Judgment

The plaintiff in this matter is Ms Abigail Lucilla Balingit Valenzuela. The defendant is the Commonwealth Bank of Australia (the Bank). On 21 April 2017, Ms Valenzuela filed a statement of claim by which she sought various forms of relief from the Bank. Ms Valenzuela has acted for herself in this matter, and she appeared for herself at the hearing that is the subject of these reasons for judgment.

The Bank’s notice of motion

On 30 May 2017, the Bank filed a notice of motion in which it sought the following relief:

1. That, pursuant to rule 13.4 of the Uniform Civil Procedure Rules, these proceedings be dismissed.

2. In the alternative, pursuant to rule 28.2 of the Uniform Civil Procedure Rules, that an order be made for a separate determination of the following questions:

(a) Is the Plaintiff estopped from bringing or maintaining these proceedings by reason of the Plaintiff being bound by the terms of the Deed Poll entered into by the Plaintiff in favour of a number of beneficiaries including the Defendant on 21 February 2014 in settlement of the proceedings no. 00294472 of 2013 in the Supreme Court of New South Wales (“Deed of Release”)?

(b) Is the Plaintiff not bound by the terms of the Deed of Release by reason of her entering into the Deed of Release under duress?

3. Such other orders as the Court thinks fit.

4. The Defendant be awarded its costs.

It appeared to me from reading the notice of motion that it sought by par 1 an order for summary dismissal of Ms Valenzuela’s claim, and in the alternative, by par 2, an order that there be determined separately and before the other issues in Ms Valenzuela’s claim the question of whether Ms Valenzuela is precluded from pursuing her claim because she is bound by the terms of what was defined as the Deed of Release. In ordinary circumstances, if the court was persuaded to make the order for separate determination, the court would then make directions for the preparation of the evidence on that issue, and in due course the separate questions would be set down for hearing by the court. However, it appeared to me from a reading of the Bank’s outline of submissions that the Bank proposed that, if instead of dismissing the claim summarily, the court made the order for separate determination, the court would then immediately proceed to hear the separate question and give judgment upon it. I took the view that the notice of motion did not by its terms give notice to Ms Valenzuela that the Bank proposed that the court would deal with the separate question immediately if the order for determination of that separate question was made. As Ms Valenzuela was a litigant in person, I took considerable time to explain the nature of the relief sought by the Bank in the notice of motion, and also the fact that the Bank proposed that the separate question would be determined immediately. At the end of that discussion, which also involved counsel for the Bank, I was advised by Ms Valenzuela that she had been informed by the solicitors for the Bank of what the Bank wished to happen at the hearing, that she had given notice for the Bank’s witnesses to attend for cross-examination, and that she consented to the separate questions being dealt with immediately. I was satisfied by the terms of the discussion that Ms Valenzuela was in a position to give her consent on a free and informed basis. I also accepted that it was in her interests to do so, as she informed the court that she was ready to proceed, and because that course would minimise the amount of the costs that Ms Valenzuela may be ordered to pay to the Bank if she failed in her case for any reason. I was also satisfied that the present was an appropriate case for the court to make an order as sought by par 2 of the notice of motion (although it would be preferable to reverse sub-pars (a) and (b)). My reason was that the question whether Ms Valenzuela was bound by the Deed of Release, and if so whether it precluded Ms Valenzuela from prosecuting the balance of her claims in her statement of claim, were genuine separate questions. If they were determined in the Bank’s favour, it would lead to the dismissal of Ms Valenzuela’s statement of claim, which would save substantial costs and delay in that it would become unnecessary for the parties to prepare and litigate the balance of the issues. Such a course was in Ms Valenzuela’s interests because it could well substantially reduce the amount of the legal costs that she might otherwise be at risk of being ordered to pay to the Bank. Once that position had been reached, the question arose as to the continuing utility of the Bank pursuing the claim in par 1 of the notice of motion for summary dismissal of Ms Valenzuela’s statement of claim. What would be the utility of the court dealing with the matter on a summary dismissal basis, when the parties were in a position to deal with the very same question on the merits? This was a significant question, given the high threshold that a defendant must satisfy before a plaintiff’s claim will be summarily dismissed. The result of these considerations was that the Bank agreed that it would not pursue the relief sought in par 1 of the notice of motion, if the court made the order sought in par 2, and the parties proceeded to deal with the separate questions on their merits. I advised the parties that I would proceed upon that basis, and that I would in due course make the orders sought in par 2 of the notice of motion, save that sub-pars (a) and (b) would be reversed. I will make that order at the end of these reasons for judgment.

