Uranium Equities Ltd v Fewster [2008] WASCA 33; (2008) 36 WAR 97
Webb v GetSwift Limited (No 5) [2019] FCA 1533
[2]
J D Heydon, Heydon on Contract (Thomson Reuters, 2019)
[3]
Division: Fair Work
[4]
Registry: New South Wales
[5]
Number of paragraphs: 147
[6]
Date of hearing: 10-12 December 2024
[7]
Counsel for the applicant: Mr S Prince SC with Mr P Moorhouse and Ms T Wong
[8]
Solicitors for the applicant: Harmers Workplace Lawyers
[9]
Counsel for the first, second, third and fifth respondents: Mr J Sheahan KC with Mr M Follett KC, Ms Z Hillman and Mr D Ward
[10]
Solicitors for the first, second, third and fifth respondents: Allens
[11]
Counsel for the fourth respondent: Ms S Palaniappan
[12]
Solicitors for the fourth respondent: Arnold Bloch Leibler
[13]
BETWEEN: REBECCA FARRELL
Applicant
SUPER RETAIL GROUP LIMITED
First Respondent
AND: ANTHONY HERAGHTY
Second Respondent
KEVIN FIGUEIREDO (and others named in the Schedule)
Third Respondent
[14]
order made by: LEE J
DATE OF ORDER: 23 DECEMBER 2024
[15]
THE COURT ORDERS THAT:
The applicant's prayer for relief in the nature of specific performance be dismissed.
The proceeding be adjourned until 2:15pm today for the making of any confidentiality orders in relation to the publication of these reasons and any related orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
LEE J:
[16]
A INTRODUCTION AND BACKGROUND
In early May this year, the solicitors for Ms Farrell (Harmers) and the solicitors for SRG (Allens) were at loggerheads.
Following an unsuccessful mediation, the publication of newspaper articles replete with allegations of a "shakedown" and "blackmail", an ASX announcement, and the termination of Ms Farrell and Ms Berczelly's employment, they had spent most of the previous weekend in Allens' offices, toing and froing over proposed terms that might facilitate the settlement of their clients' dispute. Text messages and emails were exchanged, telephone calls were made, and file notes were recorded.
By Sunday, 5 May, things had progressed. Allens had communicated to Harmers a "framework" or "proposal" for settlement which, it is said, constituted a without prejudice offer. At 5:44pm, Mr Harmer sent Ms Sonia Millen, the solicitor for SRG, a further proposal by which Ms Farrell and Ms Berczelly would "adopt the alternative framework put forward by [SRG]", subject to certain exceptions. The proposal was rejected.
On Monday, 6 May, negotiations continued. The sticking points were, among other things, the nature of the proposed releases and the retraction of the Harmers Statement. By midday, Ms Millen had "reinstated SRG's offer" and made clear there would be "no changes on key terms". Then, that evening, at 6:12pm, following telephone calls between the solicitors and senior and junior counsel on both sides and a teleconference in which he obtained instructions, Mr Harmer sent the following email to Ms Millen:
Dear Sonia,
We refer to our discussions and the last offer conveyed by you on behalf of your clients yesterday.
We are instructed to accept your offer subject to Deed.
Please provide us with a draft of the proposed Deed.
Thanks and kind regards - Michael.
Two minutes later, at 6:14pm, Ms Millen and Mr Harmer exchanged the following text messages:
Mr Harmer:
Hi Sonia - I have just left you an email and voicemail - our clients have now accepted the offer subject to deed - all the best - thanks - Michael.
Ms Millen:
Thank you for your message, Michael. We will work on the documents now and revert asap.
This judgment concerns the question as to whether upon the conveyance of the first of these communications by Mr Harmer, a binding agreement to settle emerged (Alleged 6 May Agreement). Mr Farrell contends that it did and seeks specific performance.
It is unnecessary to delve further into the background to the dispute or its procedural history, which is set out in three judgments of the Court: Farrell v Super Retail Group Limited (Confidentiality Applications) [2024] FCA 954; Farrell v Super Retail Group Limited (Cross-claim) [2024] FCA 1189; and Super Retail Group Limited v Farrell [2024] FCA 1214. These reasons assume familiarity with those judgments, and adopt the definitions used in my earlier judgments.
As would already be clear, in the light of the nature of the claim, the chronology of what relevantly occurred in the events leading up to 6 May 2024 (and following) is of critical importance. I will return to this narrative below in making factual findings as to the Alleged 6 May Agreement, but first, it is necessary to say something about the relevant law.
[17]
B THE RELEVANT LAW
At its heart, the specific performance suit concerns a relatively narrow question, namely whether on the whole of the evidence, a reasonable person would conclude that the parties, by the Alleged 6 May Agreement, intended to create a legally binding paction.
This is not the forum for an excursus on Masters v Cameron (1953) 91 CLR 353, but as is well known, in that case, Dixon CJ, McTiernan and Kitto JJ explained that where parties have been in negotiation and reach agreement on terms of a contractual nature, and also agree that the matter of their negotiations will be dealt with by way of subsequent, formal contract, the case may belong to one of three categories (J D Heydon, Heydon on Contract (Thomson Reuters, 2019) (at [3.110])):
the parties may have reached finality in arranging all of the terms of their bargain, and intend to be immediately bound to the performance of those terms (first category);
the parties may have completely agreed all of their terms of their bargain, and intend no departure from, or addition to, that which their express terms agree or imply, but nevertheless have agreed that performance of one or more terms is conditional upon entry into a formal agreement (second category); or
the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract (third category).
There is authority for the existence of a fourth category. It involves a case in which the parties were content to be bound immediately and exclusively by the terms which they had agreed while expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms: Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 (at 628 per McLelland J); Sinclair, Scott & Company Ltd v Naughton (1929) 43 CLR 310; Heydon on Contract (at [3.110], [3.170]).
The Masters v Cameron classes are not applied as strict categories into which each case must fall, but rather the determinative issue is always the intention of the parties which must be objectively ascertained: Radovanovic v Stekovic [2024] NSWCA 129 (at [22] per Payne JA, Meagher and Gleeson JJA agreeing); G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 (at 634 per McHugh J). The "intention" of the parties describes what would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 (at 105-106 [25] per Gaudron, McHugh, Hayne and Callinan JJ).
It has been said that the first, second and fourth categories involve a binding contract, whereas the third category does not. This is because in the third category, the terms of the agreement were not intended to have, and thus do not have, any binding effect of their own. The parties might have so provided because they had dealt only with major matters and contemplated that others would or might be regulated by provisions to be introduced into the formal document: Masters v Cameron (at 361); Heydon on Contract (at [3.110]).
The following six presently relevant propositions may be drawn from the cases.
First, in ascertaining whether parties intended to create legally binding relations, whether from a series of communications or from a single document, regard may be had to the commercial circumstances in which the parties exchanged their communications and to the subject matter of the alleged contract: Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd) [2008] NSWCA 149 (at [69] per Giles JA, Hodgson and Campell JJA agreeing); Allen v Carbone (1975) 132 CLR 528 (at 532 per Stephen, Mason and Murphy JJ).
Secondly, and relatedly, where parties are sophisticated entities and have contemplated the resolution of a dispute by the drawing up of a deed, or where the purported agreement concerns a significant transaction, it is less likely that the parties intended to be bound immediately unless they expressly said so: Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313; (2015) 90 NSWLR 605 (at 620 [83], 625 [116] per Beazley P, Bathurst CJ and Meagher JA agreeing); Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 14,551 (at 14,569-14,570 per Kirby P, Gleeson CJ agreeing). As Kirby P noted in Geebung (at 14,569-14,570), it is necessary in every case to consider the nature and importance of the transaction which the parties contemplate.
Thirdly, evidence of the parties' conduct after the alleged contract has been made is admissible for the purpose of determining whether there was an intention to effect legal relations: Australian Broadcasting Corp v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 (at 547-548, 550 per Gleeson CJ); Heydon on Contract (at [4.170]). As I said in Cardtronics Australasia Pty Ltd v FX Investments Australia Pty Ltd [2020] FCA 218 (at [95]), the probative value of post-contractual communications lies "in the light they throw on the proper interpretation of earlier communications alleged to constitute the conduct": Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251 (at 9255 per McLelland J). Further, where correspondence between the parties after an informal agreement refers to important terms and conditions not mentioned during that informal discussion, it may more readily be inferred that the earlier discussion was a preliminary negotiation and not a binding agreement: Uranium Equities Ltd v Fewster [2008] WASCA 33; (2008) 36 WAR 97 (at 134 [133] per Steytler P, McLure and Buss JJA); citing Geebung (at 14,569-14,570).
Fourthly, the existence of matters of importance in which the parties have not reached consensus in their informal agreement will render it the less likely that they intended immediately to be bound before the execution of a formal document; even where the parties have agreed on the "major matters", their subsequent conduct may indicate that they did not intend to be bound until the other issues between them were resolved in a formal document: Uranium Equities (at 134 [133]); citing Geebung (at 14,569-14,570).
Fifthly, the expression "subject to contract" or "subject to deed", in its natural meaning, generally creates an overriding condition that what has been agreed is the intended basis for a future contract and not as constituting a contract itself (Masters v Cameron (at 362-363)). It has been said that the inclusion of such a formula creates a presumption no contract was intended to be formed: Geebung (at 14,562). Each case turns on its facts but interestingly, Ms Farrell was unable to point to any example where these words have been used and a binding agreement was found to have been immediately struck.
Sixthly, subsequent correspondence between the parties showing that they continued in negotiation ordinarily "negatives" the idea of an existing concluded contract: Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 (at 669 per Griffith CJ); Sagacious Procurement (at [101] and [113] per Giles JA, Hodgson and Campbell JJA agreeing).
