic loss to another should be imposed depends upon the presence of salient features in the relationship between the defendants' action and the plaintiffs' loss which in combination can be seen by reference to existing categories of liability for such loss to give rise to the existence of the duty. Features commonly to be considered are:
(i) whether the loss suffered was reasonably foreseeable or actually foreseen

(ii) whether the imposition of a duty of care would impose
indeterminate liability on the defendant

(iii)

whether the imposition of a duty would impose an unreasonable burden on the freedom of action of the defendant
(iv) whether the plaintiff was vulnerable to loss from the
defendant's conduct

(v)

whether the defendant knew that his conduct could cause harm to persons such as the plaintiff
(vi) whether the defendant was 'in control' of the activities
which caused the loss.

'Vulnerability' refers to the capacity of a plaintiff to take steps to
protect itself from the loss in question.
According to McHugh J in Apand (p226):
'In determining whether the plaintiff was vulnerable an important consideration will be whether the plaintiff could easily have protected itself against the risk of loss by a protective action … Pecuniary losses are one of the ordinary risks of business … life. Business people frequently take … steps to minimise their business or economic losses. Taking these steps will often be a more efficient way of dealing with the risk of these losses than requiring defendants to have regard to the risk that others may suffer economic loss.'

Although the formerly popular concepts of 'reliance' and 'assumption of responsibility' have been criticised, it is still surely a useful starting point to consider whether a defendant assumed responsibility for the protection of the plaintiff against some particular foreseeable kind of economic loss, and whether it was reasonable for the plaintiff to rely upon what the defendant did or said."