Ms Valenzuela’s original proceedings

It is necessary to begin by considering the earlier Supreme Court proceedings referred to in par 2(a) of the notice of motion. On 8 November 2013, Ms Valenzuela filed an amended statement of claim in the Supreme Court in which she claimed relief against the Bank and seven others. The seven other defendants were apparently executives of the Bank or possibly the Bank’s subsidiary, Commonwealth Securities Ltd (CommSec). There is evidence that on 4 March 2007, the plaintiff was employed by CommSec under a written contract of employment. Ms Valenzuela’s employment was terminated on 25 March 2009. There is an issue between the parties as to whether the Bank or CommSec terminated Ms Valenzuela’s employment, or whether she voluntarily resigned in an email dated 26 March 2009. Ms Valenzuela evidently drafted the statement of claim herself, and there are some difficulties in understanding it. It is sufficient to note that Ms Valenzuela alleged that during the course of her employment she was the author of a computer program for which she claimed copyright. Ms Valenzuela also claimed that her employment was terminated “under unjust processes”. Ms Valenzuela made what she called a restitution or quantum meruit claim on the basis that she would receive $25,000 plus interest and damages for the de facto transfer of the copyright in the computer program to the Bank. Ms Valenzuela also claimed exemplary damages and interest “for deprivation of income and negative consequences to [her] personality’s income generation capacity”. It is fair to say, based upon Ms Valenzuela’s statements of claim, and the evidence and the statements that she made during the hearing, that the loss of her employment in 2009 has caused Ms Valenzuela considerable hardship and emotional difficulties. It is sufficient to record that the Bank’s position was that Ms Valenzuela had resigned rather than that her employment had been terminated, and that any copyright in any computer program produced by Ms Valenzuela was the property of the Bank (or CommSec), as Ms Valenzuela produced the computer program during the course of her employment.

Mediation and Deed of Release

On 21 February 2014, the parties participated in a mediation conducted by Deputy Registrar Siva. As a result of that mediation, Ms Valenzuela signed what was called a Deed Poll Deed of Release on 21 February 2014. The Deed of Release was expressed to be for the benefit of the Bank, CommSec, related bodies corporate of the Bank and CommSec, the seven other defendants to the statement of claim, and all other current and former directors, officers, employees and contractors of the other companies mentioned. The Background provided for the following:

A On 14 March 2007, CommSec and the Plaintiff entered into a written contract of employment (Contract).

B Ms Valenzuela commenced employment with CommSec on or about 19 March 2017 (Employment).

C Ms Valenzuela’s employment terminated on about 25 March 2009.

D Ms Valenzuela commenced the Proceedings.

E A mediation in respect to the Proceedings was held on 21 February 2014.

F If Ms Valenzuela executes this Deed, [the Bank] will, within 14 business days of receiving the Deed executed by Ms Valenzuela, pay to Ms Valenzuela the sum of $22,000 (Settlement Sum).

G With no admission of liability, the parties have agreed to settle all Claims Ms Valenzuela has, or may have in the future, on the terms set out in this document.

Relevantly, clause 2.1 provided:

2.1 Ms Valenzuela accepts the Settlement Sum in full and final discharge of all amounts owed or owing to her in connection with her employment with the [Bank] Group or incidental to her employment with the [Bank] Group.

By clause 3, Ms Valenzuela consented to the proceedings being dismissed with no order as to costs. Clause 4 was in the following terms:

4.1 Ms Valenzuela releases and discharges the Beneficiaries from all Claims which she now has or could, would or might but for this release have or have had against the Beneficiaries by reason of or arising out of or in any way related directly or indirectly to one or more of the following:

a) the matters alleged in the Proceedings;

(B) the facts and circumstances set out in the Background clauses;

(c) her employment or the cessation of her employment with the [Bank] Group.

4.2 This document may be pleaded as a bar to any Claims commenced or to be commenced by Ms Valenzuela against the Beneficiaries or one of them concerning or arising out of or in any way related directly or indirectly to the matters referred to in clause 4.1 of this document.

