[1954] HCA 72
Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605[2015] NSWCA 313
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165
Judgment (3 paragraphs)
[1]
Solicitors:
Mills Oakley Lawyers (Plaintiff)
Avondale Lawyers (First Defendant)
Australian Government Solicitor NSW (Second Defendant)
File Number(s): 2021/28898
[2]
Judgment
BMW seeks various declarations in relation to a Ferrari which it has repossessed; an order under s 182 of the Personal Property Securities Act 2009 (NSW) requiring that the Registrar of Personal Property Securities remove from the Personal Property Securities Register, a registration concerning the Ferrari and an order restraining Mehajer Vision Pty Ltd from registering further interests in the Ferrari, in order that it can be sold.
The orders are resisted by Mehajer, who also claimed that the proceedings have been settled. That was disputed by BMW.
The Registrar filed a submitting appearance but at the hearing sought leave, which was granted, to advance submissions about the operation of the statutory scheme which had not been addressed by the parties.
At the hearing I concluded that the matter had not settled, for the following reasons.
Shortly before the hearing Mehajer's solicitors had notified the Court that the matter had settled. That was disputed by BMW. While Mehajer made no application for orders in respect of the claimed settlement, there was no issue as to the Court's power to resolve this dispute: s 73 Civil Procedure Act 2005 (NSW).
The Court had made orders in April 2021 about the preparation of the matter for hearing, by which the parties were bound, but which they did not adhere to while settlement negotiations were pursued.
In the week before the hearing my Associate raised with the parties their failure to comply with the Court's orders. BMW then sought and the parties were granted an extension of time to file the court book and other documents.
The dispute about whether the matter had settled then came to light. The parties were directed to file and serve affidavits and submissions on which they wished to rely on this issue and informed that if it was concluded that the matter had not settled, the hearing would proceed.
BMW relied on an affidavit sworn by its solicitor, Mr Angelakis and Mehajer on an affidavit sworn by its solicitor Mr Elnajjar.
On that evidence and the submissions finally advanced at the hearing, there could be no question that the matter had not settled.
There was no issue about the applicable law discussed in Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72. It has been applied in later cases such as Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52 and Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605; [2015] NSWCA 313.
What is decisive in a dispute over whether or not a settlement has been arrived at, which is contractually binding, is the parties' intentions, objectively ascertained from the relevant documents, read in the context of the surrounding circumstances, including the commercial context of their dealings. The parties' subsequent conduct may also shed light on their earlier intentions.
The parties' intentions must be determined objectively in light of the language which they used: Masters v Cameron at 362. The objective determination of their intentions also requires that their communications be considered in their context, in light of "the parties' dealings over the time leading up to the making of the alleged contract": Pavlovic at [15].
In April 2021 the Court made orders for the filing and service of evidence and various documents for the hearing fixed for 24 August. There was no issue that the parties began discussing terms of settlement in June 2021, as they had been directed. The proposed terms were reduced to writing in a deed which BMW provided in early July, the terms of which were finally agreed at the beginning of August. It was a term of that deed that the parties would not be bound until executed copies of the deed were exchanged, the deed providing that:
"12.4 Counterparts
(a) This Agreement may consist of a number of counterparts and, if so, the counterparts taken together constitute one and the same instrument.
(b) This Agreement is not binding on any Party unless one or more counterparts have been duly executed by, or on behalf of, each person named as a Party to this Agreement and those counterparts have been exchanged.
(c) A copy of a counterpart sent by facsimile machine or emailed as a PDF:
(i) must be treated as an original counterpart;
(ii) is sufficient evidence of the execution of the original; and
(iii) may be produced in evidence for all purposes in place of the
original.
2.5 Entire Agreement
This Agreement embodies the entire agreement and understanding between the Parties concerning its subject matter and succeeds and cancels all other agreements and understandings concerning the subject matter of this Agreement and any warranty, representation, guarantee or other term and condition of any nature not contained in this Agreement is of no force or effect."
The parties then discussed the necessary exchange of the counterpart deeds in their ongoing email exchanges, but no application was made to vacate the hearing, despite it plainly being on the cards that no settlement would be arrived at.
There had still been no exchange when on 17 August Mr Angelakis advised that BMW was still prepared to settle, provided that the deeds were exchanged before 12pm on 19 August, given the approaching hearing, after which the offer to settle would be withdrawn.
BMW also sought and was granted an extension of time to comply with the Court's orders and Mehajer still made no application to vacate the hearing.
BMW required physical copies of the counterpart deed, which on Mr Elnajjar's evidence were not posted until 18 August, with the result that they were not received on 19 August. Electronic copies of the executed deed were also not provided.
At 12.47 pm on 19 August Mr Angelakis thus advised Mr Elnajjar by email that the documents not having been received, BMW's offer had been withdrawn and that preparations for the hearing on 24 August were proceeding.
Mr Elnajjar explained the circumstances in which the counterpart deeds came not to be provided within the time which BMW had required, which he considered to have been "unrealistic and unreasonable" in the circumstances. They related to the impact of public health orders and the need to rely on Australia Post, one of the parties being incarcerated and others and legal representatives, being unable to leave their homes.
Even accepting this explanation, there was no issue that the evidence established that executed counterparts of the deed were not exchanged, as the deed required, before BMW's offer was withdrawn. The result was that the proceedings were not settled, as Mehajer had claimed.
It is not within the Court's power to alter the parties' agreement, even if it were accepted that BMW had acted unfairly or unreasonably, in withdrawing its offer. As the parties accepted, the question of whether the matter had settled depended on the proper construction of the deed and whether, by the actions which they each took, a settlement was effected in accordance with its terms.
The evidence established that it was not.
The required exchange of executed counterparts of the deed did not take place before BMW's offer to settle on the terms there agreed was withdrawn. The explanation for Mehajer's inability to provide the executed deeds before the offer was withdrawn, could not alter the result, that the matter had not settled.
The hearing was, however, adjourned on Mehajer's application for reasons then given, with a costs thrown away order made against it and BMW reserving the right to make an application for a costs order under s 98 of the Civil Procedure Act 2005 (NSW) against Mehajer's director, Ms Osman. Those reasons were as follows.
1. The circumstances appear to be entirely unsatisfactory; I have to say. It is quite apparent that both parties have contributed to them by their failure to comply with the Court's directions and orders and to approach the Court in a timely way in relation to the hearing and the preparation necessary, so that the proceedings could be conducted in an orderly fashion today.
2. The practical position is that in June the first defendant was given notice that its witnesses were required for cross examination.
3. It was apparent last week that the matter had not settled and that the hearing would proceed and no steps had been taken to have Mr Mehajer, who is in custody, made available for cross-examination, which it sensibly has to be accepted would be a difficult thing to arrange within the short time then remaining.
4. Under the applicable rules, the second defendant is not entitled to rely on the affidavits which are in the Court book unless the deponents are presented for cross-examination, unless the Court orders otherwise.
5. There is a question which has been raised as to whether that should occur, which is relevant to the application for vacation of the hearing, unsupported as that is, by a motion, although the matters to which Mr Elnajjar deposed in his affidavit in relation to the question of settlement, are relied on to support the application.
6. As I said, the circumstances are unsatisfactory, but I am satisfied that justice does not permit the application to be refused, although I am satisfied that a costs thrown away order should be made against the first defendant.
7. That is because settlement negotiations cannot be pursued in the expectation that if a settlement is not arrived at, that a hearing date long fixed will be vacated because necessary steps to make sure that the matter is ready for hearing are not taken because of the pursuit of a settlement.
[3]
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Decision last updated: 24 August 2021