Mr Elliott submitted that, given the absence of any binding authority setting out the extent of the duty, if any, which a mediator owed to the parties to the mediation, it was almost impossible for the second third party to strike out the allegation in paragraph 20 of the third party statement of claim that he owed certain duties to each of the parties to the mediation. The class of cases that may be subject to a general duty of care at common law are not closed[8] and this meant the Court should be extremely careful about shutting out a case summarily. This was particularly the case when the proceeding involved the provision of professional services and the claim that the plaintiff had suffered economic loss as a result of the professional's conduct.
[8] Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 481 per Brennan J; Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 52 per Deane J; Hill v Van Erp (1997) 188 CLR 159 at 178-179 per Dawson J and 189-190 per Toohey J.
Mr Elliott further submitted that rather than supporting the mediator's application, the High Court's decision in Perre v Apand Pty Ltd[9] established that the question of a mediator's duty of care to the parties was at least arguable. For example, Gleeson CJ said:
"If there once was a bright line rule which absolutely prevented recognition of a duty of care in any case where the negligent conduct of one person caused financial loss to another, not associated with injury to the other's person or property, and which assigned claims to recover such loss to the field of contract rather than tort, the line gave way in an area where there is a clear potential for carelessness to cause financial harm: negligent misstatements made to a person who, to the knowledge of the maker of the statement, relies upon the advice or information provided. However, there is no convincing reason why conveying advice or information should be treated as the solitary exception to an otherwise absolute exclusionary rule."[10]
Gaudron J said:
"The law as to liability for economic loss is a 'comparatively new and developing area of the law of negligence'… . It has not yet developed to a stage where there has been enunciated a governing principle applicable in all cases… . Perhaps it never will. Not surprisingly, given the present stage of development, different approaches have been advanced as to the way in which claims for which there is no legal precedent should be dealt with."[11]
And McHugh J stated:
"What is likely to be decisive, and always of relevance, in determining whether a duty of care is owed is the answer to the question, 'How vulnerable was the plaintiff to incurring loss by reason of the defendant's conduct?' So also is the actual knowledge of the defendant concerning that risk and its magnitude. If no question of indeterminate liability is present and the defendant, having no legitimate interest to pursue, is aware that his or her conduct will cause economic loss to persons who are not easily able to protect themselves against that loss, it seems to accord with current community standards in most, if not all, cases to require the defendant to have the interests of those persons in mind before he or she embarks on that conduct.
The principles concerned with reasonable foreseeability of loss, indeterminacy of liability, autonomy of the individual, vulnerability to risk and the defendant's knowledge of the risk and its magnitude are, I think, relevant in determining whether a duty exists in all cases of liability for pure economic loss. In particular cases, other policies and principles may guide and even determine the outcome. But I do not think that a duty can be held to exist in any case of pure economic loss without considering the effect of the application of these general principles."[12]
[9] (1999) 198 CLR 180
[10] (1999) 198 CLR 180 at 193
[11] (1999) 198 CLR 180 at 197
[12] (1999) 198 CLR 180 at 220
It was also noted by Mr Elliott that despite Chesterman J describing his list set out above as "features commonly to be considered", Mr Sifris had submitted that these same features were "necessary elements" to the existence of a duty of care, which was not the same thing. Mr Elliott therefore argued that the second third party's submissions put the matter too rigidly in what was clearly still a developing and uncertain area of the law.
Therefore, given the present uncertainty which attends the law in this area, I would be very loath to strike out a pleading on the basis that the mediator owed no duty at all to the parties in the mediation.
In respect of the pleading itself, it was submitted on behalf of the mediator that the duties in tort referred to in paragraph 20(a), (c) and (d) of the third party statement of claim were not duties owed by a mediator to disputing parties. A similar criticism to alleged contractual term (a) was made by Mr Sifris in respect of alleged duty (a) and it elicited a similar response from Mr Elliott. My reasoning is also similar and paragraph 20(a) therefore stands. As to whether the duties alleged in paragraph 20(c) and (d) would not be duties owed by a mediator to disputing parties in a more typical mediation, I do not pause to consider. In the present case where an unusual contract must be taken to exist between the mediator and those parties, it cannot be said that it is not arguable that duties similar to those implied in the contract are owed in tort by the mediator to them. I bear in mind that my present function is not to determine these matters, but only to decide whether the allegations are manifestly without prospect of success.[13]
[13] See General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130, per Barwick CJ
Mr Sifris submitted that the other duties pleaded in paragraph 20(e) to (g) were mainly procedural and were couched in general terms. He conceded that they were arguable as duties, but submitted that they were not relevant to the alleged breach of duty which allegedly caused the loss suffered by Mrs Tapoohi.
In paragraph 22 of the third party statement of claim it is alleged that the mediator knew or ought to have known a large number of specified matters. It is not necessary that I set them all out in detail. I note, however, that they included the following:
"…
(e)      any settlement between the Parties would, alternatively was highly likely to, involve consideration of tax issues worth potentially millions of dollars to the Parties, or one or more of the Parties;
(f)       none of Denton, Shiff or Adams was a tax expert and none of them was in a position to give tax advice to Tapoohi on 20 September 2001;
(g)      the Parties, alternatively Tapoohi, did not intend to enter into any legally binding agreement at the Mediation, but only intended to reach an agreement in principle, with any such agreement being subject to the Express Terms;

…

(n)

at the time that Golvan insisted that the Alleged Terms of Settlement be drafted that night he represented to Shiff in substance that it was in the interests of all of the Parties that a written agreement be prepared and executed that night;
…

(q)

during the drafting of the Alleged Terms of Settlement by Golvan it became apparent that there had been no negotiations between the Parties as to what consideration should be paid to Tapoohi for the proposed transfer of Tapoohi's shares in EOS Holdings ….;

(r)

none of the legal representatives of the Parties still present at the Mediation expressed an opinion as to what the appropriate consideration was for the proposed transfer of shares in EOS Holdings;

(s)

Golvan then represented that a figure of $1.00 should be inserted as the consideration for the proposed transfer of the shares in EOS Holdings;
…

(v)

the drafting of the Alleged Terms of Settlement was completed without any of the legal representatives of the Parties obtaining, or seeking to obtain, tax advice;
…

(x)

Golvan represented to Shiff and Adams that the Alleged Terms of Settlement should be faxed immediately to Tapoohi for execution;

(y)

the Alleged Terms of Settlement were faxed to Tapoohi in Israel for execution that night;
…"

In paragraph 23 it is said that, notwithstanding this knowledge, the mediator insisted that the parties execute the Terms of Settlement on 20 September or that he positively encouraged them or allowed them to do so. Again, for present purposes, I must proceed on the basis that the mediator did in fact know each of the things set out in paragraph 22 and, further, that he did the things alleged in paragraph 23. These matters are then said in paragraph 24 to amount to seven breaches of the contractual duty owed to the parties by the mediator as follows:

"(a) failing to exercise all the due care and skill of a senior barrister
specialising in commercial litigation and related matters;
(b)      failing to exercise all the due care and skill of a senior expert mediator;
(c)       not reasonably protecting the interests of the Parties;
(d)      acting in a manner patently contrary to the interests of the Parties, alternatively patently contrary to the interests of Tapoohi;
(e)      failing to act impartially as between the Parties;
(f)       failing to carry out his instructions from the Parties by proper means; further or alternatively

(g) coercing or inducing the Parties into settling the Earlier Proceeding when, at the relevant time or times, there was a real and substantial risk that settlement was contrary to the interests of the Parties, alternatively contrary to the interests of Tapoohi."

Counsel for the mediator contended that these breaches were not arguable and, further, that the breach of duty alleged in paragraph 23 did not constitute a breach of duty owed by the mediator. As it is pleaded, paragraph 23 does not allege a breach of duty by the mediator so that this submission was misconceived. With respect to the breaches set out in paragraph 24, so long as breach (a) is understood in the sense set out above, I am unable to conclude that the facts alleged in paragraphs 22 and 23 would not in the circumstances amount to the alleged breaches of contract.
Paragraph 25 then alleged similar breaches of the mediator's duty of care and one further breach which had not been previously pleaded. The further breach included in the particulars to this paragraph read as follows:

"(h) In all the circumstances alleged in paragraph 22 above, a mediator acting properly and in accordance with the Mediator’s Retainer would:

(i) not have allowed the Parties to execute, alternatively would have advised the Parties not to execute, the Alleged Terms of Settlement late on the night of 20 September 2001;
(ii) have insisted, alternatively advised, that the Parties have an appropriate period of time to carefully read the Alleged Terms of Settlement and/or to obtain professional tax advice on matters arising from the contents of the Alleged Terms of Settlement."

These breaches are here alleged to be breaches of the tortious duty of care pleaded in paragraph 20. It was submitted that I should strike out the further breach (h) on the basis that it did not constitute a breach of the tortious duty pleaded to be owing by a mediator to the disputants. I will not do so. The duty to reasonably protect the interests of the parties might arguably found this breach.

Then it is alleged, in paragraph 27 of the third party statement of claim, that during the course of the mediation, the mediator assumed responsibility for the interests of Mrs Tapoohi and gave advice in relation to matters affecting her interest. Four matters are referred to in the particulars – the mediator's insistence that the Terms be drafted and executed on the night of 20 September 2001; the mediator's advice that it was in the interests of the parties that the Terms be prepared and executed that night; that the mediator took it upon himself to draft the Terms; and his advice that the sum of $1.00 should be inserted into the clause dealing with the proposed transfer of Mrs Tapoohi's shares in EOS Holdings. In paragraph 28, it is pleaded that the mediator knew or ought to have known that his conduct would be relied upon by Mrs Tapoohi and her legal representatives.
Then it is alleged in paragraph 29 that the same tortious duties are owed by the mediator by reason of the retainer, by reason of his knowledge of the matters alleged in paragraph 22, by his assumption of responsibility as alleged in paragraphs 27 and 28 and by his giving of the advice alleged in paragraph 27.
In paragraph 30 it is said that the solicitors were induced by the matters alleged in paragraph 27 in giving to Mrs Tapoohi the advice referred to in paragraph 4(e) of the third party statement of claim. This was a reference to the allegation by Mrs Tapoohi in her amended statement of claim that the solicitors advised her to sign the Terms of Settlement on the basis that they did not constitute a concluded agreement binding on Mrs Tapoohi and that the Terms of Settlement were subject to express terms that the parties would seek tax advice concerning settlement of the matters in dispute between them and following receipt of such advice would negotiate in good faith in the light of that advice.
It was submitted by counsel for the mediator that there is nothing in paragraph 27 to warrant this conclusion. The response on behalf of the solicitors was that but for the conduct of the mediator Mr Shiff would not have given that advice. As it presently stands the bare allegation does seem highly unlikely. However, I consider that paragraph 30 should not be struck out at this stage. Rather it seems to me that, if it wanted to, it would be appropriate for the second third party to request particulars of the conduct of the mediator. Some of the matters relied on may well be already set out in the pleading, in particular paragraph 22, and some may be new matters. The second third party could then consider its attitude to paragraph 30 in the light of the further and better particulars.
In paragraph 31, it is alleged that the mediator acted negligently and in breach of the tortious duties alleged in paragraph 20. The breaches are identical to those alleged in paragraph 25 plus yet another which is in these terms:

"(i)

Advising to insert a figure of $1 for the consideration of the proposed transfer of Tapoohi’s shares in EOS Holdings without properly considering, alternatively without considering at all, the possible adverse tax consequences to the Parties, alternatively Tapoohi."

These breaches are said to arise by reason of the matters alleged in paragraphs 27 to 31 of the third party statement of claim. I assume that this reference to paragraph 31 is an error and must be read as a reference to paragraph 30. What appears to be pleaded here is that, by reason of the mediator’s knowledge of the matters alleged in paragraph 22, his conduct alleged in paragraph 23 and the advice given by him in paragraph 27, he was in breach of the tortious duty owed by him to the disputants. In my opinion, it is arguable that the alleged breaches could be said to arise out of the conduct of the mediator and an assumption of responsibility and the giving of advice alleged in paragraphs referred to.

In paragraphs 26 and 32 of the third party statement of claim, it is alleged that Mrs Tapoohi suffered damage as a consequence of the mediator’s breaches of contract or of duty of care. The damage alleged is that alleged by Mrs Tapoohi in paragraphs 38, 39 and 40 of her amended statement of claim. In paragraph 119 of her pleading, Mrs Tapoohi alleged against the solicitors the damages alleged in paragraphs 38 and 40 of her pleading (the potential extra income taxation liability of the plaintiff by way of a deemed dividend on the purchase of the Properties), not paragraph 39 (the considerable legal and accounting costs and disbursements which the plaintiff would incur even if she were to succeed in arguing that no such tax was payable). I strongly suspect that the omission of paragraph 39 from the particulars given in paragraph 119 of the amended statement of claim was a mistake on the part of the pleader of that claim. Nevertheless, the contribution claim arises only where the damage suffered by Mrs Tapoohi as a consequence of the mediator’s wrongful act is the same damage as that suffered by her as a consequence of the solicitor’s wrongful act. The disconformity between the damage alleged in paragraphs 26 and 32 of the third party statement of claim and that alleged in paragraph 119 of Mrs Tapoohi’s statement of claim must be resolved. I will therefore strike out the reference, in the particulars given in paragraphs 26 and 32 of the third party statement of claim, to paragraph 39 of the plaintiff’s amended statement of claim.
Finally, in paragraph 33, the solicitors assert their claim to contribution under s.23B of the Wrongs Act 1958. This paragraph is inappropriately introduced by the words "further or alternatively". This cannot be correct since there is no claim against the mediator other than a claim for contribution.
Summary Judgment – Rule 23.01(1) and Rule 23.03
The authorities warn that the jurisdiction to give summary judgment against a claim is one which should be exercised sparingly and only where the claim is evidently foredoomed to fail. Where, as here, the claim is put on a number of alternative bases it will only be where it appears that none of them has a prospect of success that judgment will be given against the solicitors. Furthermore, in a case such as the present, where there is conflicting evidence about factual matters the warning is particularly apposite. This is so despite the fact that, as previously explained, I have principally relied on the affidavits of Mr Shiff and Ms Adams filed on behalf of the solicitors in opposition to the summary judgment application. Mr Elliott graphically illustrated the point by drawing attention to the heavy reliance placed by Mr Sifris on Mr Shiff's statement that the draft Terms of Settlement were read by Mr Denton as well as himself. Mr Denton, however, denied that he had read them or advised on them. Mr Elliott submitted that if this evidence were accepted at trial, it might result in a more favourable factual situation for the solicitors than Mr Shiff's own version of what had occurred. Furthermore, experience shows that evidence at trial, especially after cross-examination, does not always have the lustre of pre-trial affidavits or witness statements. Therefore, it seems to me that it will only be in the clearest case where it is shown that there is no prospect of success of the claim that a claimant should be denied a trial.

