Michael Kuehn & Jennifer Kuehn v Masterton Homes

The NCAT Hearing

1. On 29 July 2019, the hearing of the NCAT case was delayed because the parties' respective experts were trying to reach agreement as to the scope of the building defects.
2. The transcript records the following, somewhat lengthy, discussion late in the day (apparently after 4pm) which, according to Masterton, discloses the binding agreement for which it contends. Although it will contribute to the prolixity of this judgment, it is necessary to set it out in full: BAMBAGIOTTI: Senior Member, we are pleased to say that we have reached agreement. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: That has to be reduced to a Deed but is intended to take effect, as far as the principal elements, immediately. So in effect it's Masters and Cameron Class 3. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: What I propose to do sir, because of the lateness of the hour, and I'm assuming that the recording's working. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: Is to and rather have you belabour writing it down. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: I propose if it's convenient to you sir to read the heads out. SNR MEMBER BURTON: Yes. Is it very long? BAMBAGIOTTI: No but it's too long to wrangle with because it will be reduced to a Deed. And what we would ask you to do is to stand the proceedings over so that once the documentation catches up with the spirit of today you'll be dismissing the proceedings with no order. SNR MEMBER BURTON: So there's no- if we made a copy of the document, which could then be reduced to typed form which could be done upstairs I think so long as your writing's legible, then that could be incorporated into orders. But you're telling me that- BAMBAGIOTTI: Well I've written the elements down but I can't say comprehensively that I've gotten everything in them. SNR MEMBER BURTON: Yes I see. BAMBAGIOTTI: So I don't want to be in a position whereby any omission undoes the arrangement. SNR MEMBER BURTON: Yes. Alright. So you're going to read them onto the record Mr Bambagiotti? BAMBAGIOTTI: Yes. SNR MEMBER BURTON: Right. Off you go. BAMBAGIOTTI: Sir without admission and by consent, the parties have agreed to resolve the proceedings in the following terms. I will- in the following general terms I will read them out and onto the record and at the end of which I'll ask my friend Ms Glover if she would on behalf of her client indicate acceptance as to the general scope. Bearing in mind that it is a late hour, the agreement is one that's involved and there may be some further terms not inconsistent with these generals heads that we have to resolve. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: So on that basis. Number one, Masterton will return and do the work that is set out as the work to be done in the agreed conclave report signed and completed today the 28th of July. SNR MEMBER BURTON: 29th. BAMBAGIOTTI: 29th of July 2019, which is a document that's signed. SNR MEMBER BURTON: Right. Signed by the experts? BAMBAGIOTTI: By the experts. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: Two, Masterton will attend and will complete the scope of work plus those matters listed as numbers one to sixty-three of Annexure A as marked. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: And no more than those items. Which are attended to as part of the defect liability under the contract. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: Three, there are three qualifications to one and two above that were set out in general terms in the note that was prepared by Ms Sharon Armstrong. They relate to items four and five, and were a clarification of what happens if in respect of item 4 certification cannot be provided, then we will do whatever is needed to be done in order to get that certification. SNR MEMBER BURTON: We is Masterton? BAMBAGIOTTI: We is Masterton. I'm sorry. Masterton will do what they need to do in order to provide the certification. With respect to item 5. SNR MEMBER BURTON: And that's an absolute obligation? BAMBAGIOTTI: Yes. SNR MEMBER BURTON: Yes. Right. BAMBAGIOTTI: In item 5. Sorry so in item 4 we can either- they can either find the certificate we've already got. We will either- if we can't find it we'll get a new one. If for whatever reason we can't get a new one and we have to get a new person to provide the certificate we'll do whatever that person requires to be done in order to give the certificate. SNR MEMBER BURTON: Right. BAMBAGIOTTI: Just to be clear. With item 5, which relates to the garage, Masterton will pay for Mr [Livio Chiarot] to undertake to prepare the report. If the report indicates contrary to the experts' expectation that there is a shortcoming in the slab. SNR MEMBER BURTON: In the? BAMBAGIOTTI: In the garage slab. SNR MEMBER BURTON: Yes. Sorry I thought you said flat. Slab. BAMBAGIOTTI: In the slab. Then Masterton will do whatever is needed to be done in order to satisfy Mr [Chiarot] that shortcoming is rectified and addressed. Mr [Chiarot] will then provide the unqualified report based upon on [sic] that. SNR MEMBER BURTON: Yes. Who is Mr [Chiarot]? BAMBAGIOTTI: He's my client's engineer. SNR MEMBER BURTON: Right. BAMBAGIOTTI: Mr [Livio Chiarot]. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: And if that occurs we will undertake the scope of work identified in the ROC Report that has been provided by Mr Kuehn. SNR MEMBER BURTON: By Mr Kuehn. BAMBAGIOTTI: Yeah. Notwithstanding our earlier position that that is excessive. So that provides that degree of confidence. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: The third qualification relates to the use of expert evidence that I'll explain in a moment. Four, the Applicant Mr Kuehn abandons any allegation about a defect in the slab. So that as far as the parties are concerned there is no such allegation, there is no such contention. The reason for that is so that he will have the benefit of the statutory warranties without there being an enforcement so he gets the full six years if there is some unforeseen issue that emerges. SNR MEMBER BURTON: So it's conceded that's a major defect if it's there. If it's there, I don't know. BAMBAGIOTTI: Well we're not making any admissions or concessions. SNR MEMBER BURTON: Right. BAMBAGIOTTI: He's abandoning it SNR MEMBER BURTON: Yes. BAMBAGIOTTI: And so he has the benefit of the statutory warranty whatever it is. SNR MEMBER BURTON: Right. BAMBAGIOTTI: With the withdrawal of the defect allegation Mr Kuehn covenants that he will not rely on or use any of the material that he has relied upon to date with respect to the slab, other than where that material is used for reference purposes in respect of any future report. The intention- SNR MEMBER BURTON: Sorry say that last bit again. BAMBAGIOTTI: Yeah. Other than for reference purposes for use in any further report. So if he wants to make any allegation about the slab in the future he's got to get new material. But not being silly about it, the intention is that if they need to refer to some of the material now for purposes of reference but not as purposes of evidence they can. SNR MEMBER BURTON: So he couldn't use the cores. Have to do new- BAMBAGIOTTI: Oh he could use the cores because he'd be referring to them. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: It's simply to put closure to that issue. And so that if there is any further agitation in respect of the abandoned issues it is genuinely new. SNR MEMBER BURTON: Alright. BAMBAGIOTT: That's the intention. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: This agreement is to be reduced to a Deed that reflects the general tenents [sic] of the agreement and is not inconsistent with the agreement but it is intended to be fleshed out to remove ambiguity should such ambiguity arise. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: Seven, Masterton will pay $20,000.00 within 28 days of the finalisation of the Deed, with that amount to be transferred to Mr Kuehn's Solicitors' account as nominated or such other account as he nominates in writing. The remedial work will start not before the 12th of August 2019. SNR MEMBER BURTON: Yeah that's number eight. BAMBAGIOTTI: Number eight I'm sorry yes. And so that Mr Kuehn has some degree of certainty and finality we will do that within twelve weeks. So that it's completed on or before the 15th of November 2019. But- SNR MEMBER BURTON: Before the 15th of November. BAMBAGIOTTI: Yes. But we state that it is expected that it'll be finished much before that. So we've put an allowance in for bad weather etcetera. But this is on the basis that Mr Kuehn co-operates and gives proper access to the property for that to occur. The proceedings should be stood over to a date that you nominate with leave to once the documentation has been completed that the proceedings be dismissed with no order. SNR MEMBER BURTON: As to costs or otherwise? BAMBAGIOTTI: As to costs or otherwise. SNR MEMBER BURTON: Yes okay. Alright. Well if that works it sounds very sensible and I can see why it's taken so long. BAMBAGIOTTI: Yes. SNR MEMBER BURTON: I have one issue which I was going to raise earlier but because of the backwards and forwards I haven't. The contract is with both Mr and Mrs. It's pronounced Kuehn is it? GLOVER: Yes. SNR MEMBER BURTON: The land is in Mr and Mrs Kuehn's name. BAMBAGIOTTI: Yes. SNR MEMBER BURTON: [Mr] Kuehn only is the Applicant. BAMBAGIOTTI: Yes. SNR MEMBER BURTON: I think that's something you particularly need to think about if you're- BAMBAGIOTTI: Yes but look I would expect that Mrs Kuehn will be a party to this agreement. This is a- SNR MEMBER BURTON: Yes well should Mrs Kuehn be a party to the proceedings. BAMBAGIOTTI: Yes well again that's one of the range of issues that we were going to entertain you with. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: But that is unnecessary now. SNR MEMBER BURTON: Right. Well if and when you get this done it might be in everybody's interests to tie that down. BAMBAGIOTTI: Yes sir. SNR MEMBER BURTON: So far as the orders as well. BAMBAGIOTTI: Yes sir. SNR MEMBER BURTON: Is all I'll say. And- BAMBAGIOTTI: So it may be- SNR MEMBER BURTON: And there's no problem with an amendment followed by the orders. BAMBAGIOTTI: Yes. So it might well be that we agree that Mrs Kuehn is joined as a party and then takes the benefit of the dismissal etcetera. Well thank you very much for that Senior Member. SNR MEMBER BURTON: Alright. Now- BAMBAGIOTTI: We've noted that and that'll make its way into the Deed. SNR MEMBER BURTON: Yes. Now the reason I was on the phone was that I was speaking with Principal Member Rosso who thinks that even technically I'm not part heard. So, whereas I thought I'd perhaps started on the matter although I haven't heard any evidence formally. BAMBAGIOTTI: I would- given