Feldman v GNM Australia Ltd

The draft deed

1. The draft deed contained, relevantly, the following clauses: "2 Terms 2.1 Within 3 days of the Settlement Date, [the first respondent] must cause to be published on its website [the Statement]. 2.2 [The first respondent] must retain [the Statement] online for a period of 6 months from the date of publication. 2.3 The parties acknowledge that [the first respondent] has removed from its website the Articles. 2.4 [The first respondent] agrees not to republish the Articles. … 5 No admission of liability 5.1 Nothing in this Deed is to be construed as an admission of liability by any Party in relation to the Dispute. 6 Authority to Sign and Legal Advice 6.1 Each Party warrants to the other(s) that: (a) it has full power and authority to enter into and perform this Deed; and (b) it has received legal advice regarding the subject matter of this Deed (including, without limitation, the releases contained in this Deed) before entering into this Deed. 7 Confidentiality to be preserved Provisions to remain confidential 7.1 The Parties acknowledge that the terms of this Deed are confidential. Each Party must keep the terms of this Deed confidential and must not disclose or permit to be disclosed (or further disclose) to any person: (a) the content or effect of this Deed; However, each Party may make disclosures as set out in Clause 7.2 of this Deed. Permitted disclosures 7.2 A Party may make disclosures: (a) to a court to enforce this Deed; (b) with the prior written consent of the other Party; or (c) to those of its employees, officers, professional or financial advisers, bankers and creditors, as the Party reasonably thinks necessary to give effect to this Deed but only on a strictly confidential basis; and (d) to the extent that the Party is compelled to disclose them by law, after the form and terms of that disclosure have been notified to the other Party and the other Party has had a reasonable opportunity to comment on the form and terms."
2. In addition, there were provisions as to "Releases" (cl 3); "Bar[s] to action and covenant[s] not to sue" (cl 4); and general provisions as to continuing warranties, waiver and counterpart documents, exchange and the "Governing Law and jurisdiction" (cl 8).

Reasons of the primary judge

1. There were three issues before the primary judge: first, whether the parties had reached a final, binding agreement; secondly, whether Eddy Neumann Lawyers had ostensible authority to bind the appellant to a settlement of the defamation claims; and thirdly, whether Eddy Neumann Lawyers had actual authority to bind the appellant to a settlement of those claims. The last issue was raised late and her Honour determined to hear the other two issues, and stood over the question of actual authority pending the outcome of those issues.
2. The respondents argued before the primary judge that their agreement, as evidenced in the email correspondence between 2 April 2015 and 30 April 2015 set out above, fell within either the first category of Masters v Cameron or within the fourth category recognised in Baulkham Hills 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. Her Honour, at [26], considered that the language used in the email exchanges "clearly indicates an intention to be bound immediately once terms were agreed". According to her Honour, the reference in the email of 2 April 2015 that "[a]n agreement reflecting the above would be documented in a Deed of Release" placed the "formation of an agreement ahead of the process of formal legal documentation and subsidiary issues such as confidentiality".
4. At [41], her Honour referred to the appellant's arguments that the parties did not intend to be immediately bound. The appellant had relied upon the fact that there was a warranty in the deed as to each party having received legal advice, the fact that the terms of the confidentiality clause, as contained in the draft deed, had not previously been agreed and the fact that the agreement alleged by the respondents was silent as to the time within which the first respondent was required to publish the Statement.
5. Her Honour, at [42], then stated: "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 [the Statement] within three days. Had [the appellant] 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."
6. Her Honour concluded, at [43], that the parties intended to be bound immediately upon Baker & McKenzie's acceptance of the matters negotiated in the correspondence referred to in their email dated 30 April 2015. In her Honour's view, the article published on 12 February 2015 was included in the agreement alleged by the respondents, despite the fact that it was not raised in the concerns notice. This finding was not challenged on appeal.

Was there a binding contract between the parties concluded by the email of 30 April 2015?

Appellant's submissions

1. The appellant's submissions can be grouped into four broad categories: (a) whether the terms of the contract were incomplete; (b) whether the parties intended to be bound; (c) whether aspects of her Honour's reasoning were erroneous; and (d) whether the contract was supported by consideration.

(a) Incompleteness

1. The appellant submitted that no contract as alleged by the respondents and containing the terms set out at [23] above, was entered into by the parties because its terms were incomplete. In particular, the appellant contended that, as at 30 April 2015, no time frame had been specified for the performance of each of the matters alleged to have been agreed. This was to be contrasted with the terms of the deed, which, as drafted, contained specific times within which the required steps were to be performed. For example, as mentioned above, the Statement was to be published on the first respondent's website within three days of the settlement date, defined to mean the date of the deed. The appellant pointed out that the absence of any time frame in the agreement alleged by the respondents meant that he would not know whether at any given point of time he could terminate for non-performance.
2. The appellant further pointed out that no agreement had been reached as at 30 April 2015 as to the terms of the "obligations of confidentiality" to which reference had been made in the email of 2 April 2015. The appellant submitted that the absence of agreement as to the terms of confidentiality was of particular significance in circumstances where the first respondent insisted that the agreement be confidential. The appellant contended that this was apparent not only by the reference to "confidentiality" in the email of 2 April 2015, but also in the further conversation of 5 May 2015. The appellant further submitted that the terms of any confidentiality clause were important to him, as he wanted to know how his reputation had been vindicated, a matter that was the subject of the communications between the solicitors in May.