On 21 February 2014, Ms Valenzuela gave her consent to the making of an order that the proceedings be dismissed in their entirety with no order as to costs, by reason of her signing a consent order of that date. In due course, the Bank paid to Ms Valenzuela the settlement sum of $22,000.

Ms Valenzuela’s new proceedings

On 21 April 2017, Ms Valenzuela filed the statement of claim by which she commenced the present proceedings. Again, she drafted the statement of claim herself. By her statement of claim, Ms Valenzuela claimed an extension of two years and three months of the six-year limitation period pursuant to s 60C of the Limitation Act 1969 (NSW). Her statement of claim made various allegations against the Bank including breach of duty of care to her as an employee, infringement of copyright, unjust enrichment, lying under oath pursuant to s 327 of the Crimes Act 1900 (NSW), concealing a serious indictable offence pursuant to s 316 of the Crimes Act, unwonted force applied pursuant to s 61 of the Crimes Act, and “Voidable Contract Vitiated by Duress, Undue Influence, Unconscionable Conduct, Economic Duress”. Ms Valenzuela then claimed as relief, proper compensation for the software program she had developed, her HECS fees for undertaking a bachelor of law course, and $70,000 for loss of employment. In broad terms, the pleadings and particulars alleged that Ms Valenzuela developed the computer program, and then referred to the claim that she had made for infringement of copyright in relation to the computer program in the earlier statement of claim, and alleged that the Bank had claimed that she had resigned on 25 March 2009 when in fact the Bank had terminated her employment, which caused her various alleged injuries. Ms Valenzuela pleaded a series of complicated allegations concerning the steps that she took in the production of the computer program. Concerning the mediation, Ms Valenzuela made the following allegations:

4. In the 21 February 2014 Mediation, the [Bank] used an email document sent a day after the Plaintiff was terminated, to prove coercively and falsely the above sworn false statement in the Statement of Defence…

5. At Mediation, the [Bank] denied the Plaintiff a fair discussion of issues, disregarded, hence concealing the perjury complained about in Paragraph 3 of above Pleadings, and coerced the Plaintiff to an unconscionable payout as per Ss (sic) 61 and 316 Crimes Act 1900 (NSW), hence disproving their claim that the Plaintiff had no chance of success.

6. In this same Mediation on the 21st of February 2014, the Plaintiff signed a Deed in fear of her inability to service her outstanding personal loans, already being in default and in fear of the Plaintiff’s paying the Defendant its legal fees as threatened by the Defendant at this Mediation…

In pars 31 to 34 of the statement of claim, Ms Valenzuela set out what she called “Particulars for no Genuine Process for Settlement”. In essence, Ms Valenzuela described the aspects of the mediation process about which she complains. She said that at one point the defendants’ lawyers abruptly and without warning walked out of the mediation room with the approval of the mediator while Ms Valenzuela was speaking. She said that she was not allowed to say anything further, but was instructed by the mediator to apologise to the defendants, and that she must name an amount that the defendants would be required to pay her. She said that these events frightened her. Ms Valenzuela then said that she mentioned her HECS fees and $70,000, and upon being prodded by the mediator ended up with $30,000. She said that the mediator returned to her with a negative response. Ms Valenzuela then alleged that “the Defendant” (by which she must have meant the defendants’ lawyers) re-entered the mediation room “with unwonted force of presence that shocked and scared” Ms Valenzuela, with the statement that the defendants had prepared papers to record an agreement that Ms Valenzuela would agree to accept $22,000. She then pleaded: “The Plaintiff agreed in a split of a second after the sudden re-entry and offer of the Defendant”. Ms Valenzuela further alleged that the defendants’ lawyers had said that if the matter was not settled the proceedings would have to recommence in a few weeks, so that Ms Valenzuela would have to pay the defendants’ legal fees of more than $40,000. Ms Valenzuela alleged that she “started to shiver in her knees because of a shock reaction on the Defendant’s threats”. Ms Valenzuela said that the mediator then asked her whether she would like to seek legal advice, but she said no because “the lawyer will take advantage of the Plaintiff having initially inquired and proposed to an amount of $30,000 for costs”. Ms Valenzuela then separately pleaded in pars 35 to 39 what she called “Particulars for Economic Duress During Mediation”. Ms Valenzuela alleged that she “in her confusion, humiliation and fear in a condition of financial hardship due to employment termination and a study of Bachelor of Law, having no other choice, accepted the $22,000 before tax and signed the Deed Poll”. Ms Valenzuela then said: “The Plaintiff said in her fear of the Defendant, that the Plaintiff did not have plans of suing the Defendant”. Ms Valenzuela then alleged: “The Plaintiff felt strongly against her sudden agreement but became afraid due to the strong statement by the Defendant that the Plaintiff and the Defendant have agreed in principle which meant to the Plaintiff a statement that cannot be taken back”.