that- given I've read this all out to you. SNR MEMBER BURTON: But you didn't know that of course. BAMBAGIOTTI: Yeah if the- if it's possible Senior Member if you can hold onto the matter. SNR MEMBER BURTON: Yes. I'm sure- I'm sure everyone will be very pleased to leave it with me. But I think- BAMBAGIOTTI: Yes. No no. But- SNR MEMBER BURTON: All I'm saying is that I don't have my diary here other than electronic form and I am not always sure that that keeps up with my- but maybe I'm just a paper person but I trust my hard copy more. BAMBAGIOTTI: I've got to say I'm in exactly the same position. Perhaps the way forward there is if you give us leave to approach the Registry. SNR MEMBER BURTON: Yes. So if you're able to email your dates. BAMBAGIOTTI: Yes. SNR MEMBER BURTON: And if- and this is purely for the purposes if it all falls over getting a hearing date. BAMBAGIOTT: Yes. SNR MEMBER BURTON: If it doesn't fall over then we can make the orders, which a simple order or maybe two simple orders, by way of email. BAMBAGIOTTI: Yes. SNR MEMBER BURTON: That is the Registry will tell me and I'll convey something and. BAMBAGIOTTI: Yes. SNR MEMBER BURTON: So if you can email both your parties dates. BAMBAGIOTTI: Yes. SNR MEMBER BURTON: And then within, what's this the 15th of August ah [sic] July. BAMBAGIOTTI: We can do that within a week sir. SNR MEMBER BURTON: September October. BAMBAGIOTTI: Yes. SNR MEMBER BURTON: And then I'm guessing- I suspect that's right, for a day. Then I will do the same. But if all resolves then we can just do it on email and that date will disappear. BAMBAGIOTTI: Thank you sir. SNR MEMBER BURTON: Now you'd asked your friend something? BAMBAGIOTTI: So I'm just asking through you and for the record whether or not my friend agrees? GLOVER: Sorry Senior Member I missed that. SNR MEMBER BURTON: That's alright. What Mr Bambagiotti said is that agreed? GLOVER: It is agreed are my instructions. SNR MEMBER BURTON: Right. Thank you. Thank you. BAMBAGIOTTI: And the recording, the transcript recording will be the memorial of the Heads of Agreement. SNR MEMBER BURTON: Yes. Alright. Well I'll note the case management system on that basis. It will probably come out as an adjournment to you on the email. Both Solicitors have their email addresses registered? GLOVER: Yes. SNR MEMBER BURTON: Yes. Thank you. BAMBAGIOTTI: And may I say Senior Member I know that this is the difficult part of your duties and your obligation that too many or so many of these cases involve sitting around waiting for Gotto [sic] so to speak. But the parties before you are very grateful that you've given us the indulgence to allow this occur. And if it was not for that. And I know some Members imagine that the best way to get agreement is to place pressure on the parties. This is case where that would not have achieved what we've able to achieve. So if we could on the record express our, on behalf of all of those in front of you, our gratitude for your indulgence. SNR MEMBER BURTON: Well thank you Mr Bambagiotti. And I would have thought the experts played some part in that. BAMBAGIOTTI: Oh they certainly did. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: Thank you sir. SNR MEMBER BURTON: Alright. So the orders will come out on email to you. I congratulate the parties on the settlement in principle. I hope and those of us who are praying people probably pray that this will work and that it will resolve favourably in the final form. I will make some directions that parties convey available dates for September and October. And that will be for a further hearing if it doesn't work. Estimate one day still? BAMBAGIOTTI: Yes. SNR MEMBER BURTON: And then if it does work it can be done by consent orders in Chambers. BAMBAGIOTTI: Thank you. Thank you sir. SNR MEMBER BURTON: There's no need for you to wait. BAMBAGIOTTI: Thank you. BLAND: Thank you. SNR MEMBER BURTON: Thank you. Thank you Counsel.

Subsequent Events

1. On 1 August 2019, Sharon Armstrong emailed Michael Vitagliani as follows: Dear Michael, I refer to this matter and to the agreement reached on Monday 29/07/19. Please see attached certificates issued by Rafeletos in relation to the Kuehn property. Regards, Sharon Armstrong
2. The email attached compliance certificates from an engineer dated 26 October 2016 and 5 November 2016 in relation to the pier holes and construction of the slab respectively.
3. On 14 August 2019, Sharon Armstrong sent Michael Vitagliani's office a draft deed under cover of the following email: Dear Michelina/Lorraine, Please see attached Deed for your approval. Counsel and I have reviewed the documents in detail and are happy with its contents. The Deed refers to the documents previously provided to you and will need to be included once you have approved of the contents of the Deed. Please let me know of any changes required. Regards, Sharon Armstrong
4. On 27 August 2019, Brian Frauenfelder, from Masterson's Customer Service and Warranty department, sent the following email to Michael Kuehn: Good morning Michael I refer you to the recent Tribunal Hearing where it was agreed a Deed will be prepared and signed by both parties which I understand is currently being organised. In the meantime I will be coordinating all of the appropriate remedial works as directed by the Tribunal. Would you please advise me what is the availability in regard to access to your dwelling for contractors. Thanks. Brian Frauenfelder
