Feldman v GNM Australia Ltd

Whether a binding agreement was reached

1. The question of the legal conclusion to be drawn where parties have reached agreement as to the terms of a contract but also agreed to execute a further, formal agreement is always vexed. The defendants submitted that the agreement in the present case falls either within the first category of Masters v Cameron [1] or within the so-called fourth category recognised in Baulkham Hill Private Hospital Pty Ltd v GR Securities Pty Ltd. [2]
2. The relevant principles were recently considered by the Court of Appeal in Pavlovic v Universal Music Australia Pty Ltd. [3] The leading judgment in that case was written by Beazley P. Her Honour explained that the Masters v Cameron classifications need not be applied as strict categories into which all cases must fall. The critical task is to determine the intention of the parties, objectively ascertained. [4]
3. Mr Cohen submitted that, objectively construed, the communications between the parties in the present case did not indicate that the parties intended to bind themselves prior to the execution of the deed. He pointed to a number of matters to support that submission.
4. First, Mr Cohen pointed to the language of the communications, particularly the emails exchanged after the plaintiff's solicitor first responded to the defendants' letter of offer dated 2 April 2015. He submitted that the use of the words "is willing to" by both parties suggested that they were talking about the future and that "there's a deed lurking in all of this". I would respectfully disagree. In my view, the language of the exchanges themselves clearly indicates an intention to be bound immediately once terms were agreed. As noted in the defendants' written submissions, the original offer from The Guardian stated "an agreement reflecting the above would be documented in a deed of release which would also include obligations of confidentiality", placing formation of an agreement ahead of the process of formal legal documentation and subsidiary issues such as confidentiality.
5. Further, the defendants' final email was framed as the acceptance of an offer; the draft deed of release attached to that communication was described as a document which "documents the parties' agreed terms". The plaintiff's solicitor did not cavil with or qualify the immediacy conveyed by those words.
6. Apart from the language of the communications between the parties, it is relevant to consider the subject matter of the negotiations. There was no prior relationship between Rabbi Feldman and the defendants; this was not a commercial dealing. The concerns notice overtly threatened legal proceedings by its references to matters that would be relied upon as the basis for further or aggravated damages "at trial". All of the correspondence that followed was directed to the steps the defendants were willing to take in order to redress the alleged harm caused by the articles with a view to bringing the dispute to finality and avoiding the threatened litigation. Mr Cohen relied upon that very aspect of the negotiations to support his contention that the plaintiff's former solicitor could not have had ostensible authority. It is convenient to turn to that issue.
7. In his written submissions, the plaintiff said: A solicitor does not have ostensible authority to bind a client to a contract. The exception to this rule is where the agreement is in the context of litigation and the agreement compromises the litigation.
8. The burden of Mr Cohen's submission was that there is a bright-line test for determining whether a solicitor has ostensible authority; prior to the commencement of proceedings, there is no authority whereas upon the commencement of proceedings, there is.
9. Care must always be taken in describing the application of a legal test in a particular factual circumstance as a "rule". In Lucke & Cleary, [5] the Full Court of the Supreme Court of South Australia described the notion that a solicitor does not have ostensible authority to bind his or her client to a contract as "a general proposition". [6] None of the authorities cited for that proposition is akin to the present case; each was concerned with dealings relating to interests in property. The authorities cited in Lucke include the decision of the High Court in Pianta v National Finance and Trustees Ltd. [7] That was a case involving the question of the authority of a solicitor to bind his clients to sell a parcel of land.
10. It is recognised that there is a qualification to the "general proposition" in the context of litigation, where a solicitor has ostensible authority to bind his or her client to a contract which relates to and, in particular, compromises the litigation: Lucke v Cleary at [61], citing CIC Insurance Ltd v Bankstown Football Club Ltd. [8]
11. It must be remembered, however, that in each of those cases, the ultimate issue was whether, objectively construed, the solicitors' communications gave the impression of authority to settle the dispute; the "general proposition" must be understood as a description of the usual outcome of that inquiry in non- litigious matters. Ultimately, the question is whether the parties intended to be bound immediately having regard to the "outward manifestations" of their intentions. [9]
12. It may be accepted that, in Pavlovic, the Court of Appeal rejected the proposition that the trial judge's finding of ostensible authority in a non-litigious context involved only "incremental development in principle" [10] . Beazley P said at [154] in that case: Further, to accept that a "potentially litigious" dispute engages the ostensible authority of a solicitor to enter into an agreement is also not supported by authority. CIC Insurance v Bankstown Football Club does not extend the exception in Lucke v Cleary to such disputes. Rather, in CIC Insurance v Bankstown Football Club the solicitor was retained in relation to an insurance claim, and therefore had ostensible authority to deal with "issues which reasonably and foreseeably arose in the pursuit of that claim" (Kirby P, at 75,555). The case turned on its own facts and does not give rise to the principle for which Universal contended.
