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[2013] NSWSC 251
Supreme Court of NSW
2013-03-25
Sackar J
Original judgment source is linked above.
ex tempore Judgment 1I have set out the history and background facts of this case in my judgment of 13 March 2013 on a previous interlocutory application (Enzo Jair Ploder v Vittoria Angelina Garcea (as executor of the estate of the late Fiona Rita Garcea) [2013] NSWSC 201). The hearing for this matter was set down for four days commencing today. 2However, the parties sought to have the matter listed urgently before me on 22 March 2013, and the defendant produced to the court a notice of motion seeking declarations to the effect that the parties have entered into a binding settlement agreement and orders to give effect to that agreement. The plaintiff disputes the defendant's assertion that there is a binding agreement. It is obviously necessary to determine the question raised in the notice of motion before commencing the hearing.
Relevant background 3In order to resolve the question as to whether there is a binding settlement agreement, I will need to set out I some detail the relevant correspondence between the parties. 4On 14 March 2013 the plaintiff's solicitors sent to the defendant's solicitors a letter which relevantly provided: 1. [P]ursuant to Part 20, Rule 26 of the [UCPR] the Plaintiff offers to compromise these proceedings on the following basis: Offer: a. That the Defendant pay to the Plaintiff the sum of $39,175... ... c. The offer at a) above is subject to the Plaintiff providing an undertaking to the Defendant to the effect that the sum of $39,175 will be paid back to the Defendant from any monies paid to the Plaintiff by the trustees of First State Super. 2. This offer is exclusive of costs, however, this offer is conditional upon the Defendant accepting the following offer as to costs in settlement of these proceedings: Costs Offer: a. That the Defendant pay the Plaintiff's costs of these proceedings on a party/party basis as agreed or assessed - These Plaintiff's costs include [costs incurred at various stages of the litigation]. ... 4. In the event that this offer is defective under the above stated rules, for any reason, then this offer is to be construed as a Calderbank offer. 5On 19 March 2013 the defendant's solicitors responded to the Plaintiff's solicitors' letter in these terms: 2. Subject to paragraphs 3 and 4 below, the Defendant accepts the offer and the costs offer in paragraphs 1 and 2 of [your letter] (Offers)... 3. In order to give effect to our client's acceptance of the Offers, please find enclosed consent orders (Orders) which reflect your client's Offers and the usual orders the Court is required to make to resolve proceedings of this type. 4. Please arrange for the Orders to be executed... 6The enclosed consent orders referred to in the defendant's solicitors' letter proposed the following order as to costs: 4. Order that the Plaintiff's costs of the proceedings, as agreed or assessed, calculated on a party/party basis be paid out of the estate of the Deceased including [costs incurred at various stages of the litigation]... 7Within the hour, the plaintiff's solicitors wrote back to the defendant's solicitors by email, saying: ...for the avoidance of any doubt my client seeks that his costs on a party party basis be paid by the defendant, as you are aware there otherwise being insufficient funds in the estate to satisfy them. My client rejects any settlement on the terms that your orders suggest. The settlement is for the amount states as provision and that the defendant pay clients costs as agreed or assessed. 8Within a half hour, the defendant's solicitors wrote back saying: The Defendant is Vittoria Angelina Garcea in her capacity as executrix of the estate of the late Fiona-Rita Garcea. Your client has not commenced and continued these proceedings...against Mrs Garcea in her personal capacity. ... Given the above, it is entirely at odds with both the way in which the plaintiff has run this case and the way in which the Offer is drafted, to suggest now that your client seeks that the Defendant pay the costs of the Plaintiff personally. Is it seriously suggested that paragraph 1(a) of the Letter is to be read that Mrs Garcea in her personal capacity pay the provision of the $39,175 to the Plaintiff and this amount not come from the estate... ... Subject to your response our client reserves her rights to seek specific performance what we regard is a concluded agreement. 9In their letter, the defendant's solicitors also noted that the usual costs order in family provision proceedings is that the executor's costs be paid from the estate on an indemnity basis, and a successful claimant's costs reasonably incurred be paid from the estate on the ordinary basis. Also later that day, the defendant's solicitors sent to the plaintiff's solicitors a draft summons which included the terms of what the defendant's solicitors allege was the settlement agreement reached. 10The plaintiff's solicitors replied on the same day, rejecting the suggestion that there was a binding settlement agreement, and asserting that the defendant's response to the plaintiff's offer was in fact a counter offer, not an acceptance of the plaintiff's offer. He also said that he did not object to the defendant having an indemnity against her own costs, but that provision of $39,175 should first be paid to the plaintiff, and that his offer was that the defendant personally should pay the plaintiff's costs. He also said that if it were otherwise, the plaintiff would be deprived of the benefit of his costs. 11The next day, 20 March 2013, the defendant's solicitors re-asserted their position that there was a binding agreement in the terms set out in the draft summons they had sent to the plaintiff's solicitors the previous day. In further correspondence the parties repeatedly re-asserted their respective positions, and it is therefore unnecessary to describe the content of these communications. 12The critical issue is whether there emerges from these communications a binding agreement to settle the proceedings. The parties' submissions seem to be directed to other issues.