[18]
C FACTUAL FINDINGS
It is convenient in this section to set out a chronological narrative constituting my findings as to what occurred in the days leading up to the negotiations occurring on the weekend of 4 and 5 May and Monday, 6 May; from its genesis in the mediation held in April 2024, to its alleged culmination in the making of the Alleged 6 May Agreement (and following).
Before doing so, it is well to emphasise something I said in another complex commercial case concerning the proper approach to fact-finding.
In determining contested factual issues, what matters most is usually the proper construction of such contemporaneous notes and documents as may exist, and the probabilities that can be derived from those notes and any other objective facts: Webb v GetSwift Limited (No 5) [2019] FCA 1533 (at [16]-[17]). As Leggatt J (as his Lordship then was) said in Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) (at [22]):
… the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.
In Transport Workers' Union of Australia v Qantas Airways Limited [2021] FCA 873; (2021) 308 IR 244 (at 251 [17]), I observed that the unstated assumption of this approach is that the contemporaneous notes and documents that do exist emerged as the extemporaneous and unvarnished product of the conduct of internal dealings or communications between the contesting parties. The confidence that can be placed in the narrative that emerges from the contemporaneous record is increased when the relevant documents can be seen as the unfiltered and sufficiently complete record of what people were thinking and doing in "real time".
As will be seen, the contemporaneous notes and documents in this case have this character and are a far surer guide as to what happened than any ex post facto account or rationalisation later given as to the meaning of communications and negotiations.
[19]
17 April 2024
A mediation was conducted at Allens' offices on 17 April 2024. Ms Farrell and SRG entered into a mediation agreement on 16 or 17 April (Mediation Agreement). It was an express term of the Mediation Agreement that if the parties resolved their dispute at mediation, the terms of the resolution must be written down in a document that they signed before they left the mediation. That is, both parties, cognisant of the nature of the dispute, regarded this sort of formality as appropriate before any bargain capable of enforcement was struck to resolve the dispute at the mediation.
The mediation was attended by legal representatives for both parties, including senior and junior counsel. The contemporaneous file notes of Mr Harmer and Ms Jenee Smith indicate that by the close of the mediation, Ms Farrell and Ms Berczelly had [REDACTED] [REDACTED] [REDACTED] together with the inclusion of terms providing for: (1) mutual releases; (2) mutual confidentiality; (3) mutual non-disparagement; (4) an agreed external statement; and (5) agreed referee for oral references. The SRG parties rejected the proposal [REDACTED] [REDACTED] [REDACTED] a confidentiality clause and an agreement that Ms Farrell and Ms Berczelly could characterise their dismissal as a resignation.
Unsurprisingly in these circumstances, the mediation was unsuccessful.
[20]
Events leading up to 4-5 May 2024
Several events occurred in the lead up to the negotiations on 4 and 5 May 2024. It is worth noting them briefly to emphasise the acrimonious and controversial nature of the dispute:
on 23 April, Harmers conveyed an offer to SRG on terms similar to that offered in the mediation (in a letter to which I will return below);
on 26 April, SRG made an announcement to the ASX in respect of the dispute with Ms Farrell and Ms Berczelly (without naming either complainant);
on 29 April, following media interest and the publication of newspaper articles, Ms Farrell and Ms Berczelly worked with Harmers to produce and publish a media statement (that is, the Harmers Statement) in response to the ASX Announcement; and
on 3 May, Ms Farrell and Ms Berczelly's employment were terminated because of alleged repudiations of their employment contracts by authorising the release of the Harmers Statement.
[21]
4 May 2024
The discussions that occurred on 4 May are recorded in relatively detailed file notes taken by a solicitor employed by Allens, Ms Chloe Wilton, and a highly experienced employment lawyer and then principal of Harmers, Ms Emma Pritchard. There is also a file note taken by Mr Harmer which is slightly less detailed, although it does not differ materially from Ms Wilton and Ms Pritchard's notes. Mr Harmer gave evidence that his file notes do not differ in substance from those notes.
The evidence discloses that in the first session, an opening round of discussions occurred whereby Ms Millen discussed a "framework" for how settlement might be achieved. Ms Wilton also recorded that what was discussed by both sides during that first session was the "framework" of a potential settlement.
In the second session, Harmers presented a "package" for SRG's consideration, which included pay arrangements for gardening leave for Ms Farrell and Ms Berczelly, bonuses, the maintenance of shares in SRG and acceleration of residual equity interests. There was also discussion of whether shareholder approval would be required for the benefits sought by Ms Farrell and Ms Berczelly, and [REDACTED] [REDACTED] [REDACTED].
In the third session, an offer was advanced by SRG which included potential benefits for Ms Farrell and Ms Berczelly, including: (1) gardening leave; (2) staggered resignations; (3) the ability to work on a special legal project; (4) backpay; (5) short term inventive payments; (6) the potential for long term incentives and deferred short term incentives to vest; (7) restricted shares; (8) the ability to leave during the gardening leave period; [REDACTED] [REDACTED] [REDACTED]; and (10) a retraction of the Harmers Statement. It was also noted that a joint deed would be executed. The joint deed was to include withdrawals of all complaints, full releases and several responsibility for the maintenance of confidentiality. Harmers was to come up with a solution for the other potential claims it had foreshadowed.
A fourth session was held, during which Ms Pritchard records that "most of [the] package [was] shaping well". Ms Pritchard records Ms Farrell and Ms Berczelly's position as being that a retraction of the Harmers Statement was not agreed and that there would not be any joint and several liability on their part (but merely a release and non-disparagement). Ms Pritchard recorded that Harmers would be "stepping out" (which I understand to mean ceasing to act in other disputes against SRG). Ms Pritchard further records that Harmers would be "happy to resume" discussions at a later stage.
Ms Pritchard's final note indicates that by 1pm on 4 May, the settlement negotiations concluded following Allens putting a final proposal. The notes are in bullet point form with reference to gardening leave, back pay, [REDACTED] [REDACTED] [REDACTED] long term incentives, performance hurdles, restricted shares [REDACTED] [REDACTED] [REDACTED].
[22]
5 May 2024
The following day, Mr Harmer and Ms Millen engaged in several discussions over the telephone.
The sources of contemporaneous documentary evidence of those communications comprise: (1) Mr Harmer's call logs; (2) text messages between Ms Millen and Mr Harmer (and others); (3) the handwritten file notes of Ms Millen, Mr Harmer and Ms Farrell; and (4) the typed file notes of Ms Smith. The following narrative emerges from the contents of those documents.
At 11:34am, Mr Harmer had a telephone conversation with Ms Millen which lasted approximately seven minutes. After that telephone call, at 11:43am, Mr Harmer sent a text message to Ms Farrell, Ms Berczelly and Ms Pritchard to say that an "offer" had been put via a call from Ms Millen [REDACTED] [REDACTED] [REDACTED] that he queried the terms and wanted to convene a call as soon as possible. Based on Ms Millen's file note, the scope of the offer included, among other things: [REDACTED] [REDACTED] [REDACTED] (2) SRG were engaging on the basis that Harmers had said Ms Farrell and Ms Berczelly cannot work again; (3) the construct that had been discussed the previous day (that is, 4 May) was "off the table"; (4) a deed or agreement would be drafted on terms that would not support or facilitate future employment for Ms Farrell or Ms Berczelly; (5) resignations were no longer on offer; (6) releases were required and an agreement must include, inter alia: (a) retraction of the Harmers Statement; (b) denial of liability by SRG; (c) releases by Ms Farrell and Ms Berczelly to the fullest extent of the law; (d) confidentiality provisions; and (e) Harmers would cease to act and never act again in any SRG related matter.
Mr Harmer's file note recording the discussion is not dissimilar. He records that the "board [of SRG] met this morning"; Ms Millen as having referred to a [REDACTED] [REDACTED] [REDACTED] and that she wanted to "know if it will resolve" the dispute. The offer was said to be referable to Harmers' "framework" following the conclusion of the mediation. A typed note of Ms Smith appears to record the proposal being relayed to Ms Farrell and Ms Berczelly, and that there was "a lot to be said for the framework", but [REDACTED] [REDACTED] [REDACTED].
At 12:57pm, Mr Harmer spoke with Ms Millen over the telephone for about seven minutes.
According to Mr Harmer's file note, he had instructions to put a "counteroffer" to SRG. It proceeded based on the "framework from yesterday". Aspects of the counteroffer conveyed by Mr Harmer included:
SRG would provide each of Ms Farrell and Ms Berczelly with various benefits, including 12 months' paid "gardening leave", various incentive payments, backpay for a period during which the individuals had been on unpaid leave, and shares in SRG;
during the gardening leave period, Ms Farrell and Ms Berczelly would be able to resign on two weeks' notice and the residual of their gardening leave would be paid out;
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
SRG would permit Ms Farrell and Ms Berczelly to resign their positions at SRG, as opposed to the terminations that had occurred on 3 May;
there would be a "joint statement" acknowledging that there was a "dispute over the terms of the [media] releases" that had been issued by the parties;
there would be a "mutual deed of release";
notably, there would be "in-principle agreement today" and "proper deed sign off by next Friday";
on the subject of releases, any individual on the SRG side that did not provide a release to Harmers' clients would not receive a release from those clients;
there would not be a mutually agreed ASX release; and
Harmers would undertake:
"to treat SRG work as a conflict of interest for a period of 6 years";
a "side deal for one client";
to "refer to separate advice" the "5-10 others"; and
that "21 witnesses" would "receive a note re settlement" and Harmers would have "no further contact" with them.
