[2004] HCA 55
GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631
Masters v Cameron (1954) 91 CLR 353
Source
Original judgment source is linked above.
Catchwords
[2001] NSWCA 61
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471[2004] HCA 55
GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631
Masters v Cameron (1954) 91 CLR 353
Judgment (5 paragraphs)
[1]
JUDGMENT
By a notice of motion filed on 18 November 2022, the third defendant, Iridium Developments Pty Limited (Iridium), seeks, pursuant to s 73(1) of the Civil Procedure Act 2005 (NSW), (1) an order declaring that these proceedings have been compromised and settled as between the plaintiffs and Iridium; and (2) an order that within two business days of the orders being made, the plaintiffs are to specifically perform the settlement agreement by signing and exchanging the deed that was sent by the solicitors for Iridium to the solicitors for the plaintiffs on 27 October 2022.
[2]
Background
The proceedings were commenced by Mr Theodore Manny and entities associated with him (the Manny Parties) on 6 December 2021. The proceedings concern three property development projects in Sydney, two in Cronulla and one at Willoughby.
The proceedings were initially commenced against the first defendant, Mr Christopher Rose, and entities associated with him (the Rose Parties), the eighth defendant, Mr Robert Manassen, and entities associated with him (the Manassen Parties), and the third defendant, Iridium.
On 22 March 2022, the proceedings were dismissed by consent against the Manassen Parties with no order as to costs.
In October 2022, the Manny Parties and the Rose Parties sought to organise a mediation of various disputes between them including the disputes the subject of these proceedings. By that stage, Iridium was controlled by the Manassen Parties and was represented by Dentons, who had previously acted for the Manassen Parties. Iridium was invited to participate in the mediation. However, it declined to do so. It gave two reasons. First, in an email dated 11 October 2022, Ms Bianca Williamson, special counsel with Dentons, relevantly said:
In any event, it seems to us that, as there are numerous sets of proceedings you propose to mediate, and as our client (Iridium) is just one party of many joined to only one of the various sets of proceedings, there is little utility in our client being actively involved in any mediation. In fact, it seems clear to us that the real issues in dispute arise between the parties for whom you act, and the parties for whom Brown Ward King act.
Second, in an email dated 17 October 2022, Mr David McIntosh, a partner of Dentons, relevantly said:
To be clear, at no stage has our client ever agreed to participate in any mediation of this matter.
…
Our client is entitled to further interrogate the allegations in the Amended Commercial List Statement, including those asserted in paragraph 87. In particular, our client is entitled to know precisely how the amount alleged is calculated, and to see the evidence relied upon by your client in support of that claim. Expecting our client to participate in a mediation of a dispute about a claim involving a sum of $87m before proper evidence has been exchanged about those matters is, at best, completely unreasonable.
Simply put, our [sic] is not in any position to participate in a meaningful mediation of these matters now and declines to do so. Our client has no objection to the other parties proceeding with a mediation if they wish to do so.
Despite Iridium's absence, the mediation proceeded between the Manny Parties and the Rose Parties on 26 October 2022.
At 1.55 PM on the day of the mediation, Mr Toufic Bazouni, who represented the Manny Parties, sent an email to Ms Williamson saying:
We refer to the recent telephone discussion today between yourself and our George Bazouni.
We confirm the Manny parties are in a mediation today with the Rose parties.
We seek that your client agrees to the following:
1. The above proceedings be dismissed; and
2. No order as to costs with the intent that each party pays their own costs.
We would be grateful if you would obtain your client's instructions as a matter of urgency.
Ms Williamson replied at 2.07 PM on 26 October 2022 stating that "We are obtaining instructions and will revert". She sent a second email at 4.09 PM saying:
We are instructed that Iridium Developments Pty Limited in its own right and as trustee for the Iridium Development Trust (Iridium), would be willing to agree to the proceedings 2021/346395 (Proceedings) being dismissed with no order as to costs (with the intent that each party bear its own costs) conditional upon:
1. Iridium's willingness to bear its own costs as you have proposed would be done in consideration for releases from the plaintiffs in favour of Iridium in respect of all matters alleged in the Proceedings; and
2. A similar release also being provided by the plaintiffs to Robert (Roy) Manassen; Manno Cronulla Pty Ltd in its own right and as trustee of the Cronulla Unit Trust and Manno Kingsway Pty Ltd in its own right and as trustee for the Manno Kingsway Trust, formerly being the eighth to tenth defendants, respectively, in the Proceedings.
If necessary, mutual releases can be provided.
Mr Bazouni responded to that email at 11.12 PM saying:
We refer to your email below [which was a reference to Ms Williamson's email sent at 4.09 PM].
We are instructed the Plaintiffs agree to the below and mutual releases.
We will communicate with you further in relation to documenting the agreement.
At 3.25 PM on 27 October 2022, Ms Williamson sent Mr Bazouni an email attaching a draft deed of release. The email said:
Please see attached draft deed.
