The alleged agreement
31 In his affidavit sworn 29 September 2005, Herbert states that an agreement was reached between MPA, the plaintiff and the underwriter as to the basis upon which Quick Plumbing would be released from the Scheme. Herbert contends that the agreement was reached in the course of discussions and correspondence, and thereafter recorded in a deed of retirement and release prepared by the solicitors for MPA. There is, however, no evidence that the deed was ever executed.
32 The administrator's position is that, while a conditional agreement was arrived at, the conditions were never satisfied.
33 The evidence shows that the administrator accepted an offer from Herbert and MPA to release Quick Plumbing from the Retention Bond Agreement in consideration of the payment of $37,471 to Quick Plumbing. This acceptance was set out in Rambaldi's letter of 15 April 2005 to Herbert:
"I refer to previous correspondence regarding the abovenamed Company, in particular to your letter dated 25 January 2005.
After consideration of all matters, I accept your offer to release Quick Plumbing from the MPMSAA Retention Bond Agreement based on the following:
Monies deposited by Quick Plumbing $50,000
Less: Membership fees outstanding to the MPA Bond Panel
Custodian Pty Ltd $12,529
Total payable to Quick Plumbing $37,471
Please arrange payment of above amount by cheque payable to "Quick Plumbing Australia Pty Ltd (Subject to Deed of Company Arrangement)" within fourteen (14) days.
Should you have any queries, please do not hesitate to contact Mr Bobby John of my staff on 9289 9777."
34 In response to this letter, Herbert forwarded a draft deed of retirement and release to Rambaldi. Rambaldi requested an amendment to the draft deed on the basis that he could not warrant the matters referred to in clause 4 of the draft.
35 The clause which was objected to (clause 4 of the draft deed) read as follows:
"Quick warrants that all bonds issued at its request have been fully satisfied and that there are no bonds outstanding and indemnifies the trustee and the underwriter against any loss arising as a result of any breach of this warranty."
36 Rambaldi's position was communicated by a facsimile dated 15 July 2005 from the plaintiff's solicitors to Herbert. The facsimile read as follows:
"We refer to your proposed terms of Release forwarded this afternoon.
As you would be well aware following many discussions with the Administrator and his representative Mr Yeo our Client cannot provide the warranty set out in clause 4 of the Agreement. We are instructed that our Client will execute this Agreement provided this clause is deleted. Our Client considers that in fact the Trustee is best placed to provide this warranty.
Failing acceptance of this position by 1 PM on Monday July 15 2005 we will proceed to issue court proceedings to obtain the information sought in our letter dated December 24 2005 without further notice. Please contact the writer or Mr Bobby John at Pitcher Partners to discuss."
37 Herbert's evidence was that he referred the plaintiff's request for amendment of the draft deed to his solicitors and to the underwriter to confirm that the amendment was acceptable. Upon confirmation that the amendment was acceptable, he arranged for an amended version of the deed to be executed by MPA and the underwriter. On 4 August 2005, Herbert wrote to the solicitors for the plaintiff enclosing four copies of the amended deed which had been executed on behalf of the underwriter and MPA and advising that MPA was ready to effect settlement in accordance with its terms.
38 It is convenient to set out the full text of Herbert's letter of 4 August 2005:
"We enclose 4 copies of the Deed of Retirement and Release for Quick Plumbing Australia Pty Ltd (subject to Deed of Company Arrangement) from the Bond Panel Agreement. The document has been amended as requested and has now been executed by the underwriter and the MPA Bond Panel Custodian Pty Ltd.
Subject to the execution and return of the release documents by Quick Plumbing Australia Pty Ltd (subject to Deed of Company Arrangement) the amount of $37,471 will be forwarded immediately (or may be collected if you prefer).
Your request for a copy of the Trust Deed has been considered and we advise that as Quick Plumbing Australia Pty Ltd (subject to Deed of Company Arrangement) is not a member of the Trust we are not obliged to provide a copy.
We remain prepared to settle this matter as previously agreed and look forward execution of the document so that we may release the cheque to you."