13. Mr Cohen also relied on the remarks of the Chief Justice in Pavlovic at [21], as follows: I agree with what was said by the President in relation to the question of ostensible authority. A solicitor's ostensible authority to bind his or her client to an agreement, in the context of litigation conducted on the client's behalf, does not extend to agreements resulting from negotiations, which if unsuccessful, may or may not end up in litigation.
14. Mr Cohen submitted that those remarks make it clear beyond dispute that there is a distinction fatal to the defendants' application between cases in which proceedings have already been commenced (where a finding of ostensible authority will more readily be made) and all other cases (where, according to Mr Cohen, there can be no ostensible authority to bind the client to a contract).
15. In my view, it does not follow from the Court of Appeal's decision in Pavlovic that there can never be a finding of ostensible authority of a solicitor in the absence of legal proceedings. The articulation of a rule in such rigid terms invites disregard for the proper application of the true test, which calls for an assessment of the objective intention of the parties (including by consideration of what is represented by the conduct of their agents). That assessment must be undertaken on an individualised, case-by-case basis.
16. Neither party cited any authority in which the question of the ostensible authority of a solicitor to bind his or her client to a settlement agreement has arisen in the context of the resolution of a civil dispute notified by means of a concerns notice under part 3 of the Defamation Act. As already noted, the plaintiff's letter dated 27 March 2015 was expressly described as a concerns notice and so invited attention to the provisions of the Defamation Act. The objects of the Act include the promotion of "speedy and non-litigious methods of resolving disputes about the publication of defamatory matter".
17. The remarks of Beazley P in Pavlovic at [154] set out above recognise that the mere fact that a commercial dispute is "potentially litigious" will not, considered objectively, import the whole range of expectations as to the degree of authority conferred upon a solicitor by his or her client that arise in the case of proceedings on foot. However, the negotiation of a non-litigious resolution of a dispute notified in a concerns notice under the Defamation Act is very different from the kind of negotiations considered by the Court in Pavlovic. In my view, the service of a concerns notice would readily be understood as the common first step towards the commencement of proceedings for defamation, reflecting a responsible approach to the resolution of the aggrieved person's concerns in accordance with the objects of the Act. In my view, there would be every expectation on the part of solicitors negotiating in response to a concerns notice that each had authority to settle the dispute without resort to legal proceedings.
18. Returning to the question of intention to be bound immediately, two further submissions put by Mr Cohen should be considered. First, he submitted that the agreement allegedly reached in the present case had to be dealt with in a deed because the decision to publish or not publish a news article cannot amount to consideration for the purpose of formation of a binding contract. He submitted that the decision by The Guardian to publish Rabbi Feldman's statement is not capable of being consideration, since it is a news item and the business of newspapers is to publish news. I do not accept that submission. In my view, the defendants' publication of the plaintiff's response to the matters reported in the articles is plainly capable of amounting to consideration for the purpose of the law of contract.
19. Separately, Mr Cohen relied upon the terms of the draft deed as revealing that, as at 30 April 2015, the parties had not reached agreement as to the terms of the alleged agreement. He noted, for example, that the defendants sought the inclusion of a provision in the deed by which the plaintiff would acknowledge that he had received legal advice. He also relied on the fact that the terms as to confidentiality contained in the deed had not been agreed before the draft deed was provided to the plaintiff. Mr Cohen submitted that the inclusion of such terms was inconsistent with agreement having been reached at an earlier juncture. He also noted that the agreement allegedly reached as at 30 April 2015 was silent as to the time within which the defendant would have to publish Rabbi Feldman's statement.
20. I do not think it follows from those considerations that the parties did not intend to be bound immediately upon the agreement of the primary terms negotiated in the correspondence up to 30 April 2015. Viewed objectively, it is plain in my view that both parties were treating the matter as one which should be dealt with promptly if litigation was to be avoided. It should be noted in that context that the draft deed sent on 30 April 2015 contemplated publication of Rabbi Feldman's statement within three days. Had the plaintiff not remained silent after 13 May 2015 (until the alleged withdrawal of the offer on 7 July 2015), publication of the statement would have occurred within that timeframe. The proper conclusion, in my view, is that the parties were content to put such matters of aside.
21. In all the circumstances, I am satisfied that the parties intended to be bound immediately upon the defendants' solicitor's acceptance of the matters negotiated in the correspondence referred to in their email dated 30 April 2015.