Please note this deed is being sent to you at the same time it is being sent to our client and accordingly it is subject to our clients' instructions.
Let us know any comments you may have.
We note no binding agreement will arise until such time as the parties execute and exchange deeds.
The parties to the proposed deed of release were the Manny Parties, Iridium and the Manassen Parties.
Clause 2 of the deed of release relevantly provides:
2.1 Settlement
In consideration of the mutual promises made by the Parties under clauses 2.2 and 2.3 of this document, the Parties agree that within 2 Business Days after all counterparts of this document are signed, and delivered by the Parties, the Parties will:
(a) sign consent orders in the form set out in Schedule 3 to this document; and
(b) do all such things as are necessary to have the Proceedings dismissed with no order as to costs, such that each of the Parties bear their own costs of the Proceedings.
2.2 Release by Manny Parties
Upon and with effect from the date of this document, the Manny Parties unconditionally and irrevocably release the Manassen Parties from any Claims that they presently have, may have, or could or might at any future time have or have had against the Manassen Parties in respect of any matter arising directly or indirectly out of or in connection with the Released Matters.
2.3 Release by Manassen Parties
Upon and with effect from the date of this document, the Manassen Parties unconditionally and irrevocably release the Manny Parties from any Claims that they presently have, may have, or could or might at any future time have or have had against the Manny Parties in respect of any matter arising directly or indirectly out of or in connection with the Released Matters.
"Released Matters" is defined to mean:
(a) all matters the subject of the Proceedings, including but not limited to matters raised in the Summons and Commercial List Statement filed 6 December 2021 (including any further or subsequent amendments to those documents from time to time); and
(b) without limiting the above, all Claims by any Party arising from or in connection with the Projects.
"Claims" is defined broadly to include "all claims, demands, debts, liabilities, accounts, costs and expenses of whatever description …".
The draft deed, evidently due to an oversight, does not include a release by or in favour of Iridium.
On 28 October 2022, Mr McIntosh sent Mr Bazouni an email asking "When can we expect your comments on the draft deed?"
Following further correspondence, on 3 November 2022, Ms Williamson sent Mr Bazouni an email saying:
I refer to our emails below and our discussion yesterday. I note from that discussion that you expect to come back to us at some stage today with your comments on the Deed.
When we sent the Deed to you on 27 October 2022, we noted that it was being sent subject to our clients' instructions.
We have now obtained our client's further instructions to include Manassen Holdings Pty Ltd as a party to the Deed. In our view, this entity would have been covered by the definition of 'Affiliate' in any event, but in order to remove any doubt, we have included it as a named party.
Attached is a revised Deed, with the changes since the version sent to you on 27 October 2022 reflected in mark up.
The principal amendment to the revised deed was to include Manassen Holdings Pty Ltd as a party to it.
On 3 November 2022, Ms Williams sent Mr Bazouni and Ms Hannah Brown, of Brown Ward King, the solicitors for the Rose Parties, an email observing that the matter was before the Court for directions the following day. The email attached proposed consent orders providing for a one week adjournment together with a draft email to my Associate which relevantly said:
Attached are consent orders providing for a 1 week adjournment of the matter. A short adjournment is sought as the parties are in the process of negotiating a resolution which may result in the discontinuance of the proceedings.
A solicitor in Mr Bazouni's office replied to that email suggesting a four week adjournment. Ms Williamson responded to that email stating:
Our clients are not prepared to agree to a 4 week adjournment until 2 December 2022.
While it may be the case that the matter has resolved between your clients and the Rose parties, the dispute between your clients and our client remains unresolved. As you are aware, we are waiting on your clients to come back to us on the proposed deed of settlement.
In the circumstances, until such time settlement has been achieved between all parties to the litigation, our client is not prepared to agree to an adjournment of longer than a week. If the matter has not been fully and finally resolved within that time, then we will be asking for directions to be made on the next occasion in order to progress the litigation.
Mr Gasic in Mr Bazouni's office responded to that email at 12.12 PM stating that "We will propose a deed to your client towards the end of next week" and inviting Iridium to reconsider its objection to the four week adjournment.
Mr McIntosh responded to that email at 12.49 PM on 3 November 2022. On the question of settlement, the email relevantly said:
Otherwise, as far as the, as yet, unresolved settlement between our clients and yours is concentred [sic], if what is really going on here is that your client is not prepared to enter in to the deed we have proposed unless and until payment has been made under the terms of the deed entered in to with the Rose parties, then why don't you just say so and then suggest to us that the operative terms of the deed we have put to you be amended so as to be conditional upon those events and we will get instructions from our clients accordingly.
At the directions hearing on 4 November 2022, the matter was stood over to 11 November 2022.
Following further correspondence between the parties, the Manny Parties took the position that no concluded agreement had been reached.