Ms Millen records that she was told by Mr Harmer that Ms Farrell and Ms Berczelly wanted the construct from the previous day's discussions "back on the table", in addition to what had been offered that day. This was rejected. [REDACTED] [REDACTED] [REDACTED] Ms Millen records that she stated that Ms Farrell and Ms Berczelly "kept moving their position" and were "not acting in good faith". Ms Millen also records that Mr Harmer had said he wanted to put out a statement about the proposed settlement, which Ms Millen rejected.
Mr Harmer said further that the Harmers Statement would not be retracted, to which Ms Millen responded that would be a "deal breaker" for SRG. A proposal that Ms Farrell and Ms Berczelly be able to resign was raised and Ms Millen stated that was "not happening". Ms Millen records that Mr Harmer "kept pushing for yesterday's construct" but that she made clear that it was "off the table". Ms Millen "made clear" SRG's offer [REDACTED] [REDACTED] [REDACTED] and so SRG would insist on its settlement construct. At this time, it appears Ms Millen regarded the position being put to her was "disgusting".
At 1:10pm, according to Ms Farrell's handwritten notes, Mr Harmer told Ms Farrell that Ms Millen was "not happy" and that there were packages discussed [REDACTED] [REDACTED] [REDACTED]. Another handwritten note of Ms Farrell records a proposal including 12 months' gardening leave, staggered resignations, working from home on a special project, payment of short-term incentives, no long-term incentives, [REDACTED] [REDACTED] [REDACTED] no backpay and no bonus.
Ms Smith's file notes appear to detail a series of discussions occurring in the afternoon and records a participant in the discussions expressing the view that SRG would be "getting a good deal" from Harmers as a firm. There are also several references to the requirement that there be a deed. Despite its length, it is worth extracting parts of Ms Smith's file notes below:
MDH:
Just wanted to make sure I had reconsolidated points.
Perfectly logical spent 4.5 hours going through it all.
Have a deal return to that framework [REDACTED]
[REDACTED] [REDACTED] [REDACTED]
Getting a good deal from us as a firm.
If your case goes ahead suing for 5-10 additional people.
…
MDH:
I'll just go through the notes I have made.
Perhaps feel free at any item to say… alternatively we can read through the whole thing.
Planning to call Sonia and say initiative appreciated.
Take framework and [REDACTED] [REDACTED] [REDACTED]. Spent over 4 hours discussing framework yesterday - clearly appreciated by both sides.
Details:
*
12 months garden leave
Staggered resignations as company secretaries
Working from home on a "special project" for SRG.
Garden leave at full pay and with back pay
STI payable at target. No [NEW] LTI.
Stock in tact no acceleration
During garden leave period:
Ability to resign at 2 weeks notice
Residual pacakage [sic] paid out
Otherwise normal contractual terms
*
[REDACTED] [REDACTED] [REDACTED].
[REDACTED] [REDACTED] [REDACTED]
Rather than retraction, joint statement.
Mutual deed of release with confidentiality and non-disparagement
Withdrawal of complaints
Principle agreement with Deed signed off by Friday.
If no release from individual, no release from us.
Full indemnification from SRG.
Mental health support reasonable costs of psychological counselling and outplacement support (no cap)
Statutory leave entitlements
Harmers will treat SRG as a conflict of interest on our systems.
Negotiate a side deal for one client.
5-10 others with potential cases refer them to separate advice.
21 witnesses received a notice of settlement and indication that we would have no further conduct.
Mutually agreed ASX unnecessary other than when new CS appointed on staggered basis.
At 1:32pm, Mr Harmer spoke with Ms Millen again over the telephone. Ms Millen's file note indicates that she continued to be displeased with Ms Farrell and Ms Berczelly's position (describing it as "ridiculous"). The retraction of the Harmers Statement was said to be a "deal breaker" for SRG, and it appears that Ms Millen was not open to Ms Farrell and Ms Berczelly's requests for "full releases" (only SRG would provide releases and no individuals from SRG would do so).
Mr Harmer's file note suggests a further proposal being put by SRG. It records (consistently with a later file note created by Ms Millen) that SRG rejected the framework put forward by Harmers that morning and proposed, among other things, that:
all complaints be withdrawn;
there be a full retraction of the Harmers Statement;
full confidentiality obligations;
full non-disparagement;
releases be provided to SRG and related persons (directors and officers);
a full denial of liability;
[REDACTED] [REDACTED] [REDACTED]
a "vanilla" ASX announcement would be made that the dispute had settled;
a standard company release, non-disparagement and confidentiality clauses would be included;
Harmers would agree not to act for anyone against SRG for a period of six years; and
leave entitlements would be paid to the extent of accrued leave, but no shares would be provided.
At 3:13pm, Mr Harmer and Ms Millen spoke over the telephone for approximately five minutes.
Mr Harmer appears to have taken a file note of this call. It records that Mr Harmer was told the framework of the previous day was off the table, that a further call would occur in about a half hour, [REDACTED] [REDACTED] [REDACTED]. Mr Harmer records that was a "comfort" as everyone wished to avoid litigation.
About 30 minutes later, according to Ms Smith's file note, Mr Harmer informed his clients that SRG wanted to "stick to their framework not the framework from yesterday" [REDACTED] [REDACTED] [REDACTED]. Ms Smith's file note also records that shortly afterwards, Mr Harmer had considered conveying a proposal whereby SRG's framework would be accepted, [REDACTED] [REDACTED] [REDACTED] but, again, that retraction of the Harmers Statement would be a dealbreaker. There is no record of that offer being put to SRG.
At 4:01pm, Mr Harmer and Ms Millen spoke again over the telephone. I accept that in all likelihood, Mr Harmer's file note headed "T/A Sonia Millen & MH" (Ex B (at 369)) is a record of that conversation.
The file note records that Ms Millen had spoken to the Chairwoman of SRG and had final instructions [REDACTED] [REDACTED] [REDACTED] that a shift to "our framework" was welcome. There would be no joint statement, there would be a final offer [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]. Harmers were not to act for other clients against SRG. There would be mutual releases and if there was not to be a retraction by Ms Farrell and Ms Berczelly, then Harmers would look at unilateral retraction of the Harmers Statement (that is, the retraction would be effected by Harmers). A proposal along these lines is reported in Ms Smith's typed file note as having been conveyed by Mr Harmer to Ms Farrell and Ms Berczelly.
rejected
[REDACTED] [REDACTED] [REDACTED]
MH - disappointing
Yes - I agree
RF/AB unreasonable
Our position won't change.
In summary, Ms Millen rejected the 5 May Counteroffer, noting that it had [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]. Ms Millen considered Ms Farrell and Ms Berczelly's position to be "unreasonable" and that SRG's position would not change.
At 6:16pm, Mr Harmer texted Ms Farrell, Ms Berczelly and Ms Pritchard to confirm that Ms Millen had rejected their position, said that Ms Farrell, Ms Berczelly and Harmers were free to take up the last offer and that Mr Harmer suggested to Ms Millen that she should contact him if there was any change in SRG's position. Mr Harmer apologised that the dispute could not be tied up, reiterating his view that SRG was engaged in a "dishonest cover up and lack of accountability for their self-inflicted wound".
It is worth pausing here to note that Ms Farrell contends that by 6pm on 5 May, Ms Millen had made a "final settlement offer" on behalf of SRG (based on the offer she had made that morning (see above (at [38])). It is said this is consistent with: (1) Mr Harmer's text message sent to Ms Pritchard, Ms Farrell and Ms Berczelly that evening in which he noted that "[Ms Millen] has relayed that they reject our position put via my email - she has repeated that we are free to still take up their last offer" (emphasis added); and (2) Ms Millen making clear that there would be "no change to SRG's position". The "final settlement offer" is said to have been made on the following terms:
Ms Farrell and Ms Berczelly would withdraw all complaints against SRG;
Ms Farrell and Ms Berczelly would retract the Harmers Statement;
the terms of settlement would be confidential;
Ms Farrell and Ms Berczelly would release SRG and any related persons of SRG from any further claims;
SRG would give a standard release the Ms Farrell and Ms Berczelly from any claims, but that no individual director or related person would provide a release;
the settlement would be made on the basis of a denial of liability on the part of all parties;
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
the parties would include mutual non-disparagement clauses in any deed; and
Harmers would not act against SRG for six years for any entity or person other than Ms Farrell and Ms Berczelly.
I will call this the Alleged 5 May Final Offer.
[23]
Alleged 6 May Agreement
At 9:53am on 6 May, Mr Harmer left a voicemail for Ms Millen. He noted that the release was "gentler than what we were expecting" and suggested to resume negotiations. Mr Harmer also flagged the possibility of senior counsel for the parties conferring directly.
Mr Harmer's file note records that by 12:45pm, among other things: (1) the offer put forward by SRG the prior evening (that is, 5 May) remained open for that day only; (2) there was no change in relation to the position of SRG on the retraction of the Harmers Statement, releases and indemnities remained from 5 May; (3) [REDACTED] [REDACTED] [REDACTED] (4) the offer was the "best" and [REDACTED] [REDACTED] [REDACTED]; and (5) a note in respect of releases that there was "no give" and "it may never resolve".
Ms Millen's file note is broadly consistent and records that: (1) SRG's offer was reinstated; (2) there would be no changes on key terms; (3) Allens would draft releases to "ensure we get full coverage"; [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED].
Ms Millen recorded that Mr Harmer repeated his attempts to change the position on releases and retraction of the Harmers Statement. Ms Millen also appears to have told Mr Harmer that discussions between senior counsel were not necessary. She notes Mr Harmer saying that he would like releases and deeds negotiated and executed by Friday, 10 May.