5. Michael Kuehn did not respond.
6. On 30 August 2019, Sharon Armstrong sent the following to Michael Vitagliani: Dear Michael Please find attached the Deed of Release with annexures referred to. Please indicate by return when we are likely to receive an endorsed copy from your clients so we can arrange for the payment of the settlement monies. Please note the following: Brian Friedlander of Masterton's [sic] has sent an initial email and a follow-up email to Mr & Mrs Kuehn requesting access and is still awaiting a response. The contractors who will be doing the rectification work, Items 1-63 are on standby pending arrangements once we have access. Please obtain instructions from the Kuehns as to when access to their property can occur. We are expecting Livio's [sic] Chiarot's report to come in on Monday regarding Item 5 in the Conclave Notes of 29 July 2019. We are working on the Compliance Certificate relating to Item 4 and anticipate being able to provide the certificate in the next 10 days. Please let us have your trust account details/direction as to payment for the $20,000 settlement sum. We look forward to hearing from you. Regards, Sharon Armstrong

The Deed

1. It is necessary to set out a significant portion of the draft deed: Recitals … K. On 29 July 2019, the Proceedings was listed for hearing and in the course of that day, the parties' experts undertook a further conclave of their evidence, and the parties undertook negotiations, and without admission of liability, they agreed to settle the dispute between (Settlement) them in terms set out in this Deed. L. The Settlement was reached with the parties having taken advice and having regard to the risks and costs involved in the dispute and the Proceedings, and is in the terms set out herein, which includes: 1. That Masterton will rectify the defects in a list agreed between the parties, as the defects to be rectified pursuant to the defects liability provisions of the Building Contract. 2. The Kuehns withdraw and abandon all the allegations of defect in the Slab, otherwise than those minor deficiencies subject in the list referred to above. 3. Accordingly, the parties are aware that as there are no allegations of complaint of defects in the Slab, the Statutory Warranties in the Building Contract have never been called upon, and remain on foot in their ordinary course. 4. Masterton agrees to make a payment of some money. … Terms … 2 SETTLEMENT 2.1 The Kuehns and Masterton agree to a scope of work to rectify defects (Scope) provided for in this Deed which is and shall be treated by the parties as defects notified and to be rectified pursuant to the Defects Liability provisions in the Building Contract. 2.2 Kuehn withdraws and abandons any and all allegations of defect in the Slab, otherwise than those subject of rectification as part of the Scope. 2.3 The parties agree that the Scope comprises the whole of the works Masterton is required to rectify and address pursuant to the Defects Liability provisions of the Building Contract. 2.4 The Scope comprises: a) The works agreed upon and set out in the Experts' Conclave document dated 29 July 2019 (that is attachment 1), with the exception of Issue 3 which the Kuehn's have agreed to abandon. b) The works set out in the Scope of Works handwritten document that is attachment 2 hereto; c) The works described as items 1 to 63 in the document called Annexure A which is attachment 3 hereto. 2.5 As a clarification of the Scope set out in para 2.4 above: i) With respect to item 4 in attachment 1, Masterton will provide the certification referred to therein, but if, for whatever reason, Masterton is unable to locate that certification, it will take whatever steps are required in order for it to provide equivalent or replacement certification. ii) With respect to item 5 in attachment 1, Masterton will cause Livio Chiarot to prepare the report and certificate referred to therein. Masterton expects that Mr Chiarot's report to determine that the Slab has adequate and appropriate durability, but if, for whatever reason, Mr Chiarot finds that the Slab does not have the adequate and appropriate durability, Masterton will install the bars in accordance with the scope recommended by ROC Engineering report dated 15 October 2018. 2.6 Masterton will cause the work in the Scope to be undertaken as promptly as is practicable, with the intention that the work is to commence as soon as practicable and it intends to complete the work within 3 months after the parties have signed the Deed. 2.7 The Kuehns agree to provide appropriate access for Masterton to the Home to effect the Scope referred to herein, and shall co-operate to the extent reasonably practicable so as to allow Masterton to cause the Scope to be completed. 2.8 Masterton shall pay the Kuehns the sum of $20,000 only (Settlement Sum) to be paid as set out below. 2.9 The Settlement Sum shall be paid by direct deposit into the bank account nominated in writing by Mr Kuehn's solicitors within 28 days of the exchange and coming into effect of this Deed. 2.10 The parties agree that the withdrawal and abandonment by Kuehn of all allegations of defects in the Slab, has the effect that the Statutory Warranties in the Building Contract have not been engaged or otherwise enforced, and so remain in force as in the usual course. 2.11 The parties agree that the performance of the Scope is the full extent of Masterton's obligation to rectify defects in the Home pursuant to the defects liability provisions of the Building Contract. 2.12 In order to avoid doubt, the parties note that the work subject of this agreement amounts to the rectification of the defects which does not extend the date of completion of the works for the purposes of sec 38 Home Building Act 1989 beyond the date of practical completion. 3 SETTLEMENT, RELEASE, AND DISCONTINUANCE OF THE CLAIM & THE PROCEEDINGS 3.1 Upon this Deed being exchanged and taking effect, the parties each release each other from all claims, obligations, liabilities, suits, causes of action and the like at law or in equity or pursuant to statute (to the fullest extent possible) that the parties have, had, or might or may in future have against each other as arising out of, relating to, or otherwise connected with the subject matter of the dispute and the Proceedings, with the sole exception of the performance of each of the covenants given by each of the parties under this Deed. 3.2 The Kuehns will, within 7 days of this Deed, file a notice of discontinuance of the Proceedings, with no orders as to costs and vacating any extant orders for costs, and Masterton consents to that discontinuance. 3.3 The Kuehns and each of them undertake that, with the abandonment and withdrawal of all allegations of defect in the Slab, that they will not attempt to use or to rely upon any of the reports or other material that they have sought to serve or to rely upon in the Proceedings, other than where such material is used by way of reference purposes in the course of any future inquiry or future report made in connection with or relating to the Slab. 4 COSTS OF THE PROCEEDINGS 4.1 Each of the parties shall bear their own costs of the proceedings and relating to the preparation of this Deed. 5 SETTLEMENT OF ALL CLAIMS 5.1 The parties acknowledge that the Settlement Sum made under this Deed is in full satisfaction of any claim for loss, damage, cost or expense in relation to the proceedings. … 6 CONFIDENTIALITY 6.1 The parties to this Deed will keep confidential the terms of this Deed and shall not disclose the same to any third party except their legal and taxation advisors, their insurers and any such other entities or persons as maybe entitled to such information by law or for the purpose of enforcing the terms of this Deed.