[3]
Consideration
It is Iridium's position that an agreement was reached as a result of the exchange of emails on 26 October 2022 that fell within either the first category of cases identified in Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 (that is, where the parties have reached agreement on terms and intend to be immediately bound but intend to restate their agreement in fuller or more precise terms) or the so-called fourth category (where the parties have reached agreement on terms and intend to be bound immediately but intend to substitute for their agreement a further one containing additional terms): see Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628 per McLelland J, upheld on appeal in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 635-6 per McHugh JA (Kirby P and Glass JA agreeing).
The question whether the parties reached an agreement of either type is to be decided objectively. That is, it is to be decided by reference to what the parties' words and conduct would be reasonably understood to convey, not upon their actual beliefs and intentions: see Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 at [34]. The words and conduct, taken in context, must show that the parties intended to be bound by their agreement, not simply that they had reached agreement on the terms: see Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 326, 329 per Mahoney JA.
The Manny Parties point to a number of features which they say demonstrate that the parties did not reach a binding agreement. First, they point out that the exchange of emails occurred in the context of a mediation that Iridium refused to participate in. It was a term of the mediation agreement that "If agreement is reached at the mediation, the terms of the agreement must be written down and signed by the parties before they leave the mediation". Second, there is nothing in the parties' communications which indicate that they intended to be bound immediately. The email sent at 11.12 PM on 26 October 2022 specifically states that "We will communicate with you further in relation to documenting the agreement". Third, the Manny Parties submit that it is inherently improbable that the parties to such a large commercial dispute would agree to resolve the matter immediately through an exchange of emails. Lastly, the Manny Parties rely on the various emails sent after 26 October 2022 in which Iridium denied that any binding agreement had been reached. They also rely on the fact that the draft deed makes no reference to the earlier agreement.
I do not accept these submissions. The question of a settlement on the proposed terms was raised in the context of the mediation. It was evident from the email sent at 1.55 PM on 26 October 2022 that the Manny Parties were seeking Iridium's agreement to the proposed terms as part of a broader agreement to wrap up the whole proceedings. Iridium was asked to respond to the email urgently, which suggests that it was expected that an agreement would or might be reached between the Manny Parties and the Rose Parties that day. That was consistent with the mediation agreement, which contemplated that a binding agreement would be reached at the mediation, and not as a result of a formal settlement agreement negotiated subsequently.
Although the response was contained in an email, the drafting of that email was formal. It contained the full name of the parties and stated that those parties were acting in their own right and as trustees for named trusts. It identified the proceedings to be settled by their action number. The email was drafted with sufficient precision that acceptance of the terms proposed in it would give rise to an enforceable contract.
The offer contained in Ms Williamson's email at 4.09 PM was accepted by the email sent at 11.12 PM sent by Mr Bazouni. That email stated that the Manny parties "agree to the below and mutual releases". Although the email does not specifically say that the parties would be bound immediately, the last paragraph suggests that there was agreement, but that it was intended that it would be documented. That is entirely consistent with the first and the so-called fourth categories of Masters v Cameron.
Contrary to the Manny Parties' submission, it is not inherently improbable that the parties would reach an agreement through an exchange of emails. It was Iridium's position that the real dispute was between the Manny Parties and the Rose Parties. What was proposed was, in effect, that Iridium would bear its own costs of the proceedings and that there would be mutual releases. That was not a complicated settlement and was consistent with Iridium's position that the real dispute was between the other parties. There is nothing inherently improbable in the parties reaching an agreement of that type through the exchange of emails, with the precise terms of the release to be documented later. Nor is there any particular reason why the earlier agreement would be mentioned in a draft of the formal deed.
In my opinion, the subsequent correspondence carries little weight. It is common ground that evidence of subsequent events is admissible in relation to the question whether parties reached a binding agreement: see Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25] per Heydon JA; Australian Medico-Legal Group Pty Ltd v Claireleigh Mosman Pty Ltd [2017] NSWCA 218 at [70] per White JA. However, that principle does not displace the objective theory of contract. The fact that after the alleged contract has been entered into one party or the other asserts that there is no binding contract is nothing more than the subjective expression of that party's belief. It is not relevant to the question whether the parties reached an agreement at some earlier point in time. Nor was it suggested in this case that the parties by their conduct had abandoned the agreement reached on 26 October 2022.
[4]
Orders
It follows that Iridium is entitled to the declaration it seeks. However, it does not appear to be entitled to the order for specific performance it seeks, since the deed in respect of which specific performance is sought does not contain a release by or in favour of Iridium.
In those circumstances, it is appropriate to give the parties an opportunity to bring in short minutes of order that give effect to these reasons for judgment. Any outstanding issues should be determined on 16 December 2022.
Accordingly, the orders of the Court are:
1. Direct that within 7 days of today's date the parties bring in short minutes to give effect to these reasons for judgment and to deal with the question of the costs of the motion filed on 18 November 2022;
2. Stand the matter over to 9.15 am on 16 December 2022 to deal with any outstanding questions.
[5]
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: 08 December 2022