Much of the evidence of Mr Shiff, Ms Adams and Mr Denton, not surprisingly, suggested that no final agreement was ever reached by the parties at the mediation. This was, of course, the primary position adopted by Mrs Tapoohi in this proceeding. It is put, and I must accept, that this was a complex and bitter dispute between the sisters, that the mediator had been made aware by Mr Denton and Mr Shiff that it would be necessary to have regard to the taxation and stamp duty implications of any settlement reached and that this would require Mrs Lewenberg to seek specialist advice on those matters, which advice was not then available to her. I must accept, too, that during the time that Mr Golvan was dictating the terms, Mr Shiff protested that the consideration for the transfer of the EOS Holdings shares should be subject to review and that he was not comfortable with the unwinding of pre-existing structures which had been put in place under various agreements and trusts established by Mrs Lewenberg in order to minimise adverse taxation consequences to the deceased, Mrs Lossak. Mr Denton, Mr Shiff and Ms Adams say that, when Mr Golvan dictated the terms, these reservations had not been resolved or withdrawn and that they were never resolved or withdrawn. The Terms of Settlement are not expressed to be conditional and I must assume for present purposes that, by executing them, Mrs Tapoohi bound herself by their terms.
Put baldly, what is contended on behalf of the solicitors is that these objections were either ignored or swept aside by the mediator who insisted that the parties must that night execute a document recording their agreement. His objective was achieved. It is put that no concluded agreement had been reached at the mediation because the details and revenue implications of the agreement required further consideration. It is then put that the mediator ought to have inserted this fact in the document to be executed, or should, in the circumstances, not have insisted upon its execution forthwith, but rather he should have given the parties time to consider it further.
The mediator’s position in response to this is that Mrs Tapoohi was well represented by those who were qualified to protect her interests and that she, herself, was a qualified lawyer and well able to make decisions on the terms and implications of the agreement. It was not for him in these circumstances, to offer her legal advice. Moreover, she voluntarily executed the document in circumstances where she was not under any improper pressure. Accordingly, he owed no duty to protect her interests and, if she is bound by the document, this is not the result of any breach of contractual or tortious duty on his part.
The first submission put on behalf of the mediator was that his retainer was only to act as a mediator at the mediation between the parties and did not include, as alleged in paragraph 18 of the third party statement of claim, that he was to act for parties and to advise them at the mediation. It was also submitted that the retainer did not include many of the terms which are pleaded in paragraph 19 of the third party statement of claim.
The evidence shows that the mediation was established by private agreement between the parties and the mediator. It is said in the particulars to paragraph 18 that the agreement was oral and contained in conversations between the solicitors for the parties, the substance of which was that they wanted to retain Mr Golvan as mediator. No communication with the mediator himself is alleged. Further, no party has challenged the statement in the mediator’s letter of 3 September 2001 in which he set out his view of his role as mediator. I take it to be at least arguable that this statement was accepted by the parties to be part of the terms of the mediator’s retainer.
Therefore, it is arguable that there is nothing in the evidence to suggest that there was any express agreement between the mediator and the parties that the mediator was "to act for them" at the mediation, or to "advise them as mediator at the Mediation". He was, as Mr Sifris submitted, simply retained to act as mediator in the proceeding.
Given the nature of this application, I think I should not leave things there. In a sense, a mediator is retained "to act for the parties" at the mediation, for it is at their behest that he is acting as mediator. But in no sense, absent some specific agreement, can it be said that a mediator acts for a party in the sense that a lawyer acts for a client. A moment’s reflection will demonstrate why this is so. The parties are in dispute, so their interests are in conflict. The mediator is required to stand back from this conflict, to assist the parties to resolve it; it is not to promote the interests of one party perhaps to the disadvantage of the other. This is, essentially, the role of the lawyer acting for that party. It is arguable that there is nothing in the evidence in this case to suggest that the mediator’s retainer was otherwise.
The second aspect of the pleaded retainer is that the mediator was retained "to advise them as a mediator at the Mediation". Again, it is possible to imagine a case where the parties chose a mediator with particular expertise in the subject matter of their dispute to advise them as to the terms which they might adopt to settle it. It is possible, too, to imagine a case where the parties, lacking advice as to the legal aspects of their dispute, retain a lawyer to mediate it. In such a case it may be put that the mediator contractually assumes an obligation to proffer advice to them as to the legal implications of the settlement that they are minded to reach. I say nothing about the case where one party only lacks this legal advice, for this does not here arise. There is nothing in the evidence before me to suggest that this is such a case. True it is, that the mediator was an experienced mediator and a senior commercial barrister. But each of the parties was represented by competent lawyers. I put to one side the fact that Mrs Tapoohi was herself a qualified lawyer, for I know nothing about her experience or whether she has ever practised as such. She was represented by experienced counsel and two solicitors, one at least of whom has practised for over 25 years in commercial transactions. In these circumstances, it is arguable that there is nothing to support a contention that the mediator was retained to advise Mrs Tapoohi.