THE LAW

1. Masters v Cameron (1954) 91 CLR 353 (Masters v Cameron) is an iconic Australian decision and one of the most well-known cases in the field of the law of contract in this country. Experienced lawyers can be assumed to be familiar with it. In the famous passage at 360, the Court said: 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. 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. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
2. Earlier, in Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 650, Higgins J had made the following, also well-known, statement: There is no contract unless the two parties mutually consented to be bound one to the other by one agreement. Moreover--though it ought to be superfluous to say it--it is one thing for two parties to settle what are to be the terms of an agreement, if it should be made; and quite another thing to make the agreement.
3. Subsequent cases have spoken of a fourth category, namely, where parties enter into an immediately binding agreement on certain specified terms and on such other terms as are either subsequently agreed by the parties or able to be determined by the Court: G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 622; Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 at [25]; Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd) [2008] NSWCA 149 at [67] (Sagacious); Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd [2016] NSWCA 123 (Karellas).
4. The additional legal principles which apply to assessing whether a binding agreement has been entered into were not the subject of any debate before me. A brief summary of them will be sufficient: 1. Whether an agreement has been entered into is to be objectively assessed. The objective intention of the parties is fact-based, found in all the circumstances, including by drawing inferences from their words and their conduct in their making of the agreement: Allen v Carbone (1975) 132 CLR 528 at 532; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548-9 (ABC); Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 105 [25]; Sagacious at [69]. 2. In ascertaining the intention of the parties, whether from a series of communications or from a single document, regard can be had to the commercial circumstances in which the parties exchanged their communications and to the subject matter of the supposed contract: Sagacious at [69]. 3. The Court will not write a contract for parties who have failed to reach agreement. Failure to reach agreement includes where there is obscurity or incompleteness in the agreement: Sagacious at [73]; Feldman v GNM Australia [2017] NSWCA 107 at [60]-[61] (Feldman). 4. The existence of matters of importance on which the parties have not reached consensus in their informal agreement will render it less likely that they intended immediately to be bound before the execution of a formal document. That the terms have not been fully or well stated is material to whether a contract has been made. The more important the term, the less likely it is that the parties will have left it over for future decision, but there is no legal obstacle which prevents the parties agreeing to be bound now while deferring important matters: Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 97578 at 14,579; ABC at 548; Sagacious at [73]; Feldman at [60]-[61]. 5. Regard may be had to the parties' subsequent communications to assess whether it was in their contemplation that they were not to be bound until all the essential preliminaries had been agreed to or until the formal contract had been drawn up embodying all the matters incidental to the transaction: ABC at 547-8 and the authorities cited there; Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 at [25]; Howard Smith and Co Ltd v Varawa (1907) 5 CLR 68 at 78; B Seppelt and Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147 at 9155; Sagacious at [99]. 6. An agreement may contain an implied term requiring the parties to do all cooperative acts necessary to bring about the contractual result. A duty to cooperate may require parties to execute a formal instrument but does not apply to the negotiation of varied or additional terms: Perini Corporation v Commonwealth of Australia [1969] 2 NSWR 530; Karellas at [64].

Consideration

1. Masterton does not suggest that a binding agreement was reached otherwise than by the exchanges recorded on the transcript. No deed was signed and it is not suggested that there was any agreement on further terms.
2. Masterton does not contend for any Masters v Cameron category of agreement other than a Class 1. It does not contend for the existence of any implied term to cooperate with respect to the entry of a deed.
3. To make the objective assessment which the orthodox approach to determining the parties' intention (or not) to contract requires, a detailed examination of the transcript and the documents referred in it as well as the parties' subsequent conduct, is necessary.
4. Some of the things said on the transcript can be viewed as consistent with an intention immediately to be bound. However, there are a significant number of contra-indications, including other utterances and the parties' subsequent conduct (especially Masterton's), which undermine a conclusion that the parties had an intention to be bound without there having to be a formal instrument between both of the Kuehns and Masterton.
5. Unless I state otherwise, or the context indicates differently, where I refer to Counsel, it is to Masterton's Counsel.
6. Counsel's initial statements were that: Senior Member, we are pleased to say that we have reached agreement. … That has to be reduced to a Deed but is intended to take effect, as far as the principal elements, immediately. So in effect it's Masters and Cameron Class 3.