In the afternoon, Mr Prince SC, senior counsel for Ms Farrell and Ms Berczelly, contacted Mr Follett SC, senior counsel for SRG (but at the time of hearing, now one of his Majesty's counsel).
At 5:09pm, Mr Follett contacted Mr Prince by email as follows:
Shane
I have received the following instructions:
As to the required form of words for the retraction, they are as follows:
"The 'Harmers Statement Super Retail Group' dated 29 April 2024 is retracted in full."
As for the question of releases, it is expected that your clients would provide full releases, as far as the law permits, to the company and all relevant individuals;
The specific mechanics of whether or not the third party individuals will be signatories to any Deed, or merely third party beneficiaries in a manner that is legally effective, has not yet been determined, as it is, by its nature, a mechanical issue. As a matter of substance for the purposes of any settlement however, whether or not such persons ultimately come to be signatories, they will not be providing releases in favour of either of your clients. The company will provide a standard release for your clients.
Regards,
Matthew Follett SC
Barrister
The file note of Mr Follett made in relation to the call he received from Mr Prince records:
Structured position reached Sat
Board got involved, changed again
Sunday, reach resolution on changed structure
All points agreed
Retraction of statement made to market (Harmers Statement)
Extent of releases
Relatively close
According to Ms Smith's file note, between 5:32pm and 6:09pm, Mr Harmer, Ms Smith, Ms Pritchard, Mr Prince, Ms Farrell and Ms Berczelly spoke on a conference call. There were two issues discussed (a third issue relating to [REDACTED] [REDACTED] [REDACTED] no longer remained an issue because of advice received from counsel). The two remaining issues were: the retraction of the Harmers' statement and the extent of the releases proffered (that is, no releases would be provided by an individual director or related person). During that conference call, Mr Harmer received instructions to accept the offer of the SRG parties as she had conveyed it.
This meeting is an important one and the record of it discloses a snapshot of the view of those advising Ms Farrell and Ms Berczelly. Relevantly, the following was said:
EGP:
Purpose of the call is to just get Counsel's views on these two outstanding issues.
See if we can try to get a way forward.
What did Matthew say when you contacted him Shane?
SP:
Spoken to him a couple of times now.
Initially he said he has instructions but has not been caught up with what happened over the weekend.
I told him what I understood to be the outstanding issues.
He said he'd go back and check.
Subsequent call - said to him I've seen what Harmers want to put out.
What is it you are actually asking for in terms of the statement giving effect to this so called retraction.
He said I'll get the words they have in mind.
Other thing - do not understand how it is that we are supposed to be giving releases to a bunch of named individuals that it is one way. Are they going to be parties to the Deed? How would that work. What is the consideration for the release? He said well… when he came back the second time - spoken to solicitor and apparently they were taking a pretty firm view. Point not moving from it. Told us what it was. [REDACTED] [REDACTED] [REDACTED]
I said ok well … just want to understand what that means in terms of these two outstanding issues.
Got an email at 5:09pm from Matthew saying:
Required form as word "Harmers Statement dated X is retracted in full".
Question of releases - expected to provide full releases.
…
SP:
Impression I got was that … I think Michael has pushed them to the limit of human endurance.
They have put down the shutters and said not budging.
[REDACTED] [REDACTED] [REDACTED].
MDH:
Sonia to her credit [REDACTED] [REDACTED] [REDACTED].
No individual would want to re-raise all of these issues.
…
AB:
Do not want to be held to ransom.
[REDACTED] [REDACTED] [REDACTED].
PM:
[REDACTED] [REDACTED] [REDACTED].
AB:
Ok.
EGP:
Thank you so much Shane and Paul.
SP:
Good luck.
PM:
Best wishes to both of you.
Mr Harmer later attempted to call Ms Millen and left a voicemail (the contents of which were not in evidence). But it is possible to conclude that the voicemail message was in essentially the same terms as an email, sent three minutes after the conference call.
As noted earlier, at 6:12pm, Mr Harmer sent the following email to Ms Millen (being the Alleged 6 May Agreement):
Dear Sonia,
We refer to our discussions and the last offer conveyed by you on behalf of your clients yesterday.
We are instructed to accept your offer subject to Deed.
Please provide us with a draft of the proposed Deed.
Thanks and kind regards - Michael.
(Emphasis added)
Two minutes later, at 6:14pm, Ms Millen and Mr Harmer exchanged the following text messages:
Mr Harmer:
Hi Sonia - I have just left you an email and voicemail - our clients have now accepted the offer subject to deed - all the best - thanks - Michael.
Ms Millen:
Thank you for your message, Michael. We will work on the documents now and revert asap.
(Emphasis added)
[24]
Post-Alleged 6 May Agreement Conduct
At 10:24am on 8 May, Ms Pritchard requested a copy of the draft deed for Harmers' review from Ms Millen. She noted that the media continued to ask questions "so it would be good to have the matter resolved" and went on to propose the possibility that the media be told, by way of joint indication, that "the negotiations are continuing".
The next day, at 10:56am, Ms Wilton emailed Harmers. The email contained two draft deeds of release, which were said to be "without prejudice until executed by all parties".
The first deed was proposed to be between Ms Farrell, Ms Berczelly and SRG. The second was between SRG and Harmers. Various notes were highlighted for Harmers' attention. Allens asked that Harmers let Allens know whether the terms of the draft deeds were acceptable to Harmers, Ms Farrell and Ms Berczelly.
The proposed terms of the first deed included, among other things, that:
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
confidentiality of the settlement payments was "an essential term": cl 2.5(a);
provision was made for what Ms Farrell and Ms Berczelly should say if asked about the matters that were the subject of the deed: cl 2.5(b);
[REDACTED] [REDACTED] [REDACTED];
Ms Farrell and Ms Berczelly were required to inform SRG of any "Disclosures" (as defined) that they had made about SRG (including but not limited to complaints to ASIC), and to withdraw those "Disclosures": cl 4.1;
Ms Farrell and Ms Berczelly were required to inform SRG of any proceedings that they had commenced against SRG, and to discontinue them: cl 4.2;
Ms Farrell and Ms Berczelly were required to "procure that Harmers" remove the Harmers Statement from its website and not republish any of its content: cl 4.3;
similarly, Ms Farrell and Ms Berczelly were required to "procure that Harmers" publish a "Retraction Statement on its website" and distribute that statement in the same way and to the same recipients as it had distributed the Harmers Statement: cl 4.3;
no releases were to be given to Ms Farrell or Ms Berczelly by any "Related Person" (as defined): cl 6.3(d); and
the deed provided that SRG would execute it "on behalf of each Related Person", and Ms Farrell and Ms Berczelly acknowledged that benefits or rights given to "Related Persons" were held on trust by SRG, and were enforceable by SRG: cl 13.
The proposed terms of the second deed between Harmers and SRG included, among other things, that:
the deed imposed upon Harmers itself (as opposed to its clients) an obligation to retract the Harmers Statement: cl 2(a);
the deed required Harmers to undertake not to represent any person (including Ms Farrell and Ms Berczelly) in relation to any matter related to SRG "or any Related Person": cl 3(a); and
the deed imposed confidentiality obligations upon Harmers in respect of the deed itself: cll 4.1, 4.3.
The draft deed did not include any release by SRG of Harmers.
At 11:09am on the same day (that is, 9 May), Harmers forwarded the draft deeds to Ms Farrell and Ms Berczelly, requesting that they mark up one set of comments which could be reviewed together, and that Harmers would add its own.
Later, at 5:03pm, Harmers noted in an email to Ms Farrell and Ms Berczelly that [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED].
I pause here to note that Harmers (or, more specifically, Mr Harmer) was mistaken about this aspect of the deed. Although it does not matter for present purposes, it is a matter of context which goes to the issue of whether the parties were ad idem as to the terms of the Alleged 6 May Agreement. I will return to this issue later in these reasons.
Returning to the narrative, at 6:49pm, Ms Berczelly provided Harmers with Ms Farrell's draft deed and her comments in mark up on the deed to which SRG, Ms Farrell and Ms Berczelly were proposed parties.
Later that evening, Ms Berczelly provided Harmers with her comments on the draft Harmers deed. Ms Berczelly noted that: (1) a release should be sought for Harmers; (2) the agreement with Harmers should be structured as part of her and Ms Farrell's agreement with SRG in a single document; (3) she wanted Harmers to be able to act for her and Ms Farrell to "enforce the terms of the deed"; (4) she wanted to amend the terms of the retraction statement; (5) she sought amendment to what was to be said publicly if information about the subject matter of the deed was sought by a third party; and (6) she wanted the governing law clause to adopt New South Wales (rather than Queensland law), and to set New South Wales as the exclusive jurisdiction governing the terms of the deed.
Harmers agreed with Ms Farrell and Ms Berczelly's suggested amendments to the terms of the proposed agreement. Ms Berczelly then suggested she would take up the drafting of a single deed which would insert terms from the draft Harmers deed as part of one document.