The witnesses

Evidence was given in support of the Bank’s notice of motion by one of the solicitors who acted for the Bank in the proceedings, Mr Albert Khouri, in his affidavit affirmed 30 May 2017. That affidavit put before the court a hand-written letter to the Bank written by Ms Valenzuela that attached the 2013 statement of claim, the 2013 amended statement of claim, the Deed of Release, and the order by which the 2013 proceedings were dismissed by consent. The Bank also relied upon affidavits by the two solicitors who represented the defendants at the 21 February 2014 mediation. The first was the affidavit of Mr Scott Richard Joseph sworn 15 August 2015. At the time, Mr Joseph was a senior internal lawyer for the Bank. The other evidence was given in the affidavit of Ms Vanessa Louise Andersen sworn 14 August 2017. Ms Andersen was a partner of the firm of solicitors that acted for the Bank in the defence of Ms Valenzuela’s 2013 proceedings. Ms Andersen represented the Bank during the mediation, and was the primary person who spoke on the Bank’s behalf. An affidavit sworn by Ms Valenzuela on 16 July 2017 was also read, save for a number of paragraphs that were rejected, and an arrangement agreed to by the Bank concerning the conditional receipt of other paragraphs that avoided the need for considerable time to be taken to deal with the admissibility of Ms Valenzuela’s affidavit on a paragraph by paragraph basis. All three witnesses were subjected to some cross examination. Both Mr Joseph and Ms Andersen candidly conceded in their affidavits that they did not have a detailed recollection of the events that occurred during the mediation. Mr Joseph made some brief, hand-written notes of what happened at the mediation. Those notes were in evidence.

Events at the mediation

I make the following findings concerning the events that took place during the mediation that led to Ms Valenzuela signing the Deed of Release as a deed poll. First, the mediation was a court sanctioned mediation that was conducted by Deputy Registrar Siva. Although Deputy Registrar Siva has not given evidence, it must be inferred from the evidence that has been given that Deputy Registrar Siva conducted the mediation in a conventional way, and nothing occurred that caused her to form the opinion that there was anything improper in the way the mediation was run that was sufficient to require her to intervene and prevent the mediation from continuing. I am satisfied that, if anything had occurred in the presence of Deputy Registrar Siva that caused her to believe that the continuation of the mediation would be unfair to Ms Valenzuela, or that it would be inappropriate for Ms Valenzuela to execute the Deed of Release, the Deputy Registrar would have intervened. After the parties had reached a settlement whereby Ms Valenzuela would accept $22,000 in final settlement of all of her claims against the Bank, Deputy Registrar Siva enquired of Ms Valenzuela as to whether she wished to obtain legal advice before she executed the Deed of Release. Ms Valenzuela responded by saying that she did not want to have legal advice. In relation to Ms Valenzuela’s pleaded claim, as elaborated in her evidence and her submissions, that she was not given an adequate opportunity during the mediation to explain her position, the note prepared by Mr Joseph is relevant. Although the note is written in outline, I am satisfied that it records a relatively lengthy and complete statement by Ms Valenzuela concerning her position in relation to the issue of the production of the computer program, her position that her employment was terminated summarily rather than that she resigned, the embarrassment that she felt about the circumstances of the termination and its unfairness, and also that Ms Valenzuela had no security of employment and the need to repay a mortgage that had left her “scrambling for funds”. While Ms Valenzuela may genuinely think that she was not given adequate time to explain her position, it seems clear that she was given a real opportunity to outline the basis of her case. That is a course that experience suggests is conventional in mediations. Mr Joseph made a note that in the statement of claim Ms Valenzuela had claimed a specific amount of $25,000 plus damages plus costs (but he also noted that there should be no legal costs except perhaps for a filing fee). Mr Joseph made a note of a series of figures, being 73, 12, 61, and then the note “22 in principle”. The last note was followed by “Deed Poll”. I find that this note on the balance of probabilities records the course of offer and counter offer that led to the agreement that the matter would be settled on the basis of a payment of $22,000 by the Bank to Ms Valenzuela. That conclusion is reinforced by a note made by Mr Joseph on the previous page of his notes in which he has set out a breakup of the original request by Ms Valenzuela that she be paid $73,000. That involved $25,000 for the computer program and 15 years at $3000 per annum for shortfall of income, giving $45,000. There is an additional $3000 noted, but the explanation is not sufficiently legible. Mr Joseph noted “wants to sign prop rights to CBA ask for a token”. Mr Joseph has also made notes that are consistent with the evidence given by Ms Valenzuela as to the benefits of her coding work to the Bank, which allowed the Bank to save a considerable amount of money. This aspect of Mr Joseph’s notes also confirms that Ms Valenzuela was given a significant opportunity at the mediation to explain her position. In relation to Ms Valenzuela’s statement in her statement of claim that she said at the mediation that she did not have plans to sue the Bank, Mr Joseph’s notes record the following:

… didn’t know if id (sic) actually run this / or have to run this. Got behind on mortgage and got worried. Posted it to Court. They accepted it, so here we are…

Mr Joseph observed that this statement by Ms Valenzuela made him concerned and frustrated because it seemed to suggest that she may not have been fully invested in her claim, whereas the Bank was taking the claim very seriously and had just agreed to make a substantial payment to Ms Valenzuela. Both Mr Joseph and Ms Andersen gave evidence to the effect that the mediation proceeded in the normal way. Ms Andersen in particular said in evidence that nothing that happened during the mediation caused her to think anything other than that Ms Valenzuela had freely agreed to compromise her claim. I accept that evidence. In relation to Ms Valenzuela’s claim that a stage was reached during the mediation when the Bank’s representatives abruptly and without warning left the mediation room while she was speaking, neither Mr Joseph nor Ms Andersen had specific recollections of what had happened. Their evidence was to the effect that the mediation proceeded in a conventional way, and that at some stage the mediator invited the parties to go into separate rooms so that there could be discussion concerning the position that each party should take. The evidence of Mr Joseph and Ms Andersen was, based upon their recollection of their own practices at mediations, that they did leave the mediation room at some stage, but that they did not do so in any inappropriate way. Towards the end of the mediation, Ms Valenzuela used her mobile telephone to call her husband to discuss whether or not she should compromise her claim for the $22,000 on offer. Mr Joseph gave evidence that she did make a call. Ms Valenzuela said that her husband was in the course of advising her to reject the offer, when the call cut out because Ms Valenzuela’s phone did not have enough battery power to continue the call. Apart from the Bank’s representatives being aware that the call was being made, there was no evidence that suggested that they were made aware of the terms of the conversation, or that it was not completed because Ms Valenzuela’s phone cut out. Ms Valenzuela gave evidence that she was intimidated because she was told that if she continued with her claim but failed she would have to pay the Bank’s substantial legal costs. Ms Andersen accepted that it would be usual for her at a mediation to inform the other party that if her client was successful it would seek its costs. It would be usual for the potential liabilities of the parties to pay costs to be discussed at a mediation, and even though that possibility may appear intimidating to a participant in the mediation, there would in my view be nothing unusual or inappropriate in that subject matter being addressed. Ms Valenzuela made a claim that she was intimidated because Ms Andersen had pre-empted the negotiations by having prepared a draft deed of release that already contained the amount of $22,000 as the settlement sum and, that having been announced to Ms Valenzuela, she felt constrained to execute the deed poll. In her evidence, Ms Andersen responded to this claim by saying that it was her practice to have a draft heads of agreement prepared in advance, but with the space for the settlement sum left blank. She annexed to her affidavit the draft heads of agreement that she had prepared for this particular mediation, which did in fact have a blank for the settlement sum. Ms Andersen said that she did not use the draft, but as the mediation took place in the Sydney central business district, she probably waited until after the compromise had been agreed in principle, and then made arrangements for an appropriate draft deed to be prepared by someone in her office and then brought to the mediation. Ms Andersen did not have a specific recollection of this course being followed in the present case.