(b) Intention to be bound

1. The appellant referred to the improbability of the solicitors seeking to bind their clients to a contract such as that alleged by the respondents through email correspondence and submitted that the parties did not intend to be bound until they had formally executed the deed of settlement. This latter point was said to be apparent from the following circumstances.
2. First, there were important aspects of the arrangement, including the time frame in which the Statement was to be published and the terms of any "obligations of confidentiality" that were specified in the draft deed, the details of which had not been discussed as at 30 April 2015. The fact that no time frame for the publication of the Statement had been suggested during the course of the negotiations indicated that a final agreement had yet to be reached.
3. Secondly, the language used in the emails did not reflect the language of a binding agreement. A notable instance, on the appellant's submission, was to be found in the email of 23 April 2015, where Eddy Neumann Lawyers confirmed to Baker & McKenzie that the appellant was "willing to accept your client's offer" on the bases specified in the email. Another example was to be found in the email of 28 April 2015, where Eddy Neumann Lawyers used the language of accepting "the suggestion" regarding amendments to the introductory paragraph to the Statement, made by Baker & McKenzie.
4. Thirdly, it was apparent from the communications between the parties that the first respondent's position was that the deed was to be signed before it published the Statement.
5. Fourthly, a central requirement of any settlement of the dispute was the publication of the Statement. Had the parties, as at 30 April 2015, intended to be bound by the terms of the agreement alleged, the Statement would have been published within a short time thereafter. The fact that this did not occur indicated that the parties did not intend to be bound until such time as a formal document had been executed.
6. Fifthly, there were terms of the draft deed which also indicated that the parties did not intend to be finally bound until the document was executed. The appellant pointed to cl 6.1(b), which required each party to warrant to the other that it had "received legal advice regarding the subject matter of this Deed … before entering into this Deed" (emphasis added). The appellant submitted that this clause was inconsistent with a solicitor binding his client through email communications, in circumstances where it was contemplated that a deed would be entered into later in which there was a warranty that the parties had received legal advice. As the appellant put it: "It seems implausible that [the respondents] would at a later point in time require [the appellant] to warrant that he had received legal advice yet not [have] a concern at an earlier point of time."
7. Sixthly, the deed was attached to the email of 30 April 2015, being the very email that was said to be the final document comprising the agreement between the parties. As the appellant asked rhetorically, if the parties intended to be bound by the email of 30 April, "why [was] there a necessity to send a deed across at all?".
8. Finally, the enquiry on 5 May 2015 and the discussion on 13 May 2015 as to the confidentiality clause in the draft deed indicated that the respondents' solicitor accepted that the terms of the clause were to be agreed upon before the deed could be finalised.
9. Accordingly, on the appellant's submission, the case did not fall within the Masters v Cameron categories upon which the respondents relied.

(c) Erroneous reasoning

1. The appellant also submitted that her Honour's reasoning process miscarried in various respects as follows.
2. First, her Honour considered, at [42], that it did not follow from the various considerations to which she had regard: "… 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."
3. The appellant argued that this was an incorrect approach to the determination of whether a contract had been formed. The question was not whether the parties "did not intend" to be bound, but rather, whether they intended to be bound.
4. Secondly, her Honour's finding at [42], if it was a finding, that, had the appellant "not remained silent" after the conversation between the solicitors on 13 May 2015, publication of the Statement would have occurred within the three days - being the time frame specified in the deed - was unsupported by any evidence. On the contrary, the fact that the first respondent did nothing until 15 July 2015 was a strong indication that it did not consider itself bound by the email communications upon which it relied.
5. Thirdly, her Honour's reference to the appellant's silence after 13 May 2015, coupled with the reference that, had that not been the case, the Statement would have been published within the three day time frame specified in the deed, appears to indicate an acceptance by her Honour that the parties were not immediately bound to a contract as at 30 April 2015, but intended to be bound by the terms of the draft deed once executed.

(d) Consideration

1. Finally, the appellant submitted that even if all other indicia of a contract were otherwise present, including intention to be bound, the contract was not supported by consideration.