At 10:52pm on 9 May, Ms Berczelly circulated to Harmers and Ms Farrell a new draft document, being a single deed between SRG, Ms Farrell, Ms Berczelly and Harmers, including a release for Harmers, and amendments to various terms of the draft deeds prepared by Allens. Among the amendments included in the draft circulated by Ms Berczelly were the following changes and comments (in addition to the inclusion of Harmers as a party to a single deed and a release for Harmers):
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
[REDACTED] [REDACTED] [REDACTED];
non-admissions of liability were included for the benefit of Ms Farrell, Ms Berczelly and Harmers: cl 2.3(b);
Ms Berczelly noted that she now required to see the final ASX announcement that was proposed to be made prior to agreeing that the settlement payment would be in full and final satisfaction of claims she or Ms Farrell may have: cl 2.5(d);
a form of agreed announcement was to be annexed to the deed: cl 3;
Ms Farrell and Ms Berczelly would not provide SRG with their disclosures to ASIC;
Ms Farrell and Ms Berczelly would not undertake to procure Harmers' retraction of the Harmers Statement: cl 4.3;
resignation clauses were redrafted as cessation of employment acknowledgments: cl 6;
releases were amended to carve-out directors' and officers' insurance policies: cl 7.1(b);
releases were extended so as to be given by SRG's related bodies corporate: cl 7.2(e);
a plea in bar provision was to be extended to ensure that Ms Farrell, Ms Berczelly and Harmers could rely on the deed as a bar to proceedings commenced by SRG, its related bodies corporate or any other person on their behalf: cl 9 (b)-(c);
confidentiality and permitted disclosure provisions were amended to provide benefits to Ms Farrell and Ms Berczelly: cll 12.1, 12.2; and
the governing law was to be the law of New South Wales: cl 19.
On 15 May, Harmers provided a "without prejudice" letter to Allens and a single draft deed which contained Harmers' comments and amendments (15 May Deed). This deed was noted as being "without prejudice until executed by all parties". Harmers asked Allens to advise whether the draft deed was acceptable to SRG. The letter stated, among other things, that:
[o]ur record of what was negotiated on … 5 May 2024 … and ultimately accepted by us the following day … was that … [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] The letter closed by stating that "[w]e remain open to further discussion on relevant issues. Please let us know whether you are agreeable to our amendments.
The 15 May Deed included Ms Berczelly's requested changes, and made the following additional amendments, among others:
[REDACTED] [REDACTED] [REDACTED];
Harmers proposed the terms of a statement that SRG was to make to the ASX: cl 3 and Sch 2;
Harmers noted that the "agreement" of Ms Farrell, Ms Berczelly and Harmers to the clauses that provided for releases of SRG by Ms Farrell and Ms Berczelly, was "subject to" the statement to the ASX "being in acceptable terms": cll 7.1(a)(i)(D), 7.2(a)(i)(D);
the releases did not prevent Ms Farrell or Ms Berczelly from bringing a "counter-claim" if they were themselves sued: cll 7.1(b)(iii), 7.2(b)(iii);
the releases applied where Ms Farrell or Ms Berczelly had been negligent, and where they had engaged in conduct that would have entitled SRG to terminate their employment without notice: cl 7.3(d); and
Ms Farrell, Ms Berczelly (and Harmers itself) were permitted to make "counter-claims" if sued by SRG or its related bodies corporate: cl 9.
At 2:37pm on 17 May, Allens sent Harmers an email stating that the 15 May Deed was "inconsistent with the In-Principle Settlement" and not acceptable. Allens denied that [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED].
On 21 May, Harmers responded by way of a "without prejudice" letter.
In that letter, Harmers rejected the assertion that its proposed amendments contained in the 15 May Deed were "inconsistent with the In-Principle Settlement" and noted that "it is clear there is a disagreement (or at least a misunderstanding) as to [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]. Harmers asserted that the "in-principle agreement" entailed [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] and added that the "offer was ultimately accepted by other clients on this basis". The letter further stated that:
[o]ur clients remain open to having good faith discussions to finalise the terms of the Deed on mutually acceptable terms …. [W]e consider the parties would benefit from the assistance and independence of a mediator and counsel present to facilitate those discussions with a view to resolving all matters that are in disagreement, and with a view to the Deed being executed by all parties at the conclusion of such a mediation.
Harmers suggested that a further mediation be held and sought confirmation that the legal representatives of SRG would attend the mediation. It was then said:
If we do not receive this confirmation from you by close of business tomorrow, we are instructed to finalise the draft pleadings and to commence proceedings without further notice to you.
Further, we note that in order to preserve our clients' rights, we intend to lodge a general protections application on behalf of Ms Berczelly and Ms Farrell on Friday, 24 May 2024. Our clients' aim remains to resolve this matter before any conciliation in the Fair Work Commission.
At 10:15am on 22 May, SRG put to Ms Farrell and Ms Berczelly an offer that would have been legally binding if accepted by the return of fully executed deeds by 4:30pm that day. It was an offer to settle the dispute on terms contained in two draft deeds that were substantially similar to the drafts that had been proposed by Allens on 9 May (see above (at [75]-[77])). The offer lapsed without having been accepted.
On the same day, at 11:02am, Ms Millen and Ms Pritchard had a conversation (recorded in a file note of Ms Pritchard) in which Ms Millen is recorded as saying:
Restating offer in initial Deed
Client until 4.30 to accept
Amendments/changes to releases - not what was offered
Offer not accepted not repeated
Worked very hard with client - no allusion not move and if this agreement falls over today they will be ready for litigation
All of the amendments - walked back from what was agreed
At around 11:30am, Ms Pritchard sent an email to Mr Ross Drinnan, a partner of Allens, stating that Ms Farrell had instructed her to call him. Sometime between 11:30am and 12:24pm, Ms Pritchard and Mr Drinnan had a conversation, and both took file notes of the discussion. Those notes record that Ms Millen had told her the "offer" was the "same" and Ms Pritchard's file note also records Mr Drinnan referring to "the offer put and accepted". Mr Drinnan's file note also confirms that his instructions "were clear" and that SRG's position "remains as set out [in Allens' letter of 22 May]", being a letter dated 22 May which enclosed two deeds, and which communicated that the SRG parties would not accept any amendment to the proposed deeds.
On 23 May, Allens sent another letter to Harmers. The letter referred to, among other things, Ms Farrell and Ms Berczelly "accept[ing] terms proposed by SRG [on 6 May]" and alleged that Harmers was engaged in a conflict of interest as to "the interests of [Ms Farrell and Ms Berczelly] in accepting the settlement offer made by SRG".
In response, Harmers, among other things, took specific and firm objection to the absence of any marking on Allens' letter confirming it was "without prejudice", noting that the correspondence referred to and disclosed "communications between our respective clients in respect of attempts to negotiate a settlement of their dispute … including terms that our clients sought as part of a deed to resolve their dispute". Harmers went on to state "[Ms Farrell and Ms Berczelly] have not and do not consent to the details of the settlement negotiations being disclosed, and communications regarding the settlement negotiations remain subject to the usual "without prejudice privilege".
On 24 May, Harmers sent another letter (marked "without prejudice"). The letter set out the reasons why Ms Farrell and Ms Berczelly sought amendments to the deed, noting, among other things:
The Allens Deeds do not provide our clients with the necessary comfort they require in order for them to voluntarily relinquish their ability to enforce their legal rights against your corporate client and any Related Persons, and for them to enjoy adequate protection against the possibility of claims that Related Persons may seek to bring against them. In the absence of that comfort and protection, the fact that your corporate client [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED].
Harmers went on to identify the issues raised by Ms Farrell and Ms Berczelly as to why the Allens deeds were unacceptable and enquired as to whether Allens "has been and is" acting for any individuals (in addition to SRG) during settlement negotiations.
On 19 June, Harmers noted in a letter marked "without prejudice" that notwithstanding the failed attempt at documenting a settlement, the parties had "reached a binding agreement in respect of their dispute on 6 May".
[25]
D CREDIT FINDINGS
Only two witnesses were called, Mr Harmer and Ms Farrell. I will be circumspect in making general findings as to credit, for two reasons.
The first is that consistently with what I have said earlier concerning the helpful working hypothesis of paying close attention to the contemporaneous documents and representations (at [22]-[25]), the oral evidence adduced from Mr Harmer did not materially add or detract from the coherent narrative emerging from the contemporaneous documentary record. As I noted above, any ex post facto accounts or rationalisations later given as to the meaning of communications and negotiations is of less assistance than assessing objectively the meaning of what people were recording in real time.
The second is that as I explained in Russell v Australian Broadcasting Corporation (No 3) [2023] FCA 1223 (at [438]), many experienced judges have expressed the caution that any criticisms of a witness, which go beyond the legitimate necessities of the occasion, should be avoided. Indeed, unnecessary credit findings should be avoided partly because of a body of research casting doubt on the ability of judges to make accurate credibility findings based on demeanour: see McNickle v Huntsman Chemical Company Australia Pty Ltd (Initial Trial) [2024] FCA 807 (at [128]-[130]); Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 (at 129 [31] per Gleeson CJ, Gummow and Kirby JJ).
Mr Harmer is a partner of Harmers and a highly experienced solicitor who has practised for over four decades, principally in employment law or what is now often called "workplace relations".
Without descending into detail at this stage, Mr Harmer was challenged principally on his understanding of the settlement negotiations leading up to the Alleged 6 May Agreement. The core of Mr Harmer's evidence was that a "framework" or "structure" had emerged on 4 May and that the parties had reached a consensus then on almost all settlement terms, except for those relating to the releases and the retraction of the Harmers Statement. By the evening of 5 May, Mr Harmer understood Ms Millen to have conveyed an offer on behalf of SRG (being the Alleged 5 May Final Offer) (see above (at [71]-[72])) which was capable of immediate acceptance and, in his view, was accepted by him on behalf of his clients, resulting in the Alleged 6 May Agreement. Mr Harmer gave evidence that notwithstanding his stipulation that the agreement was "subject to deed", in the context of the negotiations as they stood on 5 and 6 May (specifically Ms Millen's reference to a deed on "standard terms"), the reference to the settlement agreement necessitating a deed morphed into a formality.
