Charles Neville Bagot and Gordon Thomas Grieve trading as Piper Alderman v Chameleon Mining NL

Supreme Court of NSW|2012-11-01|Before: Garling J, Adamson J

Judgment 1The plaintiffs, Charles Neville Bagot and Gordon Thomas Grieve, who are solicitors, practising under the name Piper Alderman ("Piper Alderman"), once acted for the defendant, Chameleon Mining NL ("Chameleon"), in proceedings in the Federal Court of Australia. 2Piper Alderman and Chameleon are engaged in litigation between themselves in the Common Law Division of this Court before Adamson J. In the course of those proceedings, a dispute has arisen as to whether those proceedings have, or have not, been settled in an enforceable way. 3By a Notice of Motion filed 23 August 2012, Piper Alderman seek orders enforcing the settlement agreement. Chameleon resists those orders. 4For the reasons which appear in this judgment, I have decided that the motion ought be dismissed.

Federal Court proceedings 5Chameleon took proceedings in the Federal Court of Australia against Murchison Metals Ltd and five other parties. Piper Alderman, through their partner, Amanda Banton, acted for Chameleon in those proceedings. 6For the purpose of those proceedings, Chameleon entered into a funding arrangement with International Litigation Partners Pty Ltd ("ILP"), which provided that Chameleon's legal costs of those proceedings would be paid by ILP. There were terms and conditions attached to that agreement. Some of those terms are apparent from the judgment of the High Court of Australia in International Litigation Partners Pty Ltd v Chameleon Mining NL [2012] HCA 45; (2012) 86 ALJR 1289. 7It is not in contest that ILP paid all of Piper Alderman's costs relating to the Murchison proceedings. The Murchison proceedings were settled, ultimately, in December 2011. 8The Murchison proceedings had occupied 20 hearing days. Whilst judgment was reserved an offer to settle the proceedings was made to Chameleon. Chameleon terminated Piper Alderman's instructions in about October 2010, and thereafter retained new lawyers, Lavan Legal. 9Judgment was delivered in the Federal Court in the Murchison proceedings on 20 October 2010. Chameleon, although largely successful, appealed against aspects of the judgment which it regarded as unfavourable. It was during the course of that appeal that those proceedings were ultimately settled.

Supreme Court proceedings 10Piper Alderman, in the period from August 2008 to November 2010, rendered 32 memoranda of costs and fees to Chameleon for the legal services that had been provided. 11Although these costs had been paid by ILP, in the period between 30 September 2010 to 1 September 2011, Chameleon filed seven separate applications for the assessment of the costs charged by Piper Alderman in respect of the Murchison proceedings. The sum challenged by those assessments was in excess of $1 million. 12In August 2011, Piper Alderman commenced the Supreme Court proceedings seeking, amongst other things, an order that Chameleon was not entitled to have the bills of costs that were more than 12 months old assessed. Those proceedings were listed for hearing, and the hearing commenced, before Adamson J on 10 July 2012. The hearing of the proceedings continued on 11 July 2012. 13In the course of the proceedings before Adamson J on 11 July 2012, her Honour was initially asked to temporarily adjourn the proceedings to enable the parties to discuss a possible settlement of the proceedings. 14The parties are now in dispute as to whether the proceedings before Adamson J have been settled. This judgment deals with that dispute.

Submissions of the Parties 15Piper Alderman submits that there was an enforceable agreement to resolve the Common Law proceedings, and that there has been no conduct on their part, which constitutes a repudiation of that agreement, and accordingly, the Court ought order specific performance. 16Chameleon submits that there was no agreement reached to settle the proceedings and, in the alternative if there was such an agreement, the conduct of Piper Alderman has amounted to a repudiation of that agreement, and accordingly, there ought not be any order for specific performance. 17There is a necessity to determine this dispute as promptly as can be, because, whilst ever this dispute remains outstanding, the Common Law proceedings before Adamson J, and the applications for assessments of costs, cannot be finalised. 18Accordingly, these reasons are given as soon as possible at the conclusion of submissions from the parties, and are necessarily less comprehensive, or felicitously expressed, than they would be if further time was available.