Nevertheless, the above conclusions are only that certain propositions favouring the mediator were arguable. I do not consider that they could form the basis of an order for summary judgment without a full examination of all of the relevant evidence at a trial.
I mention, too, for completeness, the possibility that the intent of the pleader was to allege that the mediator by the retainer undertook a duty to advise the parties concerning the mediation process rather than about their dispute. It is not necessary to take this further, since it is not suggested that he gave or failed to give any such advice.
With respect to terms pleaded in paragraph 19 of the third party statement of claim, it is difficult to take the matter any further than the above discussion of the contractual terms in the context of the strike out application. I accept that the parties were aware of Mr Golvan’s standing and experience, that their disputes were complex and that feelings between the sisters were hostile and even bitter. It was not, therefore, likely to be an easy task to achieve a settlement. However, there was, I think, nothing very controversial about the circumstances in which the mediator’s retainer was entered into. On the other hand, there is nothing in the affidavits which would negate the suggested terms. The question of the actual terms of the retainer cannot, therefore, be resolved without a trial.
Mr Sifris submitted that any tortious duty and the content thereof must be assessed in the context of the facts of this case. In particular, he referred to the following propositions which, he submitted, must lead to the conclusion that, even on their own version of what happened at the mediation, the solicitors could not succeed:
(a)        It could not be said that there was, and the evidence did not establish, any assumption of responsibility by the mediator in the circumstances of this case, in particular, given that Mrs Tapoohi was represented by three legal practitioners.
(b)        It could not be said that there was, and the evidence did not establish, reasonable reliance by Mrs Tapoohi on the mediator. She had not deposed to any reliance. She relied on her legal advisers. She was not even present.
(c)         It could not be said that there was, and the evidence did not establish, vulnerability on the part of Mrs Tapoohi. She was able to, and did, look after her own interests and she was represented by three experienced legal practitioners.
(d)        Clearly the mediator did not have any control in the relevant sense. Simply because the mediator dictated the Terms did not mean that the plaintiff's lawyers could not have added the express terms.
Mr Sifris further submitted that, in the circumstances of this case, it could not be suggested that a reasonable mediator would have insisted that the parties have further time to consider the Terms of Settlement where there had been agreement in principle and the Terms had been drafted together, read by the parties and their legal advisers and signed. This submission ignores Mr Shiff's evidence that he repeatedly stated that everything was subject to the obtaining of taxation advice.
Mr Sifris emphasised in the strongest terms that Mr Shiff and Ms Adams (and Mr Denton) had read the Terms of Settlement and despite the claimed constant reiteration that the Terms were subject to the obtaining of taxation advice had overlooked the fact that there was no clause in the Terms of Settlement to this effect. He then asked rhetorically why it was the mediator's fault that this occurred. He pointed out that Mr Shiff's evidence seemed to suggest a mistake on his part and yet mistake had not been pleaded. Mrs Tapoohi's problem was caused, Mr Sifris submitted, not by Mr Shiff being forced to continue with the mediation or by the mediator dictating the Terms of Settlement that night, but by Mr Shiff making the admitted mistake of not appreciating that the desired express term was not contained in the Terms of Settlement before he advised Mrs Tapoohi to sign.
Mr Elliott submitted that there were two key ways of looking at what the mediator had done wrong. First, on the assumption that it was intended to be (and there was) a binding settlement, Mr Golvan allowed the matter to proceed to that stage when he should not have because he knew and had been told that Mrs Tapoohi had not received any taxation advice about the settlement. Either he should have stopped the mediation or he should have advised the parties of the risk of concluding a binding agreement without such advice. On the other hand, if it was not intended to be a binding settlement (but it had become one) then the mediator was at fault because he did not include in his dictation of the Terms the express term. Moreover, the mediator gave bad advice about the insertion of the figure of $1.00 in the Terms as the consideration for the transfer of the shares.
Mr Elliott disputed Mr Sifris' submission that there had been no assumption of responsibility by the mediator. He pointed to the allegations of various advice given by Mr Golvan. It was also open to conclude, he submitted, that through her solicitors Mrs Tapoohi relied on what Mr Golvan said to them. Mr Elliott also stressed that it was arguable that Mrs Tapoohi was vulnerable in the relevant sense. She was in Israel, not present at the mediation. Further, the settlement involved substantial sums of money where none of her legal representatives professed any expertise in the area of taxation. Finally, Mr Elliott submitted that the facts showed that the mediator did exercise control, including over Mrs Tapoohi's counsel, in that he agreed to stay on at the request of Mr Golvan.
