Humphris-Clark v Lazaridis

Humphris-Clark v Lazaridis - [2010] NSWSC 318 - NSWSC 2010 case summary — Zoe

[45]

Consideration 23 Although written submissions were filed in relation to the agency of lawyers to bind a client in a settlement, there is no issue that each of the legal representatives had authority to enter into and reach agreement on behalf of their clients. 24 The real issue in this case is whether a binding agreement was reached. In Masters v Cameron (1954) 91 CLR 353 the High Court referred to the three classes into which a case may fall where parties have been negotiating and reach agreement and also agree that the matter of their negotiation shall be dealt with in a formal contract: Dixon CJ, McTiernan & Kitto JJ at 360. Those classes may be stated shortly as: (1) where parties intend to be immediately bound to the performance of the terms agreed, 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; (2) where the parties have reached complete agreement on all the terms and intend no departure from or addition to those terms, but nevertheless may have made performance of one or more of the terms conditional upon the execution of a formal document; and (3) the parties do not intend to make a concluded bargain unless and until they execute a formal contract. Dixon CJ, McTiernan & Kitto JJ said at 360: In each of the first two cases there is a binding contract; in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. 25 A fourth class has been recognised as one in which the parties are 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: Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310 per Knox CJ, Rich and Dixon JJ at 317. In this regard, in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 McLelland J, as his Honour then was, referred to the following passage of the speech of Lord Loreburn in Love & Stewart Ltd v S Instone & Co Ltd (1917) 33 TLR 475 at 628: 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. 26 The parties are ad idem that the question as to whether these parties entered into a binding agreement must be assessed objectively and that the apparent purpose of the agreement will be taken into account: Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 at [11], 188.

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29 In Gorrick v Santisi [2010] FMCA 2 Driver FM dealt with an application in which the respondents contended that there was an agreement reached between the parties in accordance with the terms of a deed of settlement that had been submitted to the applicant, which she refused to sign. Following the failure of mediation the solicitors for the respective parties negotiated and reached a "general understanding that the proceedings should be settled on the basis of a deed of release". The respondents' solicitors drafted the deed and submitted it to the applicant's solicitor. The applicant's solicitor advised the respondents' solicitor that "he expected the matter would be settled in accordance with the deed". Driver FM held that the case fell within the third class identified in Masters v Cameron and that it was a condition precedent to the settlement of the matter that the applicant executed the Deed of Release. 30 In Gorrick v Santisi the parties did not reach agreement that they would be immediately bound to enter into a Deed of Release. Rather the solicitors thought it "should" settle on that basis. It was certainly open to the applicant to disagree, as she did, that it should so settle. That case is distinguishable from the present case in that the parties, through their lawyers, decided to settle the proceedings by having a verdict entered for the plaintiff with an order that each party pay their own costs. The payment of $4999.99 to the defendant was agreed and the parties agreed that they would "enter into" a Deed of Release. 31 Mr McClintock relied upon Abadeen Group Pty Ltd v Bluestone Property Services Pty Ltd & Ors; Brown & Ors v Hodgkinson & Ors [2009] NSWCA 386 in support of his submissions that no binding agreement had been reached between these parties. That case was far more complex than the simple facts of this case. It involved a number of arrangements between property developers in various parts of New South Wales and Victoria and involved the review of an alleged agreement reached at a discussion between the relevant developers at a hotel when they prepared a note, referred to as the Lord Dudley document. The complexity of the arrangements was compounded by later developments to buy out one of the developers. It was common ground that there were "gaps" in the Lord Dudley document and although counsel for the appellants sought to fill those gaps, the Court held that the parties did not reach agreement on all matters that were essential to a concluded contract. Although Abadeen is distinguishable from the circumstances of this case, Mr Shields submitted that the following passages of Sackville AJA's judgment (with whom Hodgson and Campbell JJA agreed) are applicable to the determination of this case: 110. … The Court seeks to ascertain the objective intention of the parties, being: "the intention that a reasonable person, with the knowledge of the words and actions of the parties communicated to each other, and the knowledge that the parties had of the surrounding circumstances, would conclude that the parties had concerning the subject matter of the alleged contract". Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603, at 655 [262], per Campbell JA (with whom Mason P and Tobias JA agreed) citing, among other authorities, Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451, at 461-462 [22], per curiam. … 112. In determining whether the parties intended to conclude a contract, their post-agreement conduct may be taken into account. The conduct may be relevant, among other purposes, in order to show 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". Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; 5 CLR 647, at 669, per Griffiths CJ. See also Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, at 547-548, per Gleeson CJ (with whom Hope and Mahoney JJA agreed); Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153, at 163-164, [25], per Heydon JA. … 115. It is also permissible to consider whether it was inherently likely that the parties to a transaction would have intended to bind themselves to an informally expressed agreement or whether they intended to await a formal contract: B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147, at 9151-9152, per Mahoney JA, citing Clifton v Palumbo [1944] 2 All ER 497, at 499, per Lord Greene MR.

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36 It is clear that the dates in the proposed Deed were inconsistent with the dates alleged in the Statement of Claim. That is either an error in failing to reflect what was agreed or it may be, as Mr McClintock claims, evidence that would lead to the conclusion that the parties had not reached a binding agreement on 14 August 2009. 37 There was also a provision in relation to the completion of the Medicare documentation (clause 2.1.2). I am of the view that this was a machinery clause ensuring that the defendant would have no liability for any amount that may be the subject of the "Notice of Charge" referred to in clause 2.2 of the proposed Deed, a process that was referred to by Mr Downing and accepted by Mr Lawson. 38 The conduct of the parties in having the Court note that the matter was settled, rather than informing the Court that the matter was settled in principle, and in abandoning the trial, is conduct that evidences an intention to be immediately bound by their agreement. The agreement reached as documented in Ms Nicolle's letter of 14 August 2009 recorded the agreement to the terms of the Consent Orders finalising the litigation, the amount to be paid to the defendant and the agreement that the parties "will enter into a Deed of Release". Having regard to the issues between the parties in the District Court proceedings and the discussions between Mr Downing and Mr Lawson, I am satisfied that when the parties used the expression "enter into a Deed of Release" they understood and intended that they would sign a Deed providing: (a) for the payment of the agreed amount to the defendant: and (b) releasing the plaintiff from all claims arising out of or relating to the matters the subject of litigation. This was not an agreement to agree at some time in the future referred to by the High Court in Booker. There were no further matters to be agreed. All that had to occur was that the Deed had to be prepared consistently with the agreement. The defendant is entitled to require the plaintiff to remove any provisions of the Deed that go beyond such a release. 39 I am satisfied that such agreement falls within the first class in Masters v Cameron. 40 I make the declarations in paragraphs 1 to 3 of the Summons. I make the orders in paragraphs 4, 5 and 7 of the Summons. **********

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