Respondents' submissions

1. The respondents made the following submissions in relation to the points raised by the appellant.
2. First, the appellant had not argued before the primary judge any question as to the incompleteness of the contract, nor had it been raised in the grounds of appeal. The respondents submitted that the appellant should not be allowed to raise that argument now, although they did not object to any such argument being advanced on the appeal to the extent that it was raised as part of the argument on the Masters v Cameron point.
3. It is convenient to deal with this submission immediately. It was always the appellant's case that no final agreement had been reached. The two essential aspects of that argument were that there was no time for performance specified in the contract alleged to have been constituted by the emails and that the term as to confidentiality had not been finally agreed. In other words, the appellant's case was that the contract was incomplete in respect of those matters. The primary judge dealt with both those matters.
4. Even if this point was not raised in the precise way it is now argued, given that the respondents contended for a contract that was to be found in the exchange of emails it is difficult to discern any prejudice to the respondents in the point now being raised. But in any event, the questions whether the contract was complete and whether the parties intended to be immediately bound by the emails said to constitute the contract are inextricably linked. Accordingly, it is appropriate for this court to deal with the point as argued.
5. The second point submitted by the respondents in further answer to the argument that the agreement was incomplete was that a court could have, and in fact would have, implied a reasonable time within which the Statement should be published. The respondents submitted that even if it were considered that the publication of the Statement on 15 July 2015 was not done within a reasonable time, that did not indicate a lack of agreement. Rather, it would constitute a breach of the agreement that had been reached in the email correspondence.
6. Thirdly, the respondents submitted that a confidentiality clause was not regarded as essential by the parties. The respondents contended that this was apparent both from the correspondence between the parties and the "extremely limited" or "boilerplate" nature of the confidentiality clause contained in the draft deed. Further, on the respondents' submission, an obligation of confidentiality was not an element of the alleged agreement. Rather, it was an "optional extra" for later agreement.
7. Fourthly, the respondents submitted that this case fell within the first category of Masters v Cameron or, alternatively, in the fourth category identified in Baulkham Hills Private Hospital v GR Securities. In oral submissions, the respondents submitted that the agreement was one that was best categorised as falling within the fourth category of Masters v Cameron. Alternatively, the agreement was said to fall within the first category.