In response to Mr Sifris' rhetorical question as to why it was the mediator's fault that the express term was not included in the Terms of Settlement, Mr Elliott submitted that the eleventh defendant was not saying it was all the mediator's fault, simply that he was to some extent at fault. Mr Shiff admitted he made a mistake in not picking up the omission of the express term, but he sought contribution from the mediator should Mrs Tapoohi succeed in her claim against the solicitors.
In considering these competing submissions, I must remind myself of the caution which must attend my determination of this application. I have reached the conclusion that it is not beyond argument that some at least of the breaches of the contractual and tortious duties might be made out. I consider that it is possible that a court could find that there was such a breach constituted by the imposition of undue pressure upon resistant parties, at the end of a long and tiring mediation, to execute an unconditional final agreement settling their disputes where it was apparent that they, or one of them, wanted to seek further advice upon aspects of it, or where it was apparent that the agreement was not unconditional, or where the agreement was of such complexity that it required further consideration. I emphasise that it is not for me to conclude that any of these things occurred in the present case and I do not do so. It is sufficient that I conclude, as I do, that on the evidence before me such a contention is not plainly hopeless.
A claim of the kind presently under consideration raises formidable difficulties of causation. These are illustrated by the decision of the Missouri Court of Appeals in Lange v Marshall[14]. Nevertheless, I think this is a matter, too, which must go to trial. It is only when all the facts are known and examined that this question can be determined. I would certainly not conclude, as things stand, that it is so plainly hopeless that the solicitors should be denied a trial of the issue.
[14] 622 SW 2d 237 (Mo. App. 1981) at 238
It was also submitted by Mr Sifris that the damage suffered by Mrs Tapoohi, assuming her success on all other issues, was at best highly speculative. If the settlement had not occurred, or even if Mrs Tapoohi has incurred a substantial taxation liability, it was impossible to say what would have happened if all of the disputes had gone to trial and whether Mrs Tapoohi would have been better or worse off. I would not give summary judgment on this basis. Mrs Tapoohi will have to prove her loss in her proceeding against the solicitors. It would be undesirable that I should conclude here that she must inevitably fail to do so without having heard what she has to say about this issue.
Finally, it was contended that, as a matter of public policy, no duty is owed by a mediator to the disputants. Mr Elliott submitted that the onus of establishing this immunity rested on the mediator and referred to two decisions of the House of Lords in Sutcliffe v Thackrah[15] and Arenson v Arenson[16]. In the latter case, which dealt with the question of whether a valuer acting as an expert, and whose finding was to be final and binding on all parties, had a right of immunity, Lord Salmon held that immunity against actions for negligence could only exist where there were strong public policy grounds. His Lordship continued:
"This rarely occurs because the law recognises that there is normally an overriding requirement of public policy that those who cause damage by a breach of their legal obligations to take reasonable care should be answerable in the courts to compensate those to whom they have caused damage by their negligence.[17]
Again, this issue can only be fully investigated at a trial.
[15] [1974] AC 727
[16] [1977] AC 405
[17] [1977] AC 405 at 436
Further, it was faintly suggested that, notwithstanding the absence of any court order for mediation, I should characterise the mediator as one to whom a proceeding had been referred to mediation under the Rules of Court so as to attract statutory immunity under s. 27A of the Supreme Court Act 1986. This was put on the basis that the mediation here was conducted with the knowledge and approval of the Court and in the Commercial List where mediations are, in most cases, ordered as a matter of course. It is sufficient that I say that I am not satisfied that this submission is uncontrovertible in the sense that it must inevitably succeed. Nor do I conclude that an analogous common law immunity for mediators under a consensual mediation must inevitably be held to exist. Therefore, I am not satisfied that the solicitors' claims against the mediator are unarguable because of the evident existence of such an immunity. The matter must await fuller examination and argument at trial.[18]
[18] See Wickstead v Browne (1992) 30 NSWLR 1 at 5, per Kirby P.
Conclusions
I conclude, therefore, that the second third party’s application for summary judgment or a stay of the third party statement of claim as against the second third party should be dismissed.
I also conclude that the following parts of the third party statement of claim against the mediator should be struck out:
(a) the reference in the particulars given in paragraphs 26 and 32 to paragraph 39 of the plaintiff's amended statement of claim;
(b) the words "further or alternatively" in paragraph 33.
The question of what orders should now be made is complicated by the fact that since this matter was argued the plaintiff has been given leave to discontinue her proceeding against the first to tenth defendants.[19] She is now suing only the solicitors. A proposed further amended statement of claim against the sole remaining defendant is yet to be delivered. I will hear counsel further as to these matters and as to costs.
[19] Tapoohi v Lewenberg [2003] VSC 379