Ms Valenzuela’s circumstances

For the purpose of considering whether Ms Valenzuela was in some way induced to execute the Deed of Release by some form of duress or other unconscionable conduct, it is necessary to have regard to Ms Valenzuela’s experience and level of education. The evidence tendered by Ms Valenzuela established that in 1990 she was Head of the Secretarial Science Department in the University of Pangasinan in the Philippines, and at times between 1993 and 1995 she was an instructor at STI College Dagopan. Ms Valenzuela achieved various certificates in computer programming from institutions in the Philippines and Australia. Ms Valenzuela has been awarded a Master of Economics degree by the University of New England that was conferred on 5 April 2008. Ms Valenzuela put into evidence her master’s thesis, which demonstrates a high level of English competence and capacity for abstract thought. As at the time of the mediation, Ms Valenzuela appears to have completed three years of Bachelor of Laws degree at the University of New England. That degree was conferred on her on 27 March 2015. Ms Valenzuela was awarded the Graduate Diploma of Legal Practice by The College of Law on 15 March 2016. Ms Valenzuela has a current Australian Practising Certificate issued by the Law Society of New South Wales. She has also been issued with various certificates of achievement in courses concerning the use of computers and computer programs. Ms Valenzuela tendered a medical report dated 20 November 2015 produced by a Dr Samuell concerning her fitness for duty in relation to her then current employment. The doctor, who was a clinical and forensic psychiatrist, reported that there was no external evidence of Ms Valenzuela having psychiatric illness, and no evident thought disorder. Ms Valenzuela tendered a report by her general practitioner dated 4 July 2017. The doctor had reported that Ms Valenzuela suffered from severe depression, severe stress and moderate anxiety and that further assessment would be required in order to rule out post-traumatic stress disorder. The doctor set out a history that described the consequences of the termination of Ms Valenzuela’s employment with the Bank, which included significant problems that arose with her family. The doctor observed: “There is compounding effect of all the issues in addition to what’s going on”. Ms Valenzuela conducted her own case at the hearing in a polite and dignified way, and was clearly able to comprehend the proceedings and to articulate the points that she wished to make. The evidence establishes that Ms Valenzuela suffered considerable economic stress after the end of her employment by the Bank. She was apparently employed in a number of other jobs, but her employment has not proved to be secure. Notwithstanding that the issue before the court was whether or not Ms Valenzuela is bound by the Deed of Release, by reason of the circumstances in which the deed was executed at the mediation, during the hearing Ms Valenzuela’s focus continually returned to the circumstances in which her employment by the Bank came to an end and the consequences that she and her family experienced. Ms Valenzuela gave evidence that she was upset during the mediation because she was thinking of the death of her father and the fact that she did not have any money to give him assistance, which to her recollection caused her to sob at about the time that the defendants’ representatives left the room. Neither Mr Joseph nor Ms Andersen remembered Ms Valenzuela sobbing, although the latter said that it often happened in her experience that participants in mediations became distressed. Ms Valenzuela also said that throughout the mediation she was motivated by fear and anxiety concerning her parlous financial history and her inability to pay for legal advice and the possible consequences of having to pay substantial legal costs to the defendants. Although the events of the mediation occurred more than three years ago, and Ms Valenzuela has suffered significant psychological and emotional difficulties since that time, which may have a tendency to colour her recollection of what happened, I am generally prepared to accept Ms Valenzuela’s evidence concerning her psychological experience of the mediation. However, as Ms Valenzuela had no experience of how mediations are generally conducted, I prefer the evidence of Mr Joseph and Ms Andersen concerning the events that occurred during the mediation. As I have said above, the objective evidence supports a finding that Ms Valenzuela was given substantial opportunity to explain the basis of her case. I do not accept that Mr Joseph or Ms Andersen acted in any way that was inappropriate or that they intimidated Ms Valenzuela to any further extent than might naturally and inescapably occur when the prospects of each party’s case and the consequences of failure are discussed in a mediation in the ordinary way. Furthermore, I am satisfied that, whatever Ms Valenzuela’s frame of mind and emotional state may have been at times during the mediation, neither Mr Joseph nor Ms Andersen understood or believed that Ms Valenzuela was excessively intimidated or that her conduct was not the product of full understanding and her own free will. The objective circumstances did not require them to form a different understanding or belief than they in fact formed.