Determination

1. It is a trite proposition that "[c]ontract results from the agreement of the parties and courts will not write a contract for parties that have failed to reach agreement": J W Carter, Contract Law in Australia (6th ed, 2013, LexisNexis) at 91 [4-01]. The learned author further states at 96 [4-10], that "a contract will fail for incompleteness where some essential or important part of the bargain is yet to be agreed". See also Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 at 604 per Gibbs CJ, Murphy and Wilson JJ; Coal Cliff Collieries v Sijehema Pty Ltd (1991) 24 NSWLR 1; Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605; [2015] NSWCA 313 at [65].
2. However, the terminology of 'essentiality' needs to be regarded with some care. In Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601, Lloyd LJ, O'Connor and Stocker LJJ agreeing, observed, at 619: "It is sometimes said that the parties must agree on the essential terms and it is only matters of detail which can be left over. This may be misleading, since the word 'essential' in that context is ambiguous. If by 'essential' one means a term without which the contract cannot be enforced then the statement is true: the law cannot enforce an incomplete contract. If by essential one means a term which the parties have agreed to be essential for the formation of a binding contract, then the statement is tautologous. If by essential one means only a term which the court regards as important as opposed to a term which the court regards as less important or a matter of detail, the statement is untrue. It is for the parties to decide whether they wish to be bound and if so, by what terms, whether important or unimportant. It is the parties who are, in the memorable phrase coined by the judge [at p 611] 'the masters of their contractual fate'. Of course the more important the term is the less likely it is that the parties will have left it for future decision. But there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. It happens every day when parties enter into so-called 'heads of agreement'."
3. This statement, which also reflects, in part at least, the reasoning in Masters v Cameron, was quoted with approval by the United Kingdom Supreme Court in RTS Ltd v Molkerei Alois Müller GmbH & Co KG [2010] 1 WLR 753; [2010] UKSC 14 at [49]. In Masters v Cameron, the High Court (Dixon CJ, McTiernan and Kitto JJ) stated, at 360, that: "Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases."
4. Their Honours identified the first category, upon which the respondents in this case relied to contend that there was a binding contract, as follows: "It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect."
5. The second category refers to a situation in which the parties have completely agreed on all the terms, intend no departure from the agreed terms, but have made performance of one or more terms conditional upon a formal contract being executed by the parties: see, for example, Niesmann v Collingridge (1921) 29 CLR 177 where it was agreed that part of the deposit for the purchase of land which had been arranged orally was to be paid "on the signing of the contract".
6. The third category refers to a situation in which the parties do not intend to be bound unless and until a formal contract has been signed. It is described in Contract Law in Australia as "the most common type" of the Masters v Cameron categories: at 103 [5.05].
7. What is commonly referred to as the "fourth category", and that upon which the respondents placed principal reliance, was articulated by McClelland J in Baulkham Hills Private Hospital v GR Securities, at 628, where, quoting Sinclair, Scott & Co v Naughton (1929) 43 CLR 310 at 317 per Knox CJ, Rich and Dixon JJ, his Honour described it as a situation in which: "… the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms."
8. In Sinclair, Scott & Co v Naughton, the plurality in turn referred to Love and Stewart (Limited) v S Instone and Co (Limited) (1917) 33 TLR 475 at 476, where having posed the central and ultimate question, namely, "whether there was any contract at all", Lord Loreburn stated: "It was strongly in favour of the appellants that in the correspondence both parties spoke of a contract between them, and stated, or acquiesced in the statement, that, though a formal document was intended by both, their contract was meanwhile confirmed. It was quite lawful to make a bargain containing certain terms which one was content with, dealing with what one regarded as essentials, and at the same time to say that one would have a formal document drawn up with the full expectation that one would by consent insert in it a number of further terms. If that were the intention of the parties, then a bargain had been made, none the less that both parties felt quite sure that the formal document could comprise more than was contained in the preliminary bargain. But if the intention were that what was agreed in the first instance should be subject to the completion of the formal document, then there was no bargain while that condition remained unfulfilled. Also, of course, there was no bargain if the parties had not agreed on a set of terms at all, either absolutely or conditionally. One had therefore, in cases of this kind, to ascertain what was the intention common to both parties."
9. As this last cited passage makes apparent, and as is clear from Australian authority, the categories identified in Masters v Cameron are neither strict nor prescriptive. Nor are they exclusive nor necessarily exhaustive. Rather, they describe circumstances in which a finally binding contract may or may not have come into existence. McHugh JA pointed this out on the appeal in the Baulkham Hills case: see GR Securities v Baulkham Hills Private Hospital, at 634-635: "… the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 638; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 332-334, 337."
10. In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 the plurality, Gaudron, McHugh, Hayne and Callinan JJ, observed, at [25], that: "… not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the 'intention to create contractual relations' requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules." (citations omitted)
11. Their Honours further stated that "intention" in this context describes what "would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened". This statement reflects the objective theory of contract which is the law in Australia: see Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7. The same point was made by Bathurst CJ in Pavlovic v Universal Music Australia. The Chief Justice, at [15], explained that: "It is well established that the question of whether the parties intended to bind themselves to a contract is to be determined objectively, having regard to the intention disclosed by the language the parties have employed: Masters v Cameron [1954] HCA 72; 91 CLR 353 at 362. In cases such as the present, which do not depend on the construction of a single document, what is involved is the objective determination of the question from the communications between the parties in their context and the parties' dealings over the time leading up to the making of the alleged contract. This involves consideration of the subject matter of the communications: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550. As was said by Mahoney JA and McHugh JA in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, that includes consideration of what the parties said or wrote (at 334, 337)."