7. The statement that agreement had been reached is neutral as to whether the agreement was binding.
8. The next statement that it was intended to take effect immediately is consistent with bindingness, although what was comprehended by 'the principal elements' is imprecise.
9. However, the succeeding statement contradicts the preceding one. It is notorious that Masters v Cameron Class 3 is where the parties do not intend to make a concluded bargain at all. Masterton did not submit that the words used with reference to Masters v Cameron Class 3 meant anything else. It put that Counsel misspoke and that he obviously meant Masters v Cameron Class 1. But that is not what he said. In the general scheme of things, whilst it is not helpful to Masterton's cause, the contradiction is not decisive.
10. Counsel went on to propose 'to read the heads out.' It may be inferred that Counsel had a document which he proposed to read. When the Senior Member suggested that a document be typed that could be incorporated into orders, Counsel did not accept the invitation because, whilst he had written the elements down, he could not: …say comprehensively that I've gotten everything in them. adding that: I don't want to be in a position whereby any omission undoes the arrangement.
11. What lay behind this exchange is obscure and enigmatic. On the one hand, Counsel conveyed that he did not want the document reduced to typing because he was not certain that everything was in it but, on the other, wanted to read out the very (potentially incomplete) document to avoid being in a position whereby any omission undid the arrangement. Perhaps he had it in mind to say things on the transcript beyond those in the document. The exchange, however, is reflective of an absence of consensus that what was to be read out captured all of the principal elements of the putative agreement (I interpolate, whatever they were).
12. Counsel then said: Sir without admission and by consent, the parties have agreed to resolve the proceedings in the following terms. I will- in the following general terms I will read them out and onto the record and at the end of which I'll ask my friend Ms Glover if she would on behalf of her client indicate acceptance as to the general scope. Bearing in mind that it is a late hour, the agreement is one that's involved and there may be some further terms not inconsistent with these generals [sic] heads that we have to resolve.
13. The statement that the parties had agreed to 'resolve the proceedings in the following terms' may be viewed as consistent with intending a binding agreement on those terms. However, that reading is diluted by the subsequent statements envisaging acceptance 'as to the general scope' and raising the possibility that there may be some 'further terms not inconsistent with these generals [sic] heads that we have to resolve.' If assent was given to a 'general scope' yet there were further terms that have to be resolved, it indicates insufficient finality of the terms to disclose an intention immediately to be bound.
14. Counsel then articulated as 'Number one': …Masterton will return and do the work that is set out as the work to be done in the agreed conclave report signed and completed today the 28th of July.
15. The reference to 28 July 2019 is erroneous. 'Today' was 29 July 2019. I take this to be the document which was being referred to. Nothing turns on these errors.
16. There is in evidence no document which on its face is an agreed conclave report of that date. There is, however, a document entitled 'Expert's Conclave' (in a form generally used by NCAT proceedings) signed by the respective experts but it is dated 27 July 2019. I take this to be the document being referred to. It is in table form.
17. Item No. 1 is 'Cracking to External Concrete Slabs,' Item No. 2 is 'Top Repairs to Concrete Slabs,' Item No. 3 is 'Internal Concrete Slab,' Item No. 4 is 'Front Patio Concrete Slab, and Item No. 5 is 'Future Monitoring of Garage Slab.' Under the heading 'Expert's Comments,' the following appears with respect to Item No. 4 and Item No. 5: Item No. 4 The engineering experts agree that the exposed bolts are to be cored and cut back a minimum depth of 50mm and removed, two coats of Nitobond shall be applied [to] the surface of the resulting hole and filled with a non stick grout such as Sika GP grout as per TM scope at page 12 of his report. Details and certification of the repair detail are to be provided for review. Item No. 5 It is agreed that a report on durability of the slab be prepared by LC. This report is to be reviewed and certified by independent material scientist or engineer to be agreed by both parties. Any criteria in the report are to be proven to the satisfaction of both parties. Polythene sheet assumed to be maximum 90% effective.
18. Counsel that said, as to 'Two': ...Masterton will attend and will complete the scope of work plus those matters listed as numbers one to sixty-three of Annexure A as marked. … And no more than those items. Which are attended to as part of the defect liability under the contract.
19. The document marked as Annexure A consists of an email dated 17 July 2009 from Michael Kuehn to his solicitor. It is a list of defects, numbered in handwriting from 1 to 15, and a defects report from Brian Clark t/as F1 Home Improvements which identifies another 48 defects, making 63 in total. Item 12 identifies 6m long cracks in the concrete slab on the Back patio and Garage. Item 29 concerns the Back patio and records 'concrete slab has major cracking.' Item 30 records that the Garage Floor concrete is cracking.