Facts 19The facts as to whether there was or was not an agreement are in relatively short compass, and are not the subject of any dispute between the parties, because they largely are encapsulated in emails and correspondence. 20Neither of the principal witnesses, Ms Palmer for Piper Alderman, and Ms MacDougal for Chameleon, were required for cross-examination. No question of credit with respect to their evidence arises. 21What follows is a chronological account of the principal facts and events. 22Prior to the commencement of the hearing of the proceedings, Piper Alderman had made an offer by letter dated 6 July 2012 to Chameleon to settle the proceedings. That offer was not accepted. The details of that offer will be apparent in due course. 23The hearing of the proceedings commenced on 10 July 2012. They occupied the whole day. In the course of that day, Mr Anthony Phelps who was the managing partner of Piper Alderman gave evidence and was cross-examined. His evidence was followed by that of Mr Anthony Karam, who was at the relevant times, a director of Chameleon, although he was no longer a director by the time he gave evidence. 24Shortly before 10am on the following day, 11 July 2012, in the precincts of the Court, Ms Palmer, the solicitor for Piper Alderman, spoke to Ms MacDougal, the solicitor for Chameleon. As part of a longer conversation, Ms Palmer made an offer in these terms: "... I have instructions to make a once and final offer which will expire when the Judge resumes the hearing. The offer is that we all walk away from each other, each party bears their own costs in these proceedings and the assessment proceedings end." Ms MacDougal responded: "I will have to get instructions, but we do not think there is anything wrong with what we have done in respect of the costs." 25Ms MacDougal informed Ms Palmer that she needed some more time to get instructions. Ms Palmer took the opportunity to inform Ms MacDougal that she ought to have said that the offer which she had made was "...on a without prejudice save as to costs basis, as if it isn't accepted I will want to refer to it at a later stage". Ms MacDougal accepted that that was the basis upon which the offer was made. 26When the Court resumed a short time later, both parties joined in asking the Court for some additional time to enable instructions to be obtained. The Court adjourned to enable the parties to continue their negotiations. 27Before the Court resumed, there were a number of further exchanges. It is appropriate to record them in full: 28Ms MacDougal returned and spoke with Ms Palmer. A discussion occurred to this effect: "Ms MacDougal: I am instructed to accept the offer, but only if you agree confidentiality. Ms Palmer: I will have to get instructions." 29Once she had instructions, Ms Palmer returned and a conversation occurred to the effect set out in paragraph 27 of Ms Palmer's affidavit. It is appropriate to set out that conversation in full: "27. I spoke with Mr Phelps who agreed to confidentiality. I then spoke again with Ms MacDougal (who was holding a copy of Piper's letter of 6 July 2012...) in words to the following effect - 'Me: Confidentiality is agreed. Ms MacDougal: So the agreement is as set out in paragraphs 2 to 5 of your letter, plus confidentiality.' When she said this, Ms MacDougal pointed to the 6 July 2012 letter. 'Me: Yes, just to be clear, we have an agreement in principle, with terms to be drafted? Ms MacDougal: Yes, can you draft the deed? Me: I won't be able to do it this afternoon as I have a meeting that I have to go to, would you be able to draft the deed? Ms MacDougal: No, I can't either. Me: OK, I'll try to get it done and send it to you tonight if possible.'" 30It is necessary, in light of that conversation, to set out the terms of the letter of 6 July 2012, to which reference was made in the course of that conversation. The contents of that letter were, omitting formal and irrelevant parts, the following: "In order to settle matters between your client and this firm on commercial terms, this firm is willing to settle all applications for costs assessment (including the seventh application) on the following terms:

...
Your client withdraws all Applications for Assessment filed with the Court (Applications for Assessment) upon receipt of the settlement sum.
This firm dismisses Supreme Court of NSW proceedings number 254902 of 2011 upon receipt of written confirmation that the applications for assessment have been withdrawn.
Your client undertakes to make no further challenges to any bills issued by this firm to your client.
Both parties bear their own costs. In this regard, we note that our costs in respect of the Applications for Assessment and the motion are currently in the vicinity of $200,000." 31When the Court reassembled, the parties informed her Honour that the discussions had been "fruitful", but further time was necessary to undertake the completion of some documents. After discussion about appropriate times for the adjournment, the following exchange occurred between her Honour and Ms Gleeson, counsel for Piper Alderman, and Mr Morris, Counsel for Chameleon: "Her Honour: So, can I note that the matter has settled in principle? Gleeson: Yes, your Honour. Morris: Yes, your Honour. Her Honour: I note that the matter has settled in principle, and I stand the matter over with a view to the filing of consent orders to 2pm tomorrow." 32At 11.45am on 12 July 2012, Ms Palmer sent to Ms MacDougal, an email to which was attached a draft Deed of Settlement. The document was entitled "Deed of Settlement and Release". 33The Deed of Settlement and Release nominated Chameleon as one of the parties, Mr Bagot and Mr Grieve t/as Piper Alderman as another party, and it then added in four individuals, Mr Elias, Mr Kelly, Mr Sage and Mr Karam, as parties. It will be convenient to refer to these four individuals as "the directors", because they were each directors of Chameleon at relevant times, although as earlier indicated, Ms Karam was no longer a director at the time of the proceedings. 34The Deed consisted of a series of recitals which included the following: "(I) On 8 August 2011, Piper Alderman filed a summons in the Supreme Court of NSW (254902 of 2011) seeking declarations that certain bills of costs could not be subject to assessment ('the Costs Proceedings'). (J) On 7 November 2011, Chameleon filed a cross-summons in the Costs Proceedings seeking various declarations concerning, inter alia, the alleged obligations of Piper Alderman to disclose its costs. (K) The costs proceedings were heard on 10 and 11 July 2012. (L) The parties to this Deed have agreed to settle the Costs Assessments, the Costs Proceedings and other matters dealt with in this Deed without any admission of liability, on the terms set out in this Deed." 35Relevantly, the Deed included the following: (1)a definition of "claims" in the following terms: "Claims means actions, suits, proceedings, accounts, losses, damages, charges, expenses, sums of money, costs (including legal costs), liabilities, demands, obligations and claims of whatever nature and however arising, including but not limited to claims arising in equity, tort (including negligence), under contract, statute or common law, whether present or contingent." (2)The phrase "directors" was defined in this way: "Directors" means the directors of Chameleon being Mr Elias, Mr Kelly, Mr Sage and any future director of Chameleon." (3)The operative clauses included the following: "3.1 Withdrawal of Applications for Assessment/Costs Assessments On the Execution Date, Chameleon agrees to withdraw all Applications for Assessment and shall send the Withdrawal Letter to the Court. 3.2 Dismissal of the Costs Proceedings Upon the Withdrawal Letter having been sent to the Court, the Parties' representatives shall execute and file the Consent Orders with the Court. 3.3 No Further Challenges to Piper Alderman Bills Chameleon undertakes to make no further challenges whatsoever to any bills rendered by Piper Alderman, which includes but is not limited to any bills rendered in respect of the Koh Proceedings or the Murchison Proceedings. 3.4Costs Assessor (a)Within 2 Business Days after the Consent Orders have been filed, the Parties shall send a joint letter to the Costs Assessor in the form set out in Annexure C to this Deed. (b) If the Costs Assessor has any fees in respect of the Costs Assessments, Chameleon shall be solely liable for such fees and shall pay such fees within 7 Business Days. 3.5 Costs Piper Alderman and Chameleon agree to bear their own costs, which includes but is not limited to all costs incurred in respect of the Costs Proceedings and the Costs Assessment. (4)The Deed also included a non-disparagement clause which was in the following terms:

Legal Principles 53It is convenient before considering the arguments of the parties, to identify the legal principles which seem relevant to the issues. 54Logically, the first issue is whether any binding contract came into existence. The High Court of Australia recognised in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, that there were a number of categories into which contractual negotiations fell where parties agree that their negotiations will be dealt with by a subsequent formal contract. Those categories were described by the Court at 360 in these terms: (a) "[a case where] the parties have reached finality in arranging all the terms of the bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect"; (b) "... a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document"; and (c) "[the case] in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract". 55The High Court held in Masters that in the first two categories there was a binding contract, but in the third there was not. 56As McClelland J recognised in Baulkham Hills Private Hospital Pty Ltd v G R Securities Ltd (1986) 40 NSWLR 622 at 628E, there is a fourth category of case, in addition to the three mentioned in Masters, namely one in which: "... the parties were content to be bound immediately and exclusively by the terms which they had agreed upon, whilst expecting to make a further contract in substitution for the first contract. containing, by consent, additional terms." See: Sinclair, Scott & Co v Naughton [1929] HCA 34; (1929) 43 CLR 310 at 317 per Knox CJ, Rich and Dixon JJ; Love & Stewart v S Instone & Co (1917) 33 TLR 475 at 476 per Lord Loreburn. 57Whichever category of case one is dealing with, it is important to identify the intention of the parties. McHugh JA, with whom Kirby P and Glass JA agreed, described intention as the "decisive issue" in G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634E. He said: "However, the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances ... If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction." 58In considering the application to the facts of this case, of this statement of principle, it is appropriate to note that rather than there being a document as the relevant subject of enquiry, it is the terms of the conversations which comprised the offer and acceptance relied upon, between Ms Palmer and Ms MacDougal which require consideration. 59In seeking to determine whether the conversations constitute a binding contract, it is proper to take into account subsequent communications: Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653 at 670C per Sheller JA (Kirby P and Meagher JA agreeing). See also Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 77 per Griffith CJ; Barrier Wharfs Ltd v W. Scott Fell & Co. Ltd [1908] HCA 88; (1908) 5 CLR 647 at 669 per Griffith CJ at 672 per Isaacs J; Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) NSWLR 153 at [25] per Heydon JA. 60Glass JA said in B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147 at 9149, referring to subsequent communications: "Such materials may be legitimately considered in order to determine whether prior dealings between the parties gave rise to a binding contract." See also Mahoney JA at 9155. 61A convenient template for deciding those issues was that set out in Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, where Mahoney JA said at 326G that there were three questions which were often useful to consider, namely: "... did the parties arrive at a consensus?; (if they did) was it such a consensus as was capable of forming a binding contract?; and (if it was) did the parties intend that the consensus at which they arrived should constitute a binding contract?"

Issues 62The real issues in this matter can conveniently be described in this way: (1)Was there an immediately binding agreement? This issue involves determining: (a)was there a consensus on the terms of an agreement, and if so, what were those terms? and (b)whether the parties intended that the consensus reached would be an immediately binding agreement? (2)If there was an agreement which the parties intended to be immediately binding on 11 July 2012, was there any conduct on the part of Piper Alderman which constituted a repudiation of that agreement; and (3)Can and should an order for specific performance be made, or else, should any, and if so what, other relief be granted?