Relatedly, a point he emphasised repeatedly was that the words or phrases he used and which assumed importance ("subject to deed" or "in-principle agreement") are "chameleonic" and, in this case, took their colour from his understanding that the deed proposed by SRG was to be on standard terms (T68.32; T69.13-16; T81.34-44; T84.25-27; T84.42; T85.11-14).
Although a credit attack was made on Mr Harmer based partly on the personal interest he was said to have in the outcome of the litigation, I do not find that Mr Harmer actively sought to dissemble the true position. For whatever reason, and despite his actions immediately after 6 May, Mr Harmer has apparently come to believe a deal was struck and was careful to ensure his evidence was consistent with such a narrative. As I will explain, however, I do not consider that this evidence can be reconciled with a rational and objective review of the facts revealed in the contemporaneous representations of the relevant actors. Indeed, these contemporaneous representations (and the broader context in which they were made) point decisively (indeed compellingly) in the opposite direction.
It is unnecessary to descend into the detail of Ms Farrell's evidence as it was, in essence, broadly consistent with the picture emerging from the contemporaneous records and, to the extent it strayed into subjective opinion, is not of great assistance in resolving the objective issue before me.
[26]
E MS FARRELL'S SUBMISSIONS
It is next worth setting out the core contentions of Ms Farrell. They were developed as follows.
First, it is said that the weight of the documentary evidence overwhelmingly favours the conclusion that between 17 April and 6 May 2024, Allens and Harmers were engaged in the exchange of offers on behalf of their respective clients and that those offers contained terms of settlement. The language of acceptance was also repeatedly used. Ms Farrell contends the Court should reject the construction of the settlement discussions as involving exchanges of "frameworks" and "integers" and "parameters" instead of what is plain on the documents and obvious in the context of solicitors attempting to resolve a dispute.
Ms Wilton, Ms Millen and Mr Drinnan's file notes refer numerously to "offers" before setting out the terms of those offers. The file notes of Mr Harmer, Ms Pritchard, Ms Smith, Mr Justin Handisurya and Ms Farrell likewise reflect this reality of the settlement discussions. Ms Farrell contends that at no point did any party believe that the offers being made were simply "frameworks" and "integers" or "parameters". To the extent that the word "framework" or "construct" was used, it was used as a way to refer to the way that the settlement would be structured or constructed within the context of an offer rather than as a substitute for an offer itself. It is said that the intention is clear in the file notes of Ms Millen dated 5 May when she notes "made clear our [REDACTED] [REDACTED] [REDACTED] + so we would insist on our settlement construct" and also where she notes "scope of offer … construct of yesterday off the table" (emphasis added) (see above (at [43])). The concept of the settlement framework or construct was used to describe the structure of the offer and did not exist independently of the offer. Ms Farrell submits a reasonable person would infer that these notes reflect verbal offers and counteroffers being made between the parties on 4, 5 and 6 May.
Secondly, this is a case that grew out of the mediation on 17 April; the without prejudice conditions of which were expressed to have continued in the meeting on 4 May. Ms Millen described the meeting of 4 May as a "mediation" in her file note. The discussions of 5 and 6 May likewise carried this character. From 4 May onwards, the parties commenced what was an urgent mediation (or settlement discussions) against a background, relevant to the objective characterisation of their words and conduct, where each perceived that the other was causing damage by public statements, and Ms Farrell and Ms Berczelly had just been dismissed.
Ms Farrell submits that the language and conduct of the SRG parties could leave no doubt that every matter of importance between the parties had been the subject of consensus by 6 May. It is said the Alleged 5 May Final Offer contained a complete, unambiguous and final offer which was capable of acceptance and which, if accepted, would resolve the dispute, and did not leave any matters of importance that were not agreed between the parties.
Thirdly, a review of the contemporaneous documents shows that between 4 and 6 May, the parties were able to narrow down the terms in dispute to the point where SRG would no longer move at all. Ms Farrell contends that the recollections of Ms Millen should not be relied upon in the face of the detailed, comprehensive and consistent contemporaneous file notes of each of Ms Smith, Mr Handisurya, Ms Pritchard, Mr Harmer, Ms Farrell (and Mr Follett and Mr Drinnan). By those documents, it is said that the parties had reached agreement on all terms of settlement such that by the end of 5 May, the only matters that remained for Ms Farrell and Ms Berczelly to capitulate on were the releases and the issue of the retraction of the Harmers Statement.
Hence, on 6 May, Ms Millen records herself as telling Mr Harmer that her client was "unlikely to depart from … position as at last night - retraction, releases position - clear deal breaker". Consequently, Mr Harmer instructed Mr Prince to attempt to resolve the impasse on these two issues by contacting Mr Follett. The conversation recorded by Mr Follett in his file note shows that senior counsel only discussed the issue of the releases and the retraction of the Harmers Statement (see above (at [66])). It was evident, Mr Farrell says, that SRG had adopted a position on the two remaining issues of the releases and the retraction that was "immoveable" and would not change, regardless of senior counsel's input. After Ms Farrell recognised that SRG was intransigent on the issue of releases and the retraction of the Harmers Statement (and its offer remained the same as that which was made in the Alleged 5 May Final Offer), it was up to her to either accept it or reject it. Ms Farrell contends that she accepted it. Consistently with this narrative, a note was prepared by junior counsel for Ms Farrell (which was also addressed orally during the helpful submissions of Mr Moorhouse made at short notice) of the evidence supporting the conclusion that each of the pleaded terms was agreed during the course of the negotiations leading up to the asserted acceptance.
Fourthly, in the light of the above, Mr Farrell submits that a reasonable person would conclude that the outward manifestation of Ms Millen's intention on 5 and 6 May was to put and maintain the terms of the Alleged 5 May Final Offer and that Mr Harmer (after trying but failing to vary those terms) accepted the Alleged 5 May Final Offer on 6 May on instructions. It is said the terms were simple to understand and the acceptance was "clear and unqualified".
[27]
F CONSIDERATION
This is not a case at the margins. The contention of Ms Farrell that an oral contract came into being cannot be accepted.
The short and decisive point is that although it may be accepted the parties were able to narrow down the terms in dispute between them to the point where Ms Farrell correctly recognised SRG would not budge and a consensus was reached on an "in-principle" agreement, it remained just that. It was subject to the execution of an instrument the drafting of which would serve to iron out all necessary further details. Although the parties apparently subjectively anticipated those details would be resolved in the proposed deed, no binding or enforceable agreement was to come into being until execution.
This conclusion is hardly surprising, and the starting point is to recognise that this is not a "run-of-the-mill" dispute.
SRG is a publicly listed company with a market capitalisation (as of the date of this judgment) of $3.38 billion. Ms Farrell (the former Chief Legal Officer and Company Secretary of SRG) and Ms Berczelly (the former General Manager, Group Secretariat and Corporate Legal & Company Secretary of SRG), as I noted in the cross-claim judgment, are highly accomplished, experienced and sophisticated commercial solicitors. The parties are represented by experienced and commercially astute lawyers who are alive to the complex and highly sensitive nature of the controversy. The commercial sophistication of the parties (and their legal representatives) is not an insignificant contextual matter: it is a pointer suggesting it is far from unlikely that the parties wished any accord struck be embodied in an agreed and exchanged formal document.
Consistently with the nature of the parties and the underlying dispute, and as noted above (at [26]-[28]), this was reflected in the Mediation Agreement; a term of which was that if the parties resolved their dispute at mediation, the terms of the resolution must be written down in a document that the parties signed before they left the mediation (cl 6). Mr Harmer gave evidence that the framework or structure for settlement discussed on 5 May emerged from the 17 April mediation, which was predicated on the understanding between the parties that any settlement would necessarily be reflected in a deed (T59).
Viewed in the broader context (including the nature of the dispute; the sophistication of all involved; how the parties had previously turned their mind to the necessity of a formal agreement; and no one ever indicating a departure from this approach), it is difficult to understand why a reasonable person would not have readily understood that the parties and their legal representatives expected that any formal and final resolution was subject to embodiment in a formal deed. Most notably, this understanding is borne out by Mr Harmer expressly identifying in his email of 6:12pm and text message of 6:14pm on 6 May to Ms Millen that the agreement allegedly struck at that time was "subject to deed" (above (at [71]-[72])). There is no reason why the common understanding which applies to those time-honoured words (being an overriding condition that what has been agreed must be regarded as the basis for a future contract, rather than a contract itself) should be displaced. Indeed, one is asked by those acting for Ms Farrell to accept the unlikely scenario that the words "subject to deed", chosen by an experienced solicitor in these short but critical messages, were somehow redundant (T82.13-29).
In truth, they were far from superfluous. As it became apparent during the second day of the trial, the inclusion of the words "subject to deed" have a genesis (or are at least consistent with representations made) in the conference call between Mr Harmer, Ms Smith, Ms Pritchard, Mr Prince, Ms Farrell and Ms Berczelly (see above (at [69])). As Ms Smith's file note reveals, Mr Prince is recorded as saying:
SP:
I would get Michael to write back…
Things Follett told me is consistent with what you've been told
They have not added anything except to allow us to consider whether there is room to push them harder.
You might just want to write back and say refer to our discussion. Offer is accepted, subject to the Deed. Please provide us with a draft Deed.
Will open up more issues.
Deal with that.
(Emphasis added)
Mr Harmer gave evidence that Mr Prince gave that advice at the conference and Ms Farrell and Ms Berczelly took it (T75.4-14):
MR SHEAHAN: If you go over to the next page, second half, Mr Prince is speaking again about two thirds of the way down. He says:
You might just want to write back and say, refer to our discussion, offer as accepted subject to deed.
MR SHEAHAN: You see that?---Yes. I see that.
MR SHEAHAN: So his advice was to make the acceptance subject to the deed?---Correct.