20. Counsel then said, as to 'Three' (there having been identified three qualifications to One and Two): …there are three qualifications to one and two above that were set out in general terms in the note that was prepared by Ms Sharon Armstrong. They relate to items four and five, and were a clarification of what happens if in respect of item 4 certification cannot be provided, then we will do whatever is needed to be done in order to get that certification. … We is Masterton. I'm sorry. Masterton will do what they need to do in order to provide the certification. With respect to item 5. … In item 5. Sorry so in item 4 we can either- they can either find the certificate we've already got. We will either- if we can't find it we'll get a new one. If for whatever reason we can't get a new one and we have to get a new person to provide the certificate we'll do whatever that person requires to be done in order to give the certificate. … Just to be clear. With item 5, which relates to the garage, Masterton will pay for Mr [Livio Chiarot] to undertake to prepare the report. If the report indicates contrary to the experts' expectation that there is a shortcoming in the slab. … In the garage slab. … In the slab. Then Masterton will do whatever is needed to be done in order to satisfy Mr [Chiarot] that shortcoming is rectified and addressed. Mr [Chiarot] will then provide the unqualified report based upon on [sic] that.
21. Counsel identified Mr Chiarot as his client's engineer.
22. The note prepared by Ms Sharon Armstrong was not identified during the hearing. The qualifications were said to have been set out 'in general terms' in that note.
23. The main slab was the most significant aspect of the claim.
24. There is confusion on the transcript between Item No. 4 and Item No. 5.
25. Doing the best I can, the first qualification, it seems, was with respect to Item No. 4 which required, 'Details and certification of the repair are to be provided for review.' Masterton was proposing an absolute obligation on its part to provide such certification but nothing was said about the significant issue of review.
26. Item No. 5 required a report on durability to be provided by Mr Chiarot (LC) and to be reviewed and certified by an independent material scientist and engineer to be agreed by both parties and any criteria in the report were to be proven to the satisfaction of both parties. The proposal was that Masterton would do whatever was necessary to satisfy Mr Chiarot that the shortcoming was rectified and addressed and he would then provide an unqualified report 'based upon on [sic] that.'
27. Item No. 5 required not only Mr Chiarot's report, but review and certification by an independent material scientist and engineer to be agreed by both parties and the parties to be satisfied with any criteria in the report. The qualifications articulated say nothing of these additional significant requirements. I consider these to be important omissions especially given that Mr Chiarot was Masterton's engineer.
28. Before dealing with the third qualification, which Counsel described as relating to the use of expert evidence, he identified as 'Four': Four, the Applicant Mr Kuehn abandons any allegation about a defect in the slab. So that as far as the parties are concerned there is no such allegation, there is no such contention. The reason for that is so that he will have the benefit of the statutory warranties without there being an enforcement so he gets the full six years if there is some unforeseen issue that emerges.
29. Returning then to the third qualification (to One and Two), Counsel said: With the withdrawal of the defect allegation Mr Kuehn covenants that he will not rely on or use any of the material that he has relied upon to date with respect to the slab, other than where that material is used for reference purposes in respect of any future report. The intention- … Yeah. Other than for reference purposes for use in any further report. So if he wants to make any allegation about the slab in the future he's got to get new material. But not being silly about it, the intention is that if they need to refer to some of the material now for purposes of reference but not as purposes of evidence they can.
30. It will be observed that: 1. the abandonment described is only by Michael Keuhn, and not Jennifer Keuhn; 2. only Michael Kuehn is said to have the benefit of the statutory warranties; and 3. the covenant to be given is described as only given by Michael Kuehn and not Jennifer Kuehn.
31. Unsurprisingly, the Senior Member then sought clarification about what was being conveyed concerning the slab. The Senior Member said, 'So he couldn't use the cores,' and received the response: Oh he could use the cores because he'd be referring to them. … It's simply to put closure to that issue. And so that if there is any further agitation in respect of the abandoned issues it is genuinely new.
32. What was meant by being able to use material for reference purposes but 'not as purposes of evidence' is ambiguous at best. Why it is that using cores would be permissible because 'he'd be referring to them', is obscure.
33. Without expressly assigning to it a number (but it was Five in the sequence - although the next one was referred to as 'Seven'), Counsel said: This agreement is to be reduced to a Deed that reflects the general tenents [sic] of the agreement and is not inconsistent with the agreement but it is intended to be fleshed out to remove ambiguity should such ambiguity arise.
34. This statement is enigmatic. It conveys that the deed is to reflect the general tenets and is not to be inconsistent with them. However, how, if it reflected tenets, it could be inconsistent with them is obscure.
35. The statement that the deed is to be 'fleshed out to remove ambiguity should such ambiguity arise,' is a different formulation from, and potentially inconsistent with, the one earlier articulated that there may be some further terms not inconsistent with the general terms that 'we have to resolve.'
36. How any ambiguity which arose was to be removed 'by fleshing out' in binding fashion is not spelt out. One ambiguity which had already arisen was the permission for Michael Kuehn to refer to any of the material which he had relied on to date with respect to the slab for reference purposes.
37. Next, Counsel said as to 'Seven' (which the Senior Member thought was Eight): …Masterton will pay $20,000.00 within 28 days of the finalisation of the Deed, with that amount to be transferred to Mr Kuehn's Solicitors' account as nominated or such other account as he nominates in writing. The remedial work will start not before the 12th of August 2019. … And so that Mr Kuehn has some degree of certainty and finality we will do that within twelve weeks. So that it's completed on or before the 15th of November 2019. But-
38. Counsel went on to say: Yes. But we state that it is expected that it'll be finished much before that. So we've put an allowance in for bad weather etcetera. But this is on the basis that Mr Kuehn co-operates and gives proper access to the property for that to occur.