A Preliminary Issue 63Piper Alderman raised a preliminary issue, which should be addressed first. They submitted that the conduct of the solicitor for Chameleon subsequently to the events of 11 and 12 July 2012, precluded Chameleon from advancing any argument on whether an immediately binding agreement had been reached or not, because Chameleon had repeatedly acknowledged that there was an enforceable agreement. 64Piper Alderman pointed to correspondence between the parties which asserted that an agreement had been reached, a statement by counsel to a similar effect in Court to Adamson J, correspondence which, on more than one occasion, indicated Chameleon accepted Piper Alderman's repudiation of the agreement, and finally, when the Court was making orders in the course of this motion for written submissions, a statement made by the solicitor for Chameleon that the issue to be determined was whether there had been a repudiation of the agreement, in circumstances where she did not suggest there was any issue that no agreement had been reached. Piper Alderman submitted that the first occasion when Chameleon claimed that an enforceable agreement had not been reached was in the written submissions on this motion in this court. They submitted that an admission had thus been made that an agreement had come into existence, which could not be withdrawn without the Court's leave, which leave the court ought not grant. 65I note that Piper Alderman did not submit that any estoppel by conduct arose, nor that the conduct of the solicitor for Chameleon amounted to an affirmation of the agreement, such that any earlier acceptance of the asserted repudiation was ineffective. Piper Alderman did not submit that it had in any way altered its position, or else conducted itself, to its detriment in reliance upon this conduct by Chameleon's solicitor. 66I do not think that the correspondence and statement to Adamson J relied upon by Piper Alderman constituted an admission or conduct of a kind sufficient to preclude Chameleon from putting the submissions which it wishes to. None of this material actually and specifically addresses the underlying question of whether the agreement was intended to be immediately binding, nor do I think that I should draw an inference that the matter had been carefully considered and that what was being asserted was an election to choose one of two incompatible alternatives. To the extent that the conduct in the form of correspondence between the parties has any relevance, it is available to be considered as part of the subsequent communications which may tell upon the question of whether any agreement has been reached. 67The particular matter, which was strongly relied upon by Piper Alderman as constituting an admission by Chameleon, was the exchange which took place before me on 17 September 2012. On that occasion, Ms MacDougal for Chameleon informed the Court that the issue which was to be determined was one of repudiation. That statement was made in the course of a directions hearing, the purpose of which was to identify the most expeditious manner of determining the proceedings arising on the Notice of Motion, and how much court time should be allocated for a speedy hearing. The discussion which took place between the Court and the bar table was essentially a procedural one. It was not a discussion which was intended to, nor designed to, elicit formal admissions from either of the parties. 68Piper Alderman submitted that Ms MacDougal's statement was of the kind covered by The Nominal Defendant v Gabriel [2007] NSWCA 52 at [109]; (2007) 71 NSWLR 150. That part of Gabriel deals with the capacity of counsel, at common law, to make an admission during a trial, upon the basis of which the trial proceeds. In those circumstances, Campbell JA said that leave was required before such an admission could be withdrawn. 69Such a circumstances is entirely distinguishable from the present. A lawyer clarifying the issues which are to be the subject of written submissions, at a time when all evidence has been filed and served, and no oral evidence is to be taken, is not a circumstance equivalent to the making of an admission upon the basis of which a defended trial then proceeds. No doubt, in such a case, decisions are taken in light of the admission, on whether to adduce evidence or not, and whether to cross-examine a witness or not. As is obvious, it then becomes a matter, at least of fairness, if not trial efficiency, whether a party ought be permitted to recant from an admission. That is not the case here. 70In my opinion, no admission was made and leave is not required to withdraw any "admission". 71In any event, if leave was required, I would readily have granted it. Senior Counsel for Piper Alderman accepted, as was entirely appropriate, that she did not wish to rely upon any additional evidence, and that on the day listed for the completion of the argument and submissions before me, she was able to put all arguments and submissions which she wished to, on the issue of whether an immediately binding agreement had been reached. No prejudice was claimed. 72In my opinion, in the circumstances of the case, the interests of justice point strongly in favour of permitting both parties to be allowed to fully develop all arguments upon which they rely. The subject matter of the dispute is whether the parties have reached a binding and enforceable agreement on whether the matter has settled. To preclude full argument which can be had without any prejudice to either side would be, in my assessment, to engender a real sense of injustice and dissatisfaction with any result. For that reason, if leave were necessary, I would grant it. 73In the result, I am not persuaded that the Court should prevent Chameleon arguing that no binding and enforceable agreement had been reached. I will proceed now to consider the issues, which I have earlier outlined.