12. In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 Gleeson CJ stated, at 458, in the context of a 'Masters v Cameron dispute': "In a case where a court is required to make a judgment concerning the intention of the parties in relation to what might broadly be described as a Masters v Cameron ((1954) 91 CLR 353) dispute, it will normally be of importance that the court have an understanding of the commercial context in which the dispute arises, and a most significant feature of that context will relate to the subject which the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract. … In many cases … there is a need for evidence in one form or another as to what subjects would be regarded as requiring agreement between the parties. In this case the best evidence on that subject is to be found in the actual communications between the parties and, in particular, in the issues which they in fact addressed when they set about drafting their detailed contract."
13. In my opinion, the parties did not intend to be bound by a contract contained in the emails upon which the respondents rely. There are a number of reasons why this is so, perhaps the most significant of which is that the respondents seek to rely upon an agreement in respect of which one of the terms which was the subject of the emails is missing, namely, the term as to confidentiality. In this regard, it is important to return to the language used in the email of 2 April 2015 (set out above at [8]-[10]), as well as in that of 30 April 2015.
14. In paras (a) and (b) of the email of 2 April 2015, the respondents offered to settle the matter and to this end offered, first, an undertaking not to republish the impugned articles and secondly to publish the Statement on the first respondent's website. The offer was stated to be conditional on the appellant providing a release from liability from all matters raised in the letter of 27 March 2015. That letter contained the concerns notice. The respondents contend these three matters comprise the terms of an agreement which was concluded by the acceptance contained in the email of 30 April 2015.
15. However, the email of 2 April 2015 also stated that "[a]n agreement reflecting the above would be documented in a Deed of Release which would also include obligations of confidentiality". The import of the respondents' submissions is that this part of the email is a statement that any agreement on the three terms referred to above would be binding but would later be documented and contain an additional term as to confidentiality. Whilst that is a possible understanding of the email, I do not consider that it is the only or the preferred interpretation.
16. In the first place, the email states that "[a]n agreement reflecting the above would be documented". This is consistent with an interpretation of the email as meaning that if the parties reached agreement on the matters raised in the email, the agreement would be documented. There is nothing in the email that states expressly, or gives an indication, that the parties would be bound immediately if the terms offered were accepted. I do not consider the phrase "reflecting the above" as being inconsistent with this interpretation.
17. Secondly, the email expressly states that there are to be confidentiality obligations in the agreement that is to be documented. Objectively viewed, that indicates that obligations as to confidentiality are to be part of any agreement reached by the parties. The fact that those obligations were to be contained in the proposed deed is another factor that points to the intention of the parties as being bound when the deed was finalised and executed.
18. It also cannot be overlooked that the intention of both parties, objectively viewed, has to be that they be immediately bound to an agreement. There is nothing in the ensuing correspondence from which it can be objectively determined that it was the appellant's intention to be immediately bound if, and as soon as, the respondents agreed to the matters raised in the earlier emails.
19. The language in Baker & McKenzie's email of 30 April 2015 is also consistent with it being the intention of the parties to be bound once the deed was executed. Whilst the email refers to "a draft deed … that documents the parties' agreed terms", the writer invites comments and discussion and specifically seeks execution of the deed. There is nothing in the email which indicates that it is the respondents' intention by that email to be bound by the three terms they now assert constitute the contract and which were contained in the email of 2 April 2015. Nor is there any other communication upon which it can be found, objectively, that that was the appellant's intention.
20. In my opinion, the email communications contained the terms upon which the parties were negotiating. Taken as a whole and viewed objectively, a recipient of the emails, and the email of 30 April 2015 in particular, would understand that once any enquiry or comment about the deed was satisfied, each party would execute the deed and thereby be bound by the agreement recorded in that document. To put the matter another way, the language used in the email of 30 April 2015 was not the language of parties who intended to be immediately bound by a contract contained in the email communications. That is sufficient to demonstrate why the respondents' contention that there was a binding agreement as they allege must fail.
21. Further, I am of the opinion that the omission of any confidentiality provision from the agreement for which the respondents contend demonstrates that there was no concluded agreement and is illustrative of the fact that this was neither a first nor fourth category Masters v Cameron case, to the extent that it is useful to undertake that exercise. In deference to the arguments advanced by the respondents in relation to Masters v Cameron, I will explain why I have come to that view.
22. There is an immediate problem with the respondents' reliance on the first category of Masters v Cameron given its argument that a reasonable time would be implied for the performance of the steps contemplated by the contract for which it contends. The implication of a reasonable time would conflict with the term in the draft deed which contained specific dates for the steps that were to be taken under the deed. As such, the agreement alleged could not satisfy the requirements of the first category of case, which requires that the parties had: "… reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect." (at 360)
23. The absence of any time specification in the agreement for which the respondents contended is relevant for another reason, namely, it would mean that the parties would not know the nature and extent of their obligations. At least one consequence of this would be that the parties would not know whether one or the other was in breach. Whilst this is very much a subsidiary reason, it does point to the probability that the parties did not intend to be immediately bound.
24. The absence of any obligations of confidentiality from the agreement for which the respondents contend is another factor that demonstrates that this is not a first category Masters v Cameron case.
25. Further, whilst I respectfully disagree with the primary judge that a term as to confidentiality was "subsidiary", by which I understand her Honour to mean a non-essential term of the agreement, the classification of terms as essential or otherwise is not relevant to the determination of whether there is a concluded agreement in the first category Masters v Cameron sense.