Legal principles

The principle that must be applied in this case is sufficiently stated in the joint judgment of the Court of Appeal in Australia & New Zealand Banking Group v Karam (2005) 64 NSWLR 149; [2005] NSWCA 344 at [66]. It will be helpful first to set out the following part of the Court of Appeal judgment:

[45] In Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, Mason J identified a significant distinction between a claim that a transaction should not be enforced because it has been induced by “undue influence” and one which should not be enforced because of “unconscionable conduct”. His Honour stated (at 461) after reference to a number of bases upon which equity might decline to enforce a transaction:

But relief on the ground on ‘unconscionable conduct’ is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage … Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position.

The Court of Appeal later said:

[63] Because the trial judge in the present case appears to have adopted a broader approach, it is necessary to consider whether either the general law or statute law in this country has adopted some general doctrine of ‘inequality of bargaining power’ such as that identified by Lord Denning in Lloyds Bank Ltd v Bundy [1975] QB 326…

…

[66] The vagueness inherent in the terms “economic duress” and “illegitimate pressure” can be avoided by treating the concept of “duress” as limited to threatened or actual unlawful conduct. The threat or conduct in question need not be directed to the person or property of the victim, narrowly identified, but can be to the legitimate commercial and financial interests of the party. Secondly, if the conduct or threat is not unlawful, the resulting agreement may nevertheless be set aside where the weaker party establishes undue influence (actual or presumptive) or unconscionable conduct based on an unconscientious taking advantage of his or her special disability or special disadvantage, in the sense identified in Amadio…

The Court of Appeal also said at [100], referring to the joint judgment in Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66, that “there is nothing in the joint judgment which suggests that a transaction may be set aside on the basis of unconscionable conduct, absent any special disability, in circumstances where all that can be said is that the victim ‘is by pressure impeded’ from following his or her best interests”. Deane J gave the following explanation in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14 at 474-475 of the nature of special disadvantage and its significance to a finding of unconscionable conduct:

The jurisdiction of courts of equity to relieve against unconscionable dealing developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty (see O'Rorke v Bolingbroke (1877) 2 App Cas 814 at 822). The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them, and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or “unconscientious” that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: “the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract” (see per Lord Hatherley, O'Rorke v Bolingbroke, supra, at 823; Fry v Lane (1888) 40 Ch D 312 at 322; Blomley v Ryan (1956) 99 CLR 362 at 428–9 ).

The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party (see Union Bank of Australia Ltd v Whitelaw [1906] VLR 711 at 720 ; Watkins v Combes (1922) 30 CLR 180 at 193–4 ; Morrison v Coast Finance Ltd (1965) 55 DLR (2d) 710 at 713 ). Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued. In Blomley v Ryan (supra, at 405). Fullagar J listed some examples of such disability: “poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary”. As Fullagar J remarked, the common characteristic of such adverse circumstances “seems to be that they have the effect of placing one party at a serious disadvantage vis-à-vis the other”.

For the purposes of this case, it must be noted that the court will not set aside the Deed of Release on the basis that there was some inequality of bargaining power between the defendants and Ms Valenzuela. It is necessary for Ms Valenzuela to establish that the Deed of Release was a product of unconscionable conduct based on an unconscientious taking advantage of a special disability or special disadvantage from which Ms Valenzuela suffered.