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"(a)	a barrister carrying on a practice in the State of Victoria;
(b)	one of her Majesty's counsel;
(c)	a senior barrister specialising in commercial litigation and related matters;
(d)	an expert mediator and, further or alternatively, a person who holds and held himself out as an expert mediator."

"(a)	exercise all the due care and skill of a senior barrister specialising in commercial litigation and related matters;
(b)	exercise all the due care and skill of a senior expert mediator;
(c)	reasonably protect the interests of the Parties;
(d)	not act in a manner patently contrary to the interests of the Parties, or any of them;
(e)	act impartially as between the Parties;
(f)	carry out his instructions from the Parties by all proper means; and further or alternatively
(g)	not coerce or induce the Parties into settling the Earlier Proceeding when, at the relevant time or times, there was a real and substantial risk that settlement would be contrary to the interests of the Parties, or any of them."

(ii)	whether the imposition of a duty of care would impose indeterminate liability on the defendant
(iii)	whether the imposition of a duty would impose an unreasonable burden on the freedom of action of the defendant
(iv)	whether the plaintiff was vulnerable to loss from the defendant's conduct
(v)	whether the defendant knew that his conduct could cause harm to persons such as the plaintiff
(vi)	whether the defendant was 'in control' of the activities which caused the loss.

…
(n)	at the time that Golvan insisted that the Alleged Terms of Settlement be drafted that night he represented to Shiff in substance that it was in the interests of all of the Parties that a written agreement be prepared and executed that night;
…
(q)	during the drafting of the Alleged Terms of Settlement by Golvan it became apparent that there had been no negotiations between the Parties as to what consideration should be paid to Tapoohi for the proposed transfer of Tapoohi's shares in EOS Holdings ….;
(r)	none of the legal representatives of the Parties still present at the Mediation expressed an opinion as to what the appropriate consideration was for the proposed transfer of shares in EOS Holdings;
(s)	Golvan then represented that a figure of $1.00 should be inserted as the consideration for the proposed transfer of the shares in EOS Holdings;
…
(v)	the drafting of the Alleged Terms of Settlement was completed without any of the legal representatives of the Parties obtaining, or seeking to obtain, tax advice;
…
(x)	Golvan represented to Shiff and Adams that the Alleged Terms of Settlement should be faxed immediately to Tapoohi for execution;
(y)	the Alleged Terms of Settlement were faxed to Tapoohi in Israel for execution that night;
…"

[2003] VSC 410

21 October 2003