26. As is apparent from the observations of Lloyd LJ in Pagnan SpA v Feed Products Ltd, it is not for the court to determine that a term is important, essential, non-essential or, as described in this case, "subsidiary". The question is whether, objectively determined, the parties intended to be bound by terms upon which they had agreed. It is apparent from the email correspondence that the parties intended that their agreement would contain a confidentiality clause. The contract that the respondents now assert ignores that the parties agreed to the inclusion of a confidentiality clause. In effect, what the respondents seek to prove is some different contract, that is, a contract that did not contain one of the terms to which there had been agreement in the course of their negotiations.
27. For essentially the same reasons, I do not accept that the respondents have established a fourth category of Masters v Cameron case. In my opinion, the email communications do not evince an intention to be immediately bound by some of the terms specified in the emails and to then have a substituted contract with additional agreed terms. The respondents' submission that there was to be implied in the agreement for which they contend a reasonable time in which to publish the Statement differs from the terms of the deed, which required publication within three days. That arrangement does not satisfy the description of the fourth category of Masters v Cameron. Rather, it describes an arrangement, not with additional terms, but with different terms.
28. I also do not consider that a confidentiality clause was an "optional extra" in the agreement that was being negotiated. Rather, it was clearly a requirement specified in the email of 2 April 2015. Further, as Gleeson CJ explained in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd, it is relevant to examine the commercial context in which agreements are made. Here, it was the settlement of a potentially litigious dispute. It is well known, and the solicitors acting for both parties would be taken to be aware, that confidentiality is often a central component of any settlement and is often the more so for a frequent litigator. It can be readily accepted that the terms upon which individual disputes are settled, if known, could have an impact on the terms upon which other disputes are sought to be settled.
29. The first respondent, as a media organisation, is likely to have commercial and reputational reasons for maintaining confidentiality in defamation proceedings, actual or threatened, which extend beyond the given dispute. But in any event, the respondents, from the very beginning specified that there were to be obligations as to confidentiality. It was not correct, therefore, for the primary judge to treat a term as to confidentiality as an incidental or "subsidiary" aspect of the parties' agreement, or as an "optional extra", as contended by the respondents, such as to enable a conclusion that the parties intended to be immediately bound by a contract that did not include such a term.
30. If it were necessary to categorise the contractual position of the parties by reference to Masters v Cameron, I would categorise it as a third category case. That is, that objectively determined, it is apparent from the email correspondence that the parties did not intend to be bound by a concluded agreement unless and until they had entered into the proposed deed of release.
31. My view that the parties had not come to a final agreement by 30 April 2015 is confirmed by the conduct of the parties after that date, being the date upon which the respondents contended the contract was concluded. It is uncontroversial that such conduct is admissible on the question as to whether a contract has been formed: see Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd at 547-548 per Gleeson CJ, Hope and Mahoney JJA agreeing; Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25] per Heydon JA; Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 at [103] per Giles JA, Hodgson and Campbell JJA agreeing; Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150 at [121] per Basten JA, Gleeson JA agreeing.
32. In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd Gleeson CJ, Hope and Mahoney JJA agreeing, observed, at 547-548, that: "There is ample authority for the proposition that reference may be made to the correspondence between the parties subsequent to 13 June 1986 [being the date on which the appellants contended an agreement was entered into] for the purpose of showing that 'it was not in the contemplation of either party that they were to be bound until all the essential preliminaries had been agreed to, nor until a formal contract had been drawn up embodying all the matters incidental to a transaction of such a nature." (citations omitted)
33. There are two aspects of the parties' conduct which are relevant in this regard. The first is the communications between the solicitors on 5 and 13 May 2015. The email from the appellant's solicitor on 5 May 2015 demonstrates that there were outstanding questions as to what was intended by the confidentiality clause in the draft deed.
34. The telephone conversation on 13 May 2015 also demonstrates that both solicitors understood that the terms of the confidentiality clause still needed to be agreed or at least understood so that the clause as drafted in the deed could be confirmed. This is apparent from the appellant's solicitor's statement that she needed to obtain instructions on the question of the confidentiality obligation and the respondents' solicitor's response that he "looked forward to hearing" from her. He also referred in the conversation to the "draft deed". Importantly, he did not assert that the parties had already reached a concluded agreement.
35. The second aspect of the parties' conduct, and particularly that of the respondents, is that they took no steps to implement what they asserted was the concluded agreement. The respondents' inaction between 30 April 2015 and 13 July 2015 also pointed, I would suggest virtually overwhelmingly so, to the fact that they did not believe that they had any contractual obligations to perform.
36. Because I have found that the parties had not entered into a binding agreement, it is not necessary to examine in detail the other bases upon which the appellant challenges her Honour's reasons. It is sufficient to state that there is merit in the submissions advanced by the appellant and which are recorded at [48]-[51] above.
37. That leaves the appellant's submission that any agreement reached was not supported by consideration. That submission can be disposed of briefly and does not require an examination of the various arguments advanced by the appellant.
38. It is well established that a contract may be supported by mutual promises: see Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd [1915] AC 847 at 855; Perry v Anthony [2016] NSWCA 56 at [26]. In this case, assuming the parties had intended to be bound by the contract alleged by the respondents, consideration for such a contract could be found in the mutual promises made by each. In the case of the respondents, those terms were contained in paras (a) and (b) of the alleged agreement set out at [23] above. The appellant's promise was contained in para (c). However, as I have determined that the parties had not intended to be bound by a contract contained in the email communications, no question as to consideration arises.