MR SHEAHAN: And your clients accepted that advice?---Yes.
This is, in substance, the end of the case. A consensus had emerged, but it was subject to finalisation of a mutually agreeable instrument reflecting this consensus, which would then take effect as a concluded bargain. Other issues may be opened up when negotiations were being finalised, notwithstanding that a consensus had emerged on what were perceived to be the "in-principle" or most significant points that had been discussed.
But leaving aside these matters of context and the representations at this conference reflecting the contemporaneous understanding of Ms Farrell's lawyers as to the state of the "in-principle" agreement on 6 May, there are a number of matters that reinforce the conclusion that a reasonable person would have understood, at the critical time, that any settlement of the dispute would be embodied in an agreed and exchanged deed.
First, Mr Harmer gave evidence that prior to the making of the Alleged 5 May Final Offer, he had understood that any settlement of the dispute was necessarily subject to the parties entering into a formal deed, and that the only matter that altered that understanding was Ms Millen's reference to "standard terms". As Mr Harmer explained in his oral evidence (T69.5-18):
HIS HONOUR: Does that mean, Mr Harmer, but for the fact that there was a reference to these standard terms - standard releases, you had understood up until that time, including at the time that you were just taken to the file note which was recorded at 375 - up until that time, you always thought it was part of the deed that it would be subject to and conditional upon the reduction of the terms to writing in a deed. But the thing that changed that, and the only thing that changed that, was the fact that there was a reference to standard terms. Is that what I take from your evidence? I'm just trying to understand it?---In terms of what I consider to be chameleonic terms, of in-principle and subject to deed, the thing that coloured it towards the notion that the package would have a deed that would be a formality was the notion that it would be standard deeds, standard releases, standard confidentiality, standard non-disparagement.
So does that mean the answer to my question is yes?---Yes.
Mr Harmer went on to give evidence that it was his understanding that because Ms Millen had used the word "standard" in the course of negotiations on 5 May (including in relation to releases, non-disparagement and confidentiality), that Ms Millen was capable of accepting on behalf of SRG an oral offer that would immediately constitute an enforceable agreement to settle the dispute (T73.44-74.5).
reflects your intention at that time that even if you reached an in-principle agreement, it would not be binding until there was a deed?---That was our framework, yes.
Fifthly, Mr Harmer gave evidence as to the first deed received from Allens on 9 May (see above (at [75]-[76])), which was reviewed and marked-up by Harmers. Mr Harmer explained that the role of the deed was not a condition of the agreement itself but was to merely embody the Alleged 6 May Agreement in "standard terms" (T85.20-22). Nor was its role to supersede the agreement that had been earlier reached (T85.24-26). Despite this, cl 15 of the proposed deed contained an "entire agreement" clause as follows:
15 Entire agreement
Except in respect of those obligations that Ms Farrell and Ms Berczelly owe to and the Company owe to each other that survive the termination of their Employment, this Deed contains the entire agreement between the parties with respect to its subject matter. It sets out the only conduct, representations, warranties, covenants, conditions, agreements or understandings (collectively Conduct) relied on by the parties and supersedes all earlier Conduct by or between the parties in connection with its subject matter. No party has relied on or is relying on any other Conduct in entering into this Deed and completing the transactions contemplated by it.
Mr Harmer gave evidence that his firm did not push back specifically on the inclusion of cl 15 and instead rejected the entire deed framework because, in Harmers' view, the proposed deed had departed materially from what was understood to have been agreed on 6 May (T85.46-86.9). As I suggested during the hearing, however, one might have thought the natural response to the inclusion of cl 15 would have been to ask Allens why it was at all appropriate that the deed be said to embody the entire agreement between the parties and supersede any earlier agreement, when (on Harmers' view) it was not to do so and a binding agreement had been struck on 6 May. It was never suggested by the terms proposed that the proposed instrument had the legal effect of embodying an agreement already struck or, to the extent it differed from the then extant agreement, its terms amounted to a variation. Additionally, it was never submitted expressly that this was a "fourth category" Masters v Cameron case in which the parties were content to be bound immediately and exclusively by the terms which they had agreed while expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.
Sixthly, Mr Harmer gave evidence as to several references to correspondence and other documents marked "without prejudice" following the making of the Alleged 6 May Agreement. On 9 May, for example, as noted earlier, Allens provided two draft deeds of release marked "without prejudice until executed by all parties" (see above (at [75]-[76])).
Notably, on 15 May, a letter was sent to Allens enclosing an amended deed under cover of email. The email states:
Dear Colleagues
We refer to your below email and the proposed deeds that were enclosed thereto.
Please find attached:
a covering letter that is marked without prejudice; and
draft deed of release between Ms Farrell, Ms Berczelly, SRG and Harmers which contains our comments and amendments, and which consolidates your two separate draft deeds.
The draft deed is without prejudice until executed by all parties.
Please let us know whether the draft deed is acceptable to you and your clients. We look forward to hearing from you.
Kind regards
Justin Handisurya
Solicitor
(Emphasis added)
[28]
G CONCLUSION AND ORDERS
For these reasons, Ms Farrell's claim for specific performance is misconceived and must be dismissed. It would be remiss not to record my appreciation for the parties' comprehensive and helpful oral and written submissions, which has facilitated the efficient disposition of this application and has allowed me to proceed to deliver reasons expeditiously.
Parts of these reasons will be redacted to reflect confidentiality orders necessary to prevent prejudice to the proper administration of justice, which I propose to make this afternoon. I will hear from the parties and others as to the ambit of the orders.
I certify that the preceding one hundred and forty-seven (147) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.
[29]
Associate:
Dated: 23 December 2024
Schedule
No: NSD1009/2024
Federal Court of Australia
District Registry: New South Wales
Division: Fair Work
Interested Person FAIRFAX MEDIA PUBLICATIONS PTY LIMITED
Second Respondent ANTHONY HERAGHTY
Third Respondent KEVIN FIGUEIREDO
Fourth Respondent SALLY PITKIN
Fifth Respondent ANNABELLE CHAPLAIN
Sixth Respondent AMELIA BERCZELLY
Between 4:13pm and 5:01pm, Mr Harmer and Ms Millen spoke over the telephone three times. Mr Harmer's file note records that the retraction of the Harmers Statement was non-negotiable, no other releases or indemnities would be provided [REDACTED] [REDACTED] [REDACTED].
At 5:05pm, Mr Harmer texted Ms Farrell, Ms Berczelly and Ms Pritchard stating that there was not much movement from SRG and requested that they reconvene.
At 5:44pm, Mr Harmer emailed Ms Millen a further proposal as follows (5 May Counteroffer):
Ms Farrell and Ms Berczelly were willing to adopt SRG's preferred framework;
Ms Farrell and Ms Berczelly would not agree to a retraction of the Harmers Statement, but would agree to a joint or unilateral statement acknowledging that SRG denies all liability and disputes all aspects of the Harmers Statement;
Ms Farrell and Ms Berczelly required releases or indemnification from claims by SRG's board and Chief Executive Officer and indemnification from persons SRG could not control (such as its former Chief Human Resources Officer or any class action);
[REDACTED] [REDACTED] [REDACTED];
Harmers would not act against SRG for a period for six years.
At 6:12pm, Ms Millen spoke with Mr Harmer over the telephone. Her file note of the conversation is as follows:
Michael Harmer
Calling re email this afternoon 5.44pm
As req - offer put
There are several difficulties with this assumption, being, among other things:
Ms Millen at no point indicated that her instructions had changed on 5 May such that SRG was open to a resolving the dispute by way of an oral agreement, rather than by way of embodiment in a deed (T74.6-20);
Ms Millen had repeatedly used the word "full" to characterise the nature of various terms intended to be included in the deed (including in relation to releases, confidentiality and denial of liability), in contrast to the inclusion of "standard" or "boilerplate" clauses (T56.23-25; T76-77);
that Ms Farrell and Ms Berczelly, as experienced solicitors, would have understood (and which Mr Harmer accepted) the obvious perils of oral agreements in the context of complex commercial disputes including, among other things, that such agreements depend upon the parties recalling the same words being used and attributing the same meaning to those words (T75.15-34); and
relatedly, that it is doubtful Ms Farrell and Ms Berczelly would have instructed Harmers to make a binding oral agreement with SRG, particularly given their close involvement in the post-Alleged 6 May Agreement negotiations and proposed amendments to the deeds exchanged on 9 May (an issue to which I will return) (T76.1-5).
Secondly, on 23 April, Harmers sent a letter to Allens which provided, among other things:
2.2 We confirm that the offer is the same as our last offer at Mediation, being:
(a) [REDACTED] [REDACTED] [REDACTED]
[REDACTED] [REDACTED] [REDACTED]
[REDACTED] [REDACTED] [REDACTED]
(b) an internal and external communications plan is to be agreed regarding Ms Berczelly and Ms Farrell's departures from SRG; and
(c) settlement is subject to the parties entering into Deeds of Release, prepared by your office, addressing each of the above matters. The Deeds will otherwise contain standard terms, including mutual releases, confidentiality and mutual non-disparagement; and
(d) the vesting of any equity held by Ms Berczelly and Ms Farrell subject to time based restrictions is to be accelerated to vest immediately.
The letter was signed by Mr Harmer, Ms Pritchard and Ms Smith. Mr Harmer gave the following evidence in relation to the letter, specifically cl 2.2(c) which provided that settlement is subject to the parties entering into deeds (T57.44-58.12):
HIS HONOUR: Who was the author of that document?---I would suggest that - and I'm - I must admit I'm interpreting, your Honour, but normally, that would mean that the draft - first draft would have been prepared by Jen Smith, signed off by Emma, as team leader, and if my name was going on it, I would have had to review it, but the work would have been done by Emma and Jen.