39 By letter dated 3 August 2005, the plaintiff requested a copy of the Trust Deed of the Trust. By his letter of 4 August 2005, Herbert advised Rambaldi that, as Quick Plumbing is not a member of the Trust, MPA was not obliged to provide a copy of the Trust Deed.
40 In these circumstances, counsel for Herbert and MPA submitted that the parties reached a legally binding commercial settlement requiring the payment of $37,471 to Quick Plumbing in satisfaction of Quick Plumbing's claim to an interest in the contingency fund. After the administrator had issued the summonses, Herbert wrote to the plaintiff and enclosed a cheque for the sum $37,471.
41 The plaintiff disputes that any agreement was reached. In his affidavit sworn 13 October 2005, Andrew Reginald Yeo ("Yeo"), a partner in Pitcher Partners who assisted Rambaldi in performing his functions as deed administrator, states that Rambaldi was only prepared to accept the offer of $37,471 on condition that the payment was received by a stipulated date. Initially the period was within fourteen days of 15 April 2005. This was then extended to 27 May 2005 and then to 3 June 2005.
42 Yeo also states that the acceptance letter of 15 April 2005 elicited a response from Herbert. In a letter dated 22 April 2005, Herbert advised that he had applied to the underwriter to release Quick Plumbing from the Retention Bond Agreement and to agree to release the contingency deposit. In this context, Yeo states in paragraph 19 of his affidavit:
"The critical issue regarding the purported settlement was that Mr Herbert considered that the $37,471 was only payable if and when all of the outstanding warranty bonds for the Company had been returned to the MPA Bond Panel. Mr Rambaldi's letter of 15 April 2005 was clear that the agreement was that the $37,471 was to be received within 14 days, and without condition. In other words, the MPA Bond Panel would be taking the risk that the warranty bonds were not received. Mr Herbert did not wish to make the payment until the warranty bonds were returned. This was the critical point of difference, and the reason why no agreement was ever concluded."
43 The next piece of correspondence is a letter dated 25 May 2005 from Rambaldi to Herbert extending the date of payment until 27 May 2005 at which point Rambaldi advised that he would consider the agreement at an end if the payments were not made. In response, Herbert advised Rambaldi by his facsimile of 26 May 2005 that the underwriter had instructed its legal department to prepare release documents, and that Herbert was endeavouring to hasten the process and requested an extension of time.
44 In a telephone conversation between Yeo and Ms Hasseloff (an assistant of Herbert) on 1 June 2005, Yeo says that he advised that he was only prepared to extend the deadline to 3 June 2005. The file note of this conversation states that Yeo reiterated in the course of the conversation that "If Ray had felt that we had done a deal on the basis that $37,000 would only be repaid if all the bonds were returned, then he was clearly under a misapprehension." No payment was received by Friday 3 June 2005.
45 Yeo's affidavit does not refer to, or explain, the facsimile of 15 July 2005 from the plaintiff's solicitors to Herbert, in which the plaintiff's solicitors advised that the administrator could not provide the warranties set out in clause 4 of the agreement but will execute the agreement provided that clause is deleted. The facsimile confirms that the administrator was not at that point of time seeking to enforce a final time limit of 3 June 2005. There is no evidence that Herbert rejected the request to delete clause 4. The evidence indicates that MPA and the underwriter subsequently agreed to delete clause 4, and this was enshrined in the final draft.
46 The plaintiff denies that any concluded agreement was reached between the administrator and any organisation represented by Herbert. The final breakdown of discussions concerning the proposed agreement can be attributed to an exchange that took place in early August concerning the provision of the Trust Deed. Paragraphs 25 and 26 of Yeo's affidavit describe the position in the following way:
"25. On 3rd August 2005 Mr John [an employee of Pitcher Partners] had a telephone discussion with Ms Hasseloff of the MPA Bond Panel. The telephone discussion was regarding Mr Rambaldi's letter dated 2 August 2005 requesting a copy of the Trust Deed. Ms Hasseloff advised that the Mr Herbert was not currently available and that she would require permission from Mr Ray Herbert to release this document. Ms Hasseloff asked Mr John whether providing the Trust Deed affected the signing of the Deed of Release that was currently being drafted. Mr John advised briefly that the Trust Deed would be required before any document was considered. Ms Hasseloff advised that she would try and speak to Mr Herbert and advise by 4 August 2005. Now produced and shown to me marked with the letter "AY-9" is a true copy of the letter dated 2nd August 2005.