The ostensible authority case

1. It is also unnecessary to determine the argument put by the respondents and denied by the appellant that the appellant's solicitors had ostensible authority to enter into the agreement for which the respondents contended. However, I should express my provisional view that on the facts, the appellant's solicitors did not have ostensible authority to bind the appellant to a contract constituted by the exchange of emails.
2. Whether or not a person has ostensible authority (also described at times as 'apparent authority') is a question of fact: see Geissler v Accro Motors Pty Ltd (1955) 73 WN (NSW) 31; CIC Insurance Ltd v Bankstown Football Club Ltd (1995) 9 ANZ Insurance Cases ¶61-232 at 75,554. It usually involves an inference based upon a representation or representations made by the principal that the agent has authority to contract within the ambit or scope of the 'apparent authority': Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 503.
3. The jurisprudential basis of ostensible authority is traditionally described in terms of estoppel by representation. Reliance is a necessary element of the estoppel: Freeman & Lockyer v Buckhurst Park Properties at 503; Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 200; G E Dal Pont, Law of Agency (3rd ed, 2014, LexisNexis) 460 [20-7]. In a case such as the present, the party seeking to enforce the contract must prove a change of position to its detriment.
4. The question as to the extent of a solicitor's ostensible authority was discussed by this Court in Pavlovic v Universal Music Australia at [150], where the Court adopted the statement of principle in Lucke v Cleary (2011) 111 SASR 134; [2011] SASCFC 118 of Stanley J, Gray and David JJ agreeing, at [60]-[62], that: "As a general proposition, a solicitor does not have ostensible authority to bind his or her client to a contract. That general proposition, however, is subject to the qualification that, in the context of litigation, a legal practitioner has ostensible authority to bind his or her client to a contract which relates to and, in particular, compromises that litigation … … in the context of litigation the practitioner's authority to bind his or her client to a contract is confined to a contract that actually and genuinely relates to the litigation." (citations omitted)
5. In Pavlovic v Universal Music Australia, the negotiations between the parties had not reached the stage where litigation had been commenced. Rather, at least whilst the negotiations were in train, "litigation was in fact not in contemplation": at [153]. As I stated at [154]: "… 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' ..."
6. The appellant contended that this case fell within the principle stated in Lucke v Cleary and accepted in Pavlovic v Universal Music Australia, namely, that "as a general proposition, a solicitor does not have ostensible authority to bind his or her client to a contract": see at [150]. See also Lucke v Cleary at [60], as set out above at [101].
7. The appellant submitted that it was apparent from the fact that he had not signed the deed, and had in fact withdrawn his offer, and that he had not held out his solicitors as having authority to enter into a binding agreement on his behalf. He further submitted that in circumstances where the alleged offending publications had been removed from the first respondent's website prior to 30 April 2015, the respondents had not done any act to their detriment as at 30 April 2015, being the date upon which the respondents contended the agreement had been concluded. The posting of the Statement on the website occurred only after the appellant gave notice that he withdrew his offer.
8. The respondents contended that the factual situation was closer to the position in CIC Insurance Ltd v Bankstown Football Club Ltd. In CIC Insurance v Bankstown Football Club, the respondent's solicitor sought a pro rata refund of an insurance premium from an insurer after the insurer had denied the respondent's insurance claim and cancelled the policy on the basis of fraud. The solicitor also advised the insurer that the respondent intended to pursue its claim against the insurer.
9. Kirby P, Powell JA agreeing, found that the solicitors for the club had ostensible authority to act or make representations in respect of the continued operation of the contract of insurance. As Kirby P said, at 75.555: "… It is not unreasonable for the appellant to view the conduct of the club, in apparently instructing its solicitor to pursue the subject insurance claim, as including all necessary authority to give effect to those instructions. Incidental to those instructions, it can be inferred, was the power to deal with the issue of the purported cancellation of the contract. Indeed, I should have thought that the instruction of a solicitor to pursue a matter such as a controversial insurance claim would leave a third party dealing with the solicitor with the impression that that solicitor, having been retained for his or her legal expertise, would have all necessary authority to deal with all issues which reasonably and foreseeably arose in the pursuit of that claim. It is not a situation akin to the instruction of a solicitor to pursue non-litigious business where the nature and extent of the solicitor's authority is not so easily inferred to be so widely encompassing."
10. Although the appellant and the respondents made submissions to the effect that this case was closer to either Pavlovic v Universal Music Australia or CIC Insurance v Bankstown Football Club, as suited their particular argument, each case has to be decided on its own facts. In this case, the concerns notice intimated that if the appellant's demands were not met, legal proceedings would be commenced. This is apparent, not only from the statutory context in which a concerns notice is given, but also from the concluding sentence of the concerns notice which stated, "[f]ailure to provide these undertakings will sound in aggravated damages. Our client reserves all his rights".
11. As I have said, whether or not a person has ostensible authority is a question of fact. The emails upon which the respondents rely were all framed in terms that it was the appellant himself who would enter into the contract and not do so through the authority of his solicitor. Thus, in the letter of 2 April 2015, the respondents' solicitors state that "this offer is made on the basis that your client agrees to release [the respondents] from all liability" (emphasis added). It is then stated that "[a]n agreement reflecting the offer would be documented in a Deed of Release". There was no suggestion other than that the deed be signed personally by the appellant.
12. On 23 April 2015, the appellant's solicitors wrote confirming that their "client" was willing to accept the offer on specified bases. In the email of 24 April 2015 there were repeated references to "your client". In particular, amendments were suggested to "your client's suggested introduction to your client's statement". In the email of 30 April 2015, the respondents' solicitors attached the draft deed of release that was said to document the parties' agreed terms. The email continued, "[c]ould you please let me know if your client has any comments" and asked that, if not, arrangements be made for the appellant to sign the deed.
13. Although it is somewhat artificial to analyse this issue on the basis that, subject to the question of authority, there was a concluded agreement, I do not consider that there was anything in these communications that constituted a representation or a holding out by the appellant that his solicitors had authority to enter into an agreement on his behalf as opposed to an authority to negotiate the terms of any agreement.