Well, you looked at 2.2 - you signed this document, didn't you?---I did.
Yes. When you look at 2.2(c) on page 278, where it says:
Settlement is subject to the parties entering into deeds of release prepared by your office, addressing each of the above matters.
You see that?---Yes.
Now, did you understand when that was written that when settlement was subject to the parties entering into the deed of release, it meant that the agreement for settlement proposed in this letter was subject to you reviewing the deeds prepared by [Allens] … satisfying yourself they've addressed it, and executing the deed?---In terms of this specific letter, that's what's conveyed
Thirdly, Mr Harmer gave evidence as to the "package" that had been put forward by SRG on 5 May (see above (at [38]-[39])) and, in particular, his contemporaneous file note. Mr Harmer accepted in the following exchange that his file note referred to the package offered contemplating the entry into deeds (T63.8-29):
MR SHEAHAN: Yes. Now, in that right-hand column, towards the bottom of the page, you will see the word "deed" is used twice. It's in a circle at about three-quarters of the way down, and then at the bottom of the page - do you see that, the word "deed"?---Yes. Yes.
MR SHEAHAN: And that's connected by a line to what is item 13 in this numbered list. And - correct me if I'm wrong - it says hold pending deed, rights reserved. Is that what it says?---That's what it reads, yes.
MR SHEAHAN: And that was your part of this proposal, your part of a proposal to put back to SRG in relation to this matter?---Again, as I say, I think down the bottom, like, I've reached 12 at about point 9 on the page, and I think I've squeezed the rest of the things raised by SRG into the bottom part of that page, and it goes across the line. So I'm actually not sure whether - I think this is still a package moving from - from SRG, with us then making notations separately on what we would put back. But this was the framework that we felt both parties ended up moving forward with during the course of that four and a half hours or so.
MR SHEAHAN: Yes. So both parties were working towards a position where there would be deeds reflecting certain things if agreement could be reached on matters of principle. Correct?---Well, certainly deeds were contemplated to be part and parcel of the agreement that was being proposed by each party.
Fourthly, in another file note of Mr Harmer recording his notes of Harmers' counter-proposal to Allens on 5 May (see above (at [41])), Mr Harmer gave evidence as to references to "deed" and "in-principle agreement" (T67-68), as follows: (1) in item 8, there is reference to an [REDACTED] [REDACTED] [REDACTED]; (2) in item 11, there are the words "mutual deed"; (3) in item 11(c), the words "in-principle agreement today" and "proper deed sign-off by next Friday". Mr Harmer then gave evidence that hitherto Ms Millen's alleged change in position following her reference to "standard terms" (see above (at [104]-[105], [126])), there was a mutual understanding as to any agreement being reflected in a formal deed (T68.8-26):
MR SHEAHAN: Now - now, the proposal you recorded here on 5 May, I suggest, makes it perfectly plain that your intention was that there would be a settlement by a deed. Correct?---Correct.
MR SHEAHAN: … Now, this language that you've recorded in 11(c) - - -?---Yes. Yes.
The letter was marked "without prejudice" and was signed by Mr Harmer, Ms Pritchard, Ms Smith and Mr Handisurya. The first paragraph reads:
Dear Colleagues
We refer to the in-principle settlement reached between the Super Retail Group, Ms Farrell, Ms Berczelly, and Harmers Workplace Lawyers (Harmers) on Monday, 6 May 2024 (In-Principle Settlement), and to the proposed deeds of settlement subsequently provided by you on 9 May 2024.
(Emphasis added)
Further, in the enclosed proposed deed, Harmers marked every page (with the exception of one) "Without Prejudice Until Executed by All Parties".
On 21 May, as noted earlier (at [89]-[90]), Harmers sent Allens another letter marked "without prejudice" and which referred to a "disagreement (or at least a misunderstanding) as to the financial aspect of the in-principle agreement" (emphasis added). The next day, on 22 May, Allens sent Harmers a letter marked "without prejudice, save as to costs" (referred to earlier (at [94])) which said, among other things:
We refer to your letter dated 21 May 2024 and our previous correspondence about this matter.
Our client does not accept that there is a misunderstanding regarding any aspect of the in-principle agreement. [REDACTED] [REDACTED] [REDACTED] or that it would otherwise accept the other terms your clients included in the Deed of Release, including in relation to the releases to be provided by our respective clients.
We have enclosed updated versions of the Deed of Release and the Deed with Harmers and comparisons to the versions that we provided to you on 9 May 2024. Our client will not agree to any amendments to the Deed of Release and the Deed with Harmers, [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]. In these circumstances, there is no basis for the parties to attend a further mediation to finalise the terms of the settlement.
Our client's offer to settle this matter on the terms set out in the enclosed Deed of Release and Deed with Harmers is open for acceptance until 4.30pm today. If your clients do not accept our client's offer by that time, by returning fully executed copies of the Deed of Release and the Deed with Harmers, the offer will lapse.
Mr Harmer gave evidence that the inclusion of the "without prejudice" marking on the post-6 May correspondence was spurred by the emergence of a "subsidiary dispute" whereby the deeds provided by Allens departed materially from the terms of the Alleged 6 May Agreement (T86.14-20). I do not accept this evidence. In the light of the references to the requirement of a "deed" and "in-principle agreement" in the contemporaneous records, I have little doubt a reasonable person would conclude that Ms Farrell, Ms Berczelly and Harmers behaved in a manner that was consistent with the view that the communications Harmers was engaged in with Allens in relation to the draft deeds were properly characterised as negotiations following an "in-principle" (but not yet finalised) settlement. It is also consistent with Harmers' letter of 24 May demanding that Allens maintain the confidentiality of the without prejudice "negotiations".
Seventhly, Mr Harmer gave evidence in relation to a letter he received from Allens on 23 May. The third paragraph of the letter provided:
On 6 May 2024, your clients accepted the terms proposed by SRG, including with respect to the releases to be provided by Ms Farrell, Ms Berczelly and SRG. Those terms were recorded in the draft deed of release that we provided to you on 9 May 2024. …
As I remarked during the hearing, the wording of the Allens letter is prima facie curious but needs to be read in the context of the whole letter. To the extent this isolated comment is consistent with an agreement being struck, it might have been thought to be the highwater mark of the alleged post-agreement representations said to support Ms Farrell's case. What is instructive, however, is that on the following day, 24 May, as referred to above (at [97]-[98]), Mr Harmer sent a letter in response, which provided, among other things:
We refer to your letter dated 23 May 2024, sent by email at 8.30am on that day (Your Letter).
First, despite Your Letter not being marked 'without prejudice', it refers to and discloses details of communications between our respective clients in respect of attempts to negotiate a settlement of their dispute, including disclosing details of terms that our clients sought as part of a deed to resolve their dispute.
For the avoidance of doubt, our clients have not and do not consent to the details of the settlement negotiations being disclosed, and communications regarding the settlement negotiations remain subject to the usual 'without prejudice privilege'. Please ensure that there is no disclosure of Your Letter or the communications between our respective clients and firms in respect of the settlement negotiations.
(Emphasis added)
Rather than embracing the notion there was in fact a binding agreement reached on 6 May, Mr Harmer refers to ongoing negotiations and the response is generally more consistent with a binding agreement not being extant. If it were otherwise, as I noted during the hearing, it seemed to me the natural response of Harmers would have been to state that there was, in fact, a binding agreement and that the parties should simply attend to the task of reducing it to writing (T129.35-131.15).
Eighthly, notwithstanding, as Ms Farrell points out, a broad consensus emerging as to the "in-principle" points she identified in her pleading, when more closely examined, the contemporaneous documents establish that the parties were not in final agreement as to several not insignificant matters, including:
the releases - being the ambit and nature of the releases to be given by Ms Farrell, Ms Berczelly and SRG (T47.44-48.38; T53.8-57.14; T68.8-71.33; T158.34-164.45);
the retraction of the Harmers Statement - that is, the identity of the person to whom the obligation to retract the Harmers Statement was placed (T98.21-113.12; ASOC (at [21(b)]));
the "carveout" from Harmers - namely, whether the parties intended that any settlement agreement included a carveout to allow Harmers to continue to act for Ms Farrell and Ms Berczelly (T109.4-14; T167.10-43; T170.6-171.24; ASOC (at [21(k)]));
non-disparagement - that is, whether the parties intended that any non-disparagement clause would be mutual, or that Ms Farrell and Ms Berczelly would have the benefit of a standard non-disparagement clause only, qualified by a carveout for the circumstances of the termination of their employment (T47.44-48.39; T54.32-46; T68.32-69.16; T119.4-7; ASOC (at [21(j)])); and
other terms - including whether it was a term of the Alleged 6 May Agreement that the parties would execute a deed on "standard SRG terms" and, if so, what those terms were (see above (at [104]-[105], [126]); T47.44-48.38; T49.30-35; T53.8-58.15; T64.44-65.20; T68.8-71.33).
In summary, the events following the Alleged 6 May Agreement, properly understood, reflect the emergence of a broad consensus on that date which would be necessary to refine over the finalisation of a deed. This is far from novel. Moreover, it is entirely consistent with, among other things, Mr Harmer's use of the words "subject to deed" on 6 May and his and Ms Millen's discussion of "releases/deeds" having to be "negotiated". Indeed, from a review of the 15 May Deed provided by Harmers (see above (at [86]-[87])), the parties had yet to agree upon what might objectively thought to be quite substantive terms which were necessary to resolve prior to any concluded settlement, including, as noted above (at [144]): [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] and (3) notably, the scope and ambit of releases.