Issue 1: Was there an immediately binding agreement? 74The surrounding circumstances which were known to the parties and in light of which the intention of the parties is to be ascertained, include: (a)the existence of seven separate costs assessments which were in progress, and which were not a part of the proceedings in this Court. The costs assessment process is an administrative one following the statutory regime prescribed by the Legal Profession Act 2004; (b)the litigated dispute in this Court between Piper Alderman and Chameleon about whether those costs assessments could, or else should, be permitted to proceed. This dispute was part-heard and approaching completion; (c)the fact that the only parties to the dispute in the Supreme Court were Piper Alderman and Chameleon. The directors were not parties to the dispute. (d)at the time of the negotiations in the precincts of the Court, on 11 July 2012, the principal of Piper Alderman responsible for giving instructions, Mr Phelps, was not physically present. Nor were the directors of Chameleon physically present. To obtain instructions both parties needed to be contacted by their solicitors; (e)in the immediate aftermath of the conversation between Ms MacDougal and Ms Palmer, in the circumstances set out in [31] above, the Court was not asked to finally dispose of the proceedings before it, which were part heard, but rather to adjourn them to another time and date. The Court was told by both counsel that the matter had been "settled in principle", on that basis the Court adjourned the proceedings. 75It is within this context that the question of whether a consensus was reached and on what terms, needs to be considered. Piper Alderman argued that the agreement which had been reached fell within the first category identified in Masters, namely that parties had reached an immediately binding agreement with the terms to be restated in a Deed in further or more precise form. 76Chameleon argued that this was an agreement which fell into the third category of Masters, namely, a case where the parties had reached an agreement to enter into a binding agreement once all of the terms were drafted and were acceptable. 77It seems reasonably clear that a broad consensus was reached which incorporated five elements. In its final form, it is to be found in the conversation between Ms MacDougal, when she put a counter-offer to Ms Palmer in the terms set out in [28] above, and the discussion between Ms Palmer and Ms MacDougal which is set out in [29] above, which concluded with the words of Ms Palmer "Yes, just to be clear, we have an agreement in principle, with terms to be drafted". 78The elements of the broad consensus were as follows: (a)the parties agreed that they would give effect to the terms set out in paragraphs 2 to 5 of the Piper Alderman letter of 6 July 2012; (b)the parties agreed to "confidentiality"; (c)the agreement was an in principle one; and (d)the terms of the agreement were to be drafted and put into a deed. 79An examination of the terms in paragraphs 2 to 5 in the letter, which are set out in [30] above, demonstrate that, at least, the following matters remained outstanding before a firm agreement, covering everything which needed to be done, could be achieved: (1)In light of the terms of paragraph 2 of the letter, since there was to be no "settlement sum", the parties needed to agree when, and by what means, the multiple applications for the costs assessment were to be "withdrawn"; (2)In light of the terms of paragraph 3 of the letter, the means by which Piper Alderman would "dismiss" the Supreme Court proceedings needed to be considered and agreed. For example, would Piper Alderman have sought leave from the Court to discontinue the proceedings, or would they have proposed an order that the proceedings be dismissed, or was there to be an order that the proceedings be terminated in some other way; (3)In light of the terms of paragraph 4 of the letter, the manner in which it was intended that the undertaking would be given effect to, as well as the nature and content of the undertaking needed to be agreed. Whether it was to be an undertaking by Chameleon to the Court, or an undertaking inter-partes remained unresolved. 80The further term upon which there was a broad consensus, namely that the parties agreed to "confidentiality", was imprecise and largely unstated. The terms of the confidentiality, when each party was bound to that confidentiality and when, or in what circumstance, each party was entitled to disclose some or all of the terms of the agreement, were essential to a firm and binding agreement, but were not discussed. The parties also needed to determine what restriction, if any, there was, on what could be said in circumstances where confidentiality was not to be preserved. An example of the detail, which as at 11 July was unresolved, can be found in the terms of the second Draft Deed sent in August 2012, which included terms of a proposed statement to the Australian Securities Exchange. Because Chameleon was a listed company and had obligations of continuous disclosure to the market, it would be surprising if the parties had made a final agreement in terms which did not address the fact of, or the content of, Chameleon's market disclosure. 81The third matter upon which there was a broad consensus, was that the agreement was an "in principle" one. As well, it is clear that the terms of the agreement were to be drafted. It is convenient to deal with these two elements of the broad consensus together. 82A statement that an agreement is an "in principle" agreement means, so it seems to me, that the broad parameters within which the terms of a final agreement might be reached have been established. Particularly when the phrase is combined with the statement that the terms are to be agreed, the whole phrase then carries a clear intention that the parties are not intending to be immediately bound by the agreement in principle, but rather that they intended to be bound by a deed setting out the full terms of the agreement when that is prepared. The terms are therefore the subject of negotiation in due course. The concept of an agreement in principle envisages that further negotiation is to happen about the precise terms of the resolution of the dispute, but within the parameters which have been agreed. The phrase incorporates a mutual contemplation that the terms of the agreement are to be drafted in a deed, and then further instructions are to be obtained as to the acceptability of those terms to the parties to the deed. This interpretation leaves open the possibility of the addition of further terms as may be thought necessary. 83I reach this conclusion from the words used in this case, in light of the surrounding circumstances. 84However, such a conclusion is also to be inferred from, or else in entirely consistent with the actions of the parties immediately after the Court adjourned. A draft Deed which clearly went beyond the terms of the broad consensus which had been reached was submitted. The terms of that Deed were regarded as negotiable, and at one point a different position described as a "half-way house" was proffered. Of itself, this conversation makes it plain that the parties were engaged in a negotiation about the basis of, and the terms of, their agreement. The conduct bespeaks an intention that they were yet to be bound to an agreement which was capable of immediate implementation. The later conversations around this time serve to reinforce that conclusion. 85The email exchanges between Ms Palmer and Ms MacDougall each contemplated, at one stage or another, whether an agreement had been reached, or whether the Court would be asked to resume its hearing of the matter. At one stage, Ms MacDougall expressed to Ms Palmer a need to know if a particular term was a "deal-breaker". A deal-breaker is a common expression which is used during negotiations to ascertain whether any one or other demand is of such a nature as to lead to the result that the whole negotiation would cease. The use of the term is, in my opinion, inconsistent with there being already in existence, a binding agreement between the parties. A careful consideration of the balance of the subsequent conduct leads to an identical conclusion, namely, there had been no immediately binding agreement reached at the time when the agreement in principle was announced. 86In reaching this conclusion, I am mindful that the solicitor for Chameleon did express the view that an agreement had been reached. Equally, some correspondence from the solicitor for Piper Alderman could be construed as expressing an opposite view, or at the least, some uncertainty about whether there had been an agreement reached. I regard these expressions as constituting the expression of a subjective understanding, or perhaps a subjective intention, about what had happened and what was happening. They are not sufficient to mandate, nor are they determinative of, any particular finding of the objectively ascertained intention of the parties at the time that the agreement (or broad consensus) was reached. To the extent they are relevant, they have been considered as part of the matrix of subsequent communications, and all of the other surrounding facts, matters and circumstances. 87The further contextual fact which is of importance is that the parties asked the presiding Judge to stand the proceedings over part heard for further mention or directions before her. Had the parties intended the agreement to be immediately binding, then the obvious course was to ask the Judge to enter an order which terminated the hearing of the proceedings and to order that each party pay their own costs of the proceedings. This would have indicated that an immediately binding agreement had been reached, and was being implemented, and that the parties were content to agree upon and implement, such further terms as were appropriate. 88Piper Alderman argue that since only a relatively short adjournment was sought, to the next day, this fact tells in favour of an immediately binding agreement having been reached, since the mutual contemplation of the parties was that the agreement would be documented within a short space of time. It seems to me, that the length of time reflects nothing more than the parties' anticipation of the time needed to complete the task, and their mutual convenience having regard to the fact that the proceedings were part-heard in the Court. It is the fact that there was an adjournment without any terms of the agreement in principle being implemented which supports the conclusion that the parties' intention was not to make an immediately binding agreement. 89As well, I observe that in the discussions which led to the broad consensus, neither solicitor, both of whom are experienced in the conduct of litigation, used any words which expressly indicated that the agreement in principle was to be immediately binding. 90Even though an agreement is described as an "agreement in principle", where the words "legally binding" were used, it has been held that the agreement was intended to be immediately binding: see McHugh JA in G R Securities at 635F. However, here no such words were used. In my opinion, they ought not to be inferred. 91Accordingly, I have concluded in the light of the communications, objectively viewed, which demonstrate the intention of the parties and having regard to the surrounding circumstances, that these negotiations and the agreement "in principle", did not amount to a concluded agreement which was intended to be immediately binding, but rather the negotiations and the consensus fell within the third category of cases described in Masters, namely as one in which the intention of the parties is not to make a concluded bargain unless and until they have executed a formal Deed which set out all of the terms of their agreement. 92There is nothing in the later statements and dealings between the parties, and in particular what the Court was informed of by counsel at a much later stage, which is sufficient to displace this conclusion that the intention of the parties at the time was not to have an immediately binding agreement.