Conclusion

1. As on the view at which I have arrived her Honour erred in permanently staying proceedings, ground 4 of the appeal is made out and her Honour's order that the proceedings be permanently stayed must be set aside. As I have found that there was no contract, the notice of motion need not remain on foot. Accordingly, I propose the following orders: (1) Grant leave to appeal; (2) Appeal allowed; (3) Set aside the orders made by the primary judge; (4) Dismiss the respondents' notice of motion; (5) Order that the respondents pay the appellant's costs of the summons seeking leave to appeal, the appeal and the appellant's costs at first instance.
2. McCOLL JA: I have had the advantage of reading Beazley P's judgment in draft with which I agree. I make the following short observations additional to her Honour's reasons.
3. The stumbling block in terms of the parties' settlement of the proceedings ultimately was draft cl 7 relating to confidentiality.
4. Although reference to obligations of confidentiality had been included in the negotiations between the parties concerning resolution of the matter as early as 2 April 2015, the terms of any proposed confidentiality clause were not spelled out other than in the draft deed of release, forwarded on 30 April 2015. The appellant's solicitors immediately took issue, among other matters, with the proposed confidentiality clause.
5. The appellant's solicitor, Ms Saros, told the respondent's solicitor, Mr Grant, that the appellant "wants to be able to tell people that [the first respondent] has responded to his complaint." [1] Mr Grant responded that the appellant could tell anyone that the first respondent had taken down the articles and put up his statement, but could not refer to the fact or the terms of the settlement. [2]
6. In due course, the appellant's solicitors advised the respondent's solicitors that the appellant withdrew his offer to settle the matter.
7. In the course of holding that the matter had settled, the primary judge referred to the issue of confidentiality as a "subsidiary" one. [3]
8. I cannot, with respect, agree with her Honour that in the context of defamation proceedings, the issue of the terms of an agreement insofar as confidentiality is concerned, can be regarded as "subsidiary".
9. As Lord Radcliffe said in Dingle v Associated Newspapers Limited, [4] a libel action is fundamentally an action to vindicate a person's reputation "on some point as to which he has been falsely defamed, and the damages awarded have to be regarded as the demonstrative mark of that vindication." [5] The plaintiff must "be able to point to a sum awarded by a jury sufficient to convince a bystander of the baselessness of the charge." [6] This is said to be particularly the case where "the defendant has not apologised and withdrawn the defamatory allegations." [7] Part of the role of vindication, as is apparent, is to be able to demonstrate to third parties that the defamer has borne the brunt of the award of damages as the price of the defamatory publication.
10. In John Fairfax & Sons Ltd v Carson, [8] Mahoney JA said of defamation proceedings: " …it is necessary to have in mind that the plaintiff has no other way of achieving vindication than by an award of damages. There is no power to force a defendant, by public advertisement or letter or otherwise, to provide a vindication of the plaintiff. In the case of defamation by a journalist or a newspaper, the common organs for vindication are within their control. Damages, and the size of the award, are the only means which ordinarily are available to attract the public or private attention involved in the vindication of the plaintiff's position."
11. A person's reputation may also be vindicated by the publication of a correction. Unlike the position when Mahoney JA wrote in Carson, the significance of the publication of a correction is now recognised in the Defamation Act 2005 (NSW) (2005 Act) in two ways.
12. First, in s 15, which deals with the content of an offer to make amends. The offer to make amends provisions are intended to give effect to that object of the 2005 Act which is "to promote speedy and non-litigious methods of resolving disputes about the publication of defamatory matter." [9] Sub-section 15(1)(d) requires the offer to include "an offer to publish, or join in publishing, a reasonable correction of the matter in question…." The requirement to publish a reasonable correction is intended to form part of "the reparation achieved by the mandatory components of the offer". [10]
13. Secondly, the Court can take into account in mitigation of damages, evidence that the defendant has published a correction of the defamatory matter. [11]
14. The parties sought to resolve the matter in the context of the appellant triggering the offer to amends provision by the service of a concerns notice. Baker and McKenzie's offer of 2 April 2015 on behalf of the respondent first not to republish the articles complained of but, more importantly, secondly to publish on its website the appellant's statement of 6 February 2015, [12] can, in my view, be seen as an offer to publish "a reasonable correction of the matter in question" as referred to in s 15(1)(d) of the 2005 Act.
15. It is not too remote an analogy in my view, to say that, where damages are not awarded, but a corrective statement is published at the behest of the person defamed, that person should be able to point to the fact that, by reason of his or her complaints about the publication, the publisher has had to take steps, even though they do not include payment of damages, which operate by way of vindication of his or her reputation. As such, the terms of any obligation of confidentiality which might limit his or her ability to do so would be significant.
16. I agree with the orders Beazley P proposes.
17. MACFARLAN JA: I agree with the orders that Beazley P proposes and, subject to one qualification, with her Honour's reasons. The qualification is that, it being unnecessary to do so in light of our conclusions on the principal issue, I do not express a view as to whether the appellant's solicitors had ostensible authority to conclude the alleged contract with the respondent. I also agree with McColl JA's additional observations.

Endnotes

1. See above (at [21]).
2. Ibid.
3. Feldman v GNM Australia Limited [2016] NSWSC 920 (at [26]).
4. [1964] AC 371 (at 396).
5. See also Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 (at 150); [1966] HCA 40 per Windeyer J.
6. Broome v Cassell & Co Ltd [1972] AC 1027 (at 1071) per Lord Hailsham.
7. Gleaner Co Ltd v Abrahams [2004] 1 AC 628 (at 55); [2003] UKPC 55; publication of an apology may mitigate damage in a defamation action because it reduces the harm suffered by the plaintiff and, accordingly, the damages awarded: Carson v John Fairfax & Sons Limited (1993) 178 CLR 44 (at 66); [1993] HCA 31 per Mason CJ, Deane, Dawson and Gaudron JJ. An apology can have such an effect because, if properly worded, it can be seen as a form of vindication of the plaintiff's reputation.
8. (1991) 24 NSWLR 259 (Carson) (at 300).
9. 2005 Act, s 3(d).
10. Zoef v Nationwide News Pty Ltd (2016) 92 NSWLR 570; [2016] NSWCA 283 (at [72]) per Gleeson JA (Ward and Payne JJA agreeing).
11. 2005 Act, s 38(1)(b).
12. See above (at [9]).

Amendments 05 June 2017 - Minor typographical error corrected at [36] 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: 05 June 2017