Consideration

I am satisfied in this case that the evidence does not establish that during the mediation that took place on 21 February 2014, Ms Valenzuela was suffering from a special disability or disadvantage that was sufficient to form the basis of a finding that the defendants’ conduct in causing her to execute the Deed of Release, or in taking advantage of the terms of that deed, was unconscionable in the sense necessary to justify the Deed of Release being set aside. Furthermore, the evidence does not establish that the representatives of the defendants at the mediation, being Mr Joseph and Ms Andersen had, or ought to have had, any knowledge or appreciation of Ms Valenzuela’s actual psychological and emotional state that caused them, or should have caused them, to think that Ms Valenzuela was suffering from any unusual stress or anxiety in excess of that which would be normal for a lay person to experience when attending a mediation intended to settle a Supreme Court claim initiated by the person against a major bank. My conclusions are reinforced by the fact that the mediation was sanctioned by the court and presided over by a Deputy Registrar. If Deputy Registrar Siva had formed the opinion that the circumstances of the mediation were such that it would be unconscionable for the defendants persuade Ms Valenzuela to execute the Deed of Release, she would have intervened to prevent that course of action. All that the circumstances caused Deputy Registrar Siva to do by way of intervention was to ask Ms Valenzuela whether she wished to obtain legal advice before she executed the Deed of Release, and Ms Valenzuela did not adopt that suggestion. Ms Valenzuela’s psychological and emotional state may well have put her at some disadvantage compared with the two experienced lawyers with whom she had to deal, but on the basis of the findings that I have set out above, that disadvantage fell far short of an apparent, special disadvantage that would have been understood by persons of good conscience as being such as to make it unconscionable to persuade Ms Valenzuela to settle her claim on the terms contained in the Deed of Release, or to take advantage of those terms. I am satisfied that Ms Valenzuela in fact was capable of explaining the basis of her case (as the evidence shows she did) and then engaging in the usual process of offer and counter-offer in order to reach a compromised outcome. That is what in fact occurred, in circumstances where Ms Valenzuela listened to and understood the explanation given to her concerning the risks involved in proceeding with the claim, and however strongly she believed in the virtue of her claim, she made a rational decision to compromise it in order to achieve certainty of outcome. In so far as Ms Valenzuela was subject to the pressure to compromise that flowed from her personal financial difficulties, those difficulties were not so extreme as to prevent her, in an obvious way, from being able to make her own judgment concerning the advantages and disadvantages of compromising her claim. What Ms Valenzuela did was a rational response to the circumstances in which she found herself, given in particular that she was a lay person who was suing the largest company in the country, among other defendants, and she was aware that she did not have the financial resources to retain legal representation. I would add that, although the issues involved in Ms Valenzuela’s original claim were not explored, there is no reason to think that the compromise achieved at the mediation was not a reasonable outcome for Ms Valenzuela, or was in some other way improvident. It is sufficient to note that there is a least a strong likelihood that Ms Valenzuela’s employment contract would have the effect that any work produced by her that was capable of copyright protection would be for the benefit of the employer. Furthermore, the fact that an email existed that appeared to record the resignation by Ms Valenzuela from her employment, would at the least create substantial jeopardy for her claim that her employment had been wrongfully terminated. In my view it is so plain that the claims made by Ms Valenzuela in the statement of claim by which she commenced these proceedings fall within one or more of the subject matters described in sub-pars (a) to (c) of cl 4.1 of the Deed of Release that a complicated explanation is not required to support the conclusion that all of those claims are barred by the Deed of Release, after the separate issue of whether Ms Valenzuela is bound by the Deed of Release has been determined against her. Ms Valenzuela in her submissions did not make any suggestion to the contrary of this conclusion.

Conclusion

It will therefore be appropriate for the court to make the order for separate determination referred to above (with some appropriate revisions to the wording), to answer the questions posed in the manner submitted by the Bank, and then consequently to dismiss Ms Valenzuela’s claim. Further, although it will be a very unfortunate outcome for Ms Valenzuela, there is no avenue available to the court other than to order that Ms Valenzuela pay the Bank’s cost of the proceedings. I therefore make the following orders:

Order pursuant to rule 28.2 of the Uniform Civil Procedure Rules, that the following questions be determined separately and before all other questions raised by the proceedings:

Is the plaintiff not bound by the terms of the Deed Poll entered into by the plaintiff in favour of a number of beneficiaries including the defendant on 21 February 2014 in settlement of the proceedings No 00294472 of 2013 in the Supreme Court of New South Wales (“Deed of Release”) by reason of her entering into the Deed of Release as a result of unconscionable conduct on the part of the beneficiaries to the deed? Is the plaintiff estopped from bringing or maintaining these proceedings by reason of the plaintiff being bound by the terms of the Deed of Release?

Order that the separate questions the subject of order 1 be answered as follows:

The plaintiff is bound by the terms of the Deed of Release. The plaintiff is estopped from bringing or maintaining these proceedings by reason of the terms of the Deed of Release.

The plaintiff’s proceedings are dismissed. The plaintiff is ordered to pay the defendant’s costs of the proceedings.

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