Issue 2: Repudiation 93Because I have held that there was no immediately binding agreement, no issue, in fact, arises as to whether there was a repudiation by Piper Alderman. All that has happened is that the parties have not been able to agree on the terms of any final agreement. However, if I am in error on my conclusion that there was no immediately binding agreement, I ought consider whether any repudiation has occurred. As this is necessarily a hypothetical construct, my reasons will be brief. 94It is clear, as a matter of general principle, that before a finding can be made that a contract has been repudiated, the Court needs to be persuaded, having regard to the objective acts or omissions, that one party has evinced: "... an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way" See: Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620 at 625 per Gibbs CJ. See also Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 634 per Mason CJ. 95The submission of Chameleon is that there was conduct on the part of Piper Alderman constituting a repudiation because the draft deeds which had been delivered on two occasions, one in July 2012 and one in August 2012, were in significantly different terms to the consensus which had been reached on 11 July 2012. Chameleon argued that this demonstrated across a period of time that Piper Alderman did not intend to be bound by the original agreement. 96As I have earlier said, the consideration of this submission necessarily assumes that, contrary to my earlier finding, the parties did reach an agreement by which they intended to be bound. In those circumstances, it seems to me that it could only have been an agreement which fell within the fourth category of agreements, to which I have referred above identified by McClelland J in Baulkham Hills, namely that the terms that were agreed upon were intended to be immediately binding, but that other terms could be included by consent after further negotiations. 97If that be the correct construction of the agreement, then the mere fact that Piper Alderman submitted one or more drafts of a deed containing further terms would not of itself constitute conduct repudiating the original agreement. That is because the drafts, providing that they did not suggest an entitlement on the part of Piper Alderman to fulfil the agreement in a way, which was substantially inconsistent with what had initially been agreed, and they did not, would not amount to a repudiation of the agreement. 98However, Chameleon places significant emphasis on the fact that, at least in the first deed which was submitted, agreement was sought to be reached, and apparently made conditional upon, the inclusion of parties to the deed who were not parties to the litigation, namely the directors, or former directors, of Chameleon. It is clear that the inclusion of these parties and the inclusion of a non-disparagement clause, formed no part of the original broad consensus on the five elements to which I have earlier made reference. 99However, I am not satisfied that by suggesting the addition of more parties to the Deed, this would have constituted a demonstration of an intention not to be bound by the original agreement, unless it was said that entering into the original agreement was conditional upon the agreement of the directors, or former directors. There was no express condition that this was so, nor could there be any inference to that effect. 100One of the principal reasons which leads me to this conclusion is that the deed when forwarded to Chameleon by Piper Alderman was described as a draft deed. It is clear that the parties intended that there be negotiations with respect to the contents of that draft deed including any additional terms. In those circumstances, it was nothing more than an offer for the inclusion of additional terms and it cannot be said that it evinced an intention not to be bound to the terms of the original consensus. The suggested addition of a non-disparagement clause ought to be seen in the same way. 101I am not satisfied on the hypothetical construct to which I have earlier referred that, having regard to the facts which have been proved that there has been any repudiatory conduct on the part of Piper Alderman.

