Ms Fraser then wrote to the solicitors for each of the plaintiffs and had telephone conversations with them and, as a result, a deal was done that the defendant would discontinue and that each of the plaintiffs would pay one half of an agreed amount of costs.

The solicitor for the first plaintiff, a Ms Thomas, indicated to Ms Fraser that the settlement would be by way of discontinuance and deed of release. Ms Fraser said "That would be fine". Ms Thomas then drafted a notice of discontinuance and a deed of release, but those documents went too far. It may have been done bona fide in the belief that that was carrying out the settlement, or it may have been done in an attempt to get the best for her client out of the mechanics of the settlement; but whatever happened, the notice of discontinuance was not simply a notice of discontinuance, but dealt with the order for costs. Further, the proffered deed of release contained a release, not only of the cause of action in the District Court, but also a release of any claim under the Compensation to Relatives Act 1897 that might be made and indemnities.

It would seem that the defendant then changed her solicitors and instructed the new solicitors that she did not wish to continue with the settlement. The present suit was then commenced for specific performance.

[1954] HCA 72; (1954) 91 CLR 353 at 360-1); and

As to the first, I agree with the proposition of Mr McClintock, SC for the plaintiffs, that if a solicitor is given broad instructions to settle a matter on particular terms, she also has authority to bring about that settlement in the way she thinks most advantageous to the client. The client has sufficient trust in the solicitor and in her expertise that she will do that and it is a matter where the client is in no position to make a proper judgment as to the best machinery to carry out her wishes. Accordingly, in my view, there was authority in Ms Fraser to agree to a settlement by way of filing of a notice of discontinuance and a deed of release so long as her costs were paid. There is no doubt on the evidence that, generally, Ms Fraser had authority to settle the case on the basis that it would be withdrawn from the Court and the defendant's costs would be paid by the plaintiffs.

As to the second point, it seems to me that, generally speaking, settlements in litigation are intended to be final as soon as the barristers or solicitors involved shake hands - whether they do that physically or notionally over the telephone. The reasonable litigator on the Bondi bus would think that as soon as the legal representatives have reached an agreement as to the principle on which the matter is to be settled then the cause of action has been converted into the new contractual right. Accordingly the situation is one where the first category of Masters v Cameron applies, that is that there has been final mutual assent but the people who are to draw up the formal agreement have power to set it down but not alter its terms. However, the present case is more like the fourth category of Masters v Cameron, which was enunciated by McClelland CJ in Eq in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628, that there is an immediate binding of the parties by the terms upon which they have agreed, whilst they expect that a further contract will be made in substitution for that first contract.

Mr Walmsley in his strong submissions for the defendant put that the matter was in the third class, that is, that the parties did not intend to have the terms bind them until the documentation and/or the filing of the documents had taken place. It is possible for this to happen in litigation but it does not seem to me to be the usual situation. Nor do I find anything in the facts of this particular case as to why the normal situation should not apply. I am not completely au fait with modern District Court procedure, but I would have thought that although the order for costs should not have been put in the notice of discontinuance, a consent order could have been left with the Registrar of the District Court for the Judge to sign in chambers without an agreed appearance and that otherwise that would end the matter of drafting documents and filing them.

Had there been the standard GIO terms of settlement offered in this sort of case, it would seem to me that the signing of the terms of settlement could hardly ever be said to be something which was a pre-condition of the settlement being effected. The present case is a little more complicated but it does not seem to me that it falls into the third category. Really the matter is one of intention of the parties; but in a situation such as the present, where the litigant leaves the machinery to her solicitor, then one must look at it in the light of the ordinary practice of solicitors on settlement. Mr Walmsley said there should have been some evidence from an experienced litigation lawyer on that matter. My view is that in matters of that nature this Court can make use of its own experience, just as it does in conveyancing cases.

The third matter is the question as to whether the proffering of the deed of release containing additional terms was a counter offer, and if so, did it revoke the offer to settle? In one sense this is a false question. If there already had been a contract then it could not have been affected by any misperformance of the contract by any party or their agent, unless the situation got to the stage where one party was insisting on performance of the contract in an unjustifiable way so there would be repudiation (see Satellite Estates Pty Ltd v. Jacquet (1968) 71 SR (NSW) 126). However, that is not what is alleged in this case.

Even if there had been no completed contract, it is not always the case that a counter offer revokes an offer. Often that will be the case because the counter offer is inconsistent with the offer and impliedly revokes it. Examples are Hyde v Wrench [1840] EngR 1054; (1840) 3 Beav 334; 48 ER 132; and Baker v Taylor [1906] NSWStRp 103; (1906) 6 SR (NSW) 500. However the true rule is set out by the Privy Council in Khaled v Athanas Bros (Aden) Ltd (1967) 1 BPR 9310, a decision of the Privy Council on appeal from the Court of Appeal for Eastern Africa. The rule is that if a counter offer is made, the person to whom it is made may treat the counter offer as revoking the offer. On the other hand, the offeree may just ignore it and accept the offer. Furthermore, though this does not flow from the Privy Council's decision, it seems to me that if the "counter offer" merely goes to the machinery of working out what is meant by the offer, it is in the same plight as a request for information; see Stevenson, Jaques & Co v McLean (1880) 5 QBD 346. Thus, even though the request may take the form of the tender of a draft document, the request is either not a "counter offer" or alternatively is not a counter offer which revokes the offer. Accordingly this point does not avail the defendant either.

It follows that the plaintiffs are entitled to relief. However, the relief that should be given is strictly in accordance with the contract that was made, namely that the parties should file a notice of discontinuance in the Supreme Court, file a consent order for the payment of costs as agreed and there should be a deed of release of the cause of action.

I note that the question as to whether there is any discretion in the trial court to refuse to implement a settlement has not been an issue before me (vide Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528).

The District Court proceedings have now been moved into this Court as CLD number 20752/97. I think the only order I need make, which I will formally make in those proceedings, is that those proceedings be stayed until further order. The required documentation can then be filed in that suit and the appropriate Master in that Division can deal with any problems.

All I need do in the present suit is to reserve further consideration and order that the defendant pay the plaintiffs' costs to date.