Legal principles, discussion and conclusion 13I do not propose to identify in unnecessary detail the principles of offer and acceptance in relation to the formation of contracts. The critical items of correspondence are the plaintiff's solicitors' letter of 14 March 2013 and the defendant's solicitors' first response to it, purporting to accept it and enclosing draft consent orders. What took place here is nothing novel; the same situation was appropriately described in Cavallari v Premier Refrigeration Company Pty Ltd (1952) 85 CLR 20 at 26 by Dixon CJ, McTiernan, Fullagar and Kitto JJ in the following terms: What [the party in that case] did was to set out in its letter its own understanding of the offer and then to say that it accepted the offer... If those words do not reproduce what was really offered, the offer has not been accepted. 14Again, in Quadling v Robinson (1976) 137 CLR 192, Gibbs J said at 201: ...if the grantee of an option sets out his own erroneous understanding of the option, and then purports to exercise the option as so understood, there will (speaking generally) be no effective exercise of the option... It must of course depend upon the proper construction of the document by which the grantee purports to exercise an option whether it amounts to an absolute and unqualified acceptance of the rights and liabilities... 15Likewise, Barwick CJ said at 198: ...the supposed case became one in which the optionee made acceptance of his view a condition of his purported exercise of the option... Of course, it goes without saying that if an optionee purports only to exercise the option upon the footing that an erroneous construction of the option is accepted, there is no due exercise. 16The relevant chronology is simple. The plaintiff made an offer which included the condition that the defendant pays the plaintiff's costs. The defendant responded that subject to the execution of the draft consent orders which they had prepared, they accepted the offer. Within an hour, the plaintiff's solicitor read the draft consent orders and responded saying, in effect, that the defendant had misunderstood the offer being put. Accordingly, on the authorities I have cited, there is no agreement. 17Even if I consider there to be ambiguity as to precisely what is meant by the meaning of "the Defendant pay the Plaintiff's costs" in the plaintiff's offer, and I therefore, as I am entitled to, refer to extrinsic material as an aid to construction (Malago Pty Ltd v AW Ellis Engineering Pty Ltd [2012] NSWCA 227 at [23]), I would find there is no binding agreement. 18First, it is true that the defendant is named in this litigation as "Vittoria Angelina Garcea (as executor of the estate of the late Fiona Rita Garcea)". However, the parties understand that the defendant, despite being the executor, is also a beneficiary (or at least a potential beneficiary) under the Deceased's will, and that therefore the dispute over the Deceased's estate is effectively a dispute between herself, personally, and the plaintiff. 19Secondly, the parties understand that the estate, at least at present, is insolvent. The parties understand very well that they have each run of legal costs in excess of $100,000, and that the value of the Deceased's estate is about $93,000. Given these circumstances, I think it is abundantly plain that the plaintiff's offer of settlement in which he seeks a potentially refundable amount of $39,175, seeks his costs, and in which he does not dispute the executor's entitlement to an indemnity out of the estate, would make no commercial sense unless the reference to the defendant is understood to mean the defendant personally. 20Being, to some extent, familiar with the history of this matter and with at least some of the various settlement discussions which the parties have been engaged in from time to time, I must say that on my own reading of the plaintiff's offer I understood the reference to the defendant paying the plaintiff's costs as being to the defendant personally. 21In any event, for the reasons I have given I propose to dismiss the defendant's motion. 22Costs of this motion will be costs in the cause.
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: 26 March 2013
Enzo Jair Ploder
Vittoria Angelina Garcea