The fourth matter complained of

1. It is necessary to give separate consideration to the fourth matter complained of in the amended statement of claim, which was not referred to in the concerns notice or the subsequent notification of the two further articles of concern to Rabbi Feldman. The first awareness the defendants had of the plaintiff's complaint about that article came when the statement of claim was served.
2. Mr Potter, who argued the application for the defendants on the adjournment date, submitted that the fourth matter complained of should be taken to be included within the scope of the release agreed as a term of the settlement agreement. He relied in particular on the wording of the defendants' letter dated 2 April 2015 (the first substantive response to the concerns notice) which contemplated agreement by the plaintiff to release the defendants from "all liability relating to or arising out of the matters referred to" in the concerns notice "including without limitation the publication of the articles complained of".
3. The concerns notice raised a broad concern as to the reporting of Rabbi Feldman's evidence to the Royal Commission. The fourth matter complained of rehearses the same issues as were addressed in the other matters complained of. The imputations specified in respect of the fourth matter complained of are different from those specified in respect of the other articles but only by way of nuance. I am satisfied that the release extends to a release in respect of the fourth matter complained of.

Orders

1. The defendants acknowledged that there is an unresolved legal question as to the extent of the Court's authority under s 73 of the Civil Procedure Act where proceedings are not yet commenced. Accordingly, although the notice of motion specifically sought an order staying the proceedings pursuant that section, the relief sought was alternatively submitted to be within the Court's authority under s 67 or else the Court's inherent power. In my view, the proper analysis in the circumstances of this case is that, the proceedings having been commenced in circumstances where the plaintiff has released the defendants from liability in respect of the causes of action sued upon, the proceedings are an abuse of process and should be permanently stayed pursuant to s 67 of the Civil Procedure Act.

Endnotes

1. Masters v Cameron (1954) 91 CLR 353
2. Baulkham Hill Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628; confirmed on appeal in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634.
3. Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313
4. At [64] per Beazley P; Bathurst CJ agreeing "generally" at [1]; see also at [15]; Meagher JA agreeing with Beazley P at [162]
5. Lucke & Cleary [2011] SASCFC 118; 111 SASR 134
6. Per Stanley J at [60]; Grey and David JJ agreeing at [1] and [2] respectively
7. Pianta v National Finance and Trustees Ltd (1964) 180 CLR 146
8. [1994] NSWCA 359
9. Pavlovic at [64] to [64] per Beazley P; Meagher JA agreeing at [162]
10. At [152]

Amendments 03 May 2017 - Formatting correction to subheadings 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: 03 May 2017