Issue 3: Relief 102In light of my conclusion, it is inappropriate to consider what relief ought, and the particular terms of any such relief which might, be granted to Piper Alderman by way of specific performance. It is sufficient to indicate that Chameleon did not seek to argue that if I was persuaded that an immediately binding agreement had been reached, that it was inappropriate to order specific performance. It was not suggested that there was any discretionary reason why the Court would decline to make such an order. The precise terms upon which relief might be granted were not explored in detail.

Summary 103I have concluded that: (a)the parties did not reach any agreement by which they intended to be bound, but rather reached an agreement in principle which would become binding upon the agreement of terms and the execution of a deed incorporating those terms in due course; (b)Piper Alderman did not engage in any repudiatory conduct. 104In those circumstances, the appropriate relief is to dismiss the motion and order that Piper Alderman, the applicants on the motion, pay the respondent's costs. In light of my conclusion, it is necessary for the matter to be re-listed before Adamson J, so that her Honour can give any for further directions necessary for the conclusion of the proceedings which are part-heard before her. 105I make the following orders: (1)Notice of Motion filed 23 August 2012 by Piper Alderman is dismissed. (2)Applicants are to pay the Respondent's costs of the motion. (3)I list the matter for directions before Adamson J at 9.15am on Friday, 2 November 2012.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 November 2012

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