26. By 4th August 2005 I had received no response from Ms Hasseloff regarding Mr John's request to provide a copy of the Trust Deed. The decision was made to attempt to obtain the relevant documents through an examination of Mr Herbert."
47 The plaintiff's evidence is unsatisfactory in several respects. It does not deal with, or explain, the plaintiff's apparent agreement to the draft deed on the proviso that the counter-parties agreed to the deletion of clause 4. The evidence does not support the contention in paragraph 19 of Yeo's affidavit that the critical point of difference, and the reason why no agreement was concluded, was Herbert's requirement that all outstanding bonds for Quick Plumbing be returned. Any such requirement had disappeared by 4 August 2005. However, the precise date at which it disappeared is left unclear by the evidence.
48 There is no direct evidence from Rambaldi or John as to why the provisional agreement was not concluded. According to paragraph 25 of Yeo's affidavit, John advised Ms Hasseloff in a telephone conversation on 3 August 2005 that the Trust Deed would be required before any revised deed of release would be considered by the administrator. Ms Hasseloff advised that she would respond by 4 August 2005. A response was in fact provided by Herbert's letter of 4 August 2005 which forwarded the draft deed from which clause 4 had been excised. None of the evidence from the plaintiff deals with the further draft deed. No reason is advanced as to why that deed was not acceptable, other than the statements in Yeo's affidavit from which it can be inferred that the draft deed was not considered because of the non-provision of a copy of the Trust Deed.
49 The evidence given on behalf of Herbert also leaves some gaps. On the face of the evidence, it appears that the agreement by Herbert and MPA to delete clause 4 was not communicated otherwise than by his letter of 4 August 2005. I also note that Mr Bailey, counsel for Herbert and MPA, did not contend that the administrator's letter of 15 July 2005 gave rise to a legally binding agreement. In fact, he submitted that the acceptance referred to in the letter of 15 July 2005 was subject to a condition that payment be made within 14 days, and this condition was not satisfied. The evidence is also open to the inference that Herbert and MPA were insisting upon satisfaction of a further condition before a binding agreement would arise, namely the execution of a deed of release. Counsel for the administrator submitted that the acceptance of 15 July 2005 was conditional upon an agreement being recorded and executed in writing, and that legal relations were postponed until the execution of such an agreement. This never occurred. The administrator therefore submitted that the case fell within the third category described by the High Court in Masters v Cameron (1954) 91 CLR 353.
50 Notwithstanding the gaps in the evidence, I must reach a conclusion for the purposes of this application as to whether or not the parties made a final and binding agreement. On the whole of the evidence, and taking into account the submissions made by the parties, I find that no final and binding agreement had been reached before the end of September 2005. There are two possible views of what happened thereafter. One is that the communication of 4 August 2005 constituted an acceptance of the counter offer made on behalf of the administrator in his solicitor's facsimile of 15 July 2005. The alternative view is that the administrator withdrew his counter offer on 3 August 2005, adding a further condition that was never met, namely that the Trust Deed must be provided for consideration before the administrator would agree to the deed of release. Mr Bailey acknowledged that, in the absence of more complete evidence, he was not in a position to dispute the view that on 3 August 2005, prior to the provision of the revised Trust Deed, the administrator withdrew his counter offer to execute a deed from which clause 4 had been deleted.
51 In all the circumstances, I am not satisfied that the parties made a final and binding agreement whereby the plaintiff agreed to accept a payment of $37,471 in full and final satisfaction of any rights that Quick Plumbing may possess in relation to the recovery of its deposit or the distribution of any surplus trust assets.