39. Four observations are pertinent.
40. First, Masterton's payment obligation does not arise unless and until a deed has been signed, because payment is to be made 28 days after that. This is a significant, if not a decisive, indication that there would be no binding settlement without execution of the deed. Reflective of this, clause 2.9 of the deed proffered by Masterton provided that, 'the sum shall be paid within 28 days of the exchange and coming into effect of this Deed.'
41. Second, clause 2.6 of the deed proffered by Masterton provides for neither a start date nor a firm finish date for the work. This is a significant departure from what Counsel read onto the transcript and is reflective of an absence of intention on 29 July 2019 on the part of Masterton to be bound by the term articulated by Counsel. There could hardly have been any room for error in the articulation of the provision proffered. Plainly, Masterton wanted a different option.
42. Third, Masterton was waiting for the deed to be signed before actually doing the work. Its undertaking was to do the remedial work within 12 weeks and complete it by 15 November 2019 but starting not before 12 August 2019. This meant that if the work was going to take 12 weeks, it would have needed to start on 13, 14 or 15 August 2019. However, the first draft deed including annexures was only proffered by Masterton on 30 August 2019. On 27 August 2019, Brian Fraunenfelder recorded that a deed was to be prepared and signed and that, in the meantime, he would coordinate the works as directed by the Tribunal.
43. Fourth, only Michael Kuehn, and not Jennifer Kuehn, is referred to. He is to receive the payment. He is said to have certainty. Only his cooperation is expected.
44. Counsel next said: The proceedings should be stood over to a date that you nominate with leave to once the documentation has been completed that the proceedings be dismissed with no order. … As to costs or otherwise.
45. The Senior Member then raised the significant but obvious issue that the building contract was with both the Kuehns and that the land was in both their names but Mr Kuehn was the only applicant. The Senior Member suggested that this was something that particularly needed to be thought about. Counsel responded: Yes but look I would expect that Mrs Kuehn will be a party to this agreement. This is a-
46. The following exchange then occurred: SNR MEMBER BURTON: Yes well should Mrs Kuehn be a party to the proceedings. BAMBAGIOTTI: Yes well again that's one of the range of issues that we were going to entertain you with. SNR MEMBER BURTON: Yes. BAMBAGIOTTI: But that is unnecessary now. SNR MEMBER BURTON: Right. Well if and when you get this done it might be in everybody's interests to tie that down. BAMBAGIOTTI: Yes sir. SNR MEMBER BURTON: So far as the orders as well. BAMBAGIOTTI: Yes sir. SNR MEMBER BURTON: Is all I'll say. And- BAMBAGIOTTI: So it may be- SNR MEMBER BURTON: And there's no problem with an amendment followed by the orders. BAMBAGIOTTI: Yes. So it might well be that we agree that Mrs Kuehn is joined as a party and then takes the benefit of the dismissal etcetera. Well thank you very much for that Senior Member. SNR MEMBER BURTON: Alright. Now- BAMBAGIOTTI: We've noted that and that'll make its way into the Deed.
47. These exchanges point strongly (if not decisively) against an immediately binding agreement because: 1. Jennifer Kuehn was not a party to the supposed agreement but her joining in it was essential and was expected; 2. Jennifer Kuehn was not a party to the proceedings but needed to be if finality to the litigation was to be brought about by orders of NCAT; 3. there was no consensus to which Jennifer Kuehn was party as to how these lacunae were to be filled; 4. the position of Jennifer Kuehn was one of the range of issues with which they 'were going to entertain' the Senior Member. Apparently, Masterton was going to take the point.
48. Discussion then turned to the next court listing. The Senior Member sought clarification that this was 'purely for the purposes if it all falls over [of] getting a hearing date,' to which the response was, 'Yes.'
49. The Senior Member said: And then I'm guessing- I suspect that's right, for a day… But if all resolves then we can just do it on email and that date will disappear.
50. Counsel then sought the agreement of Counsel appearing for Mr Kuehn. The following exchange took place: BAMBAGIOTTI: So I'm just asking through you and for the record whether or not my friend agrees? GLOVER: Sorry Senior Member I missed that. SNR MEMBER BURTON: That's alright. What Mr Bambagiotti said is that agreed? GLOVER: It is agreed are my instructions.
51. Ms Glover's assent, of course, rose no higher than that to which she assented.
52. The final substantive exchange between the Senior Member and Counsel was: SNR MEMBER BURTON: Alright. So the orders will come out on email to you. I congratulate the parties on the settlement in principle. I hope and those of us who are praying people probably pray that this will work and that it will resolve favourably in the final form. I will make some directions that parties convey available dates for September and October. And that will be for a further hearing if it doesn't work. Estimate one day still? BAMBAGIOTTI: Yes.
53. The following utterances by the Senior Member, read in the context that no one present demurred to anything he said, are corrosive of the suggestion of an immediately binding arrangement: the Senior Member's expression 'if and when you get this done…'; his request for clarification for a further hearing day, which was assented to by Counsel, was on the assumption that it would be required 'if it all falls over' and would not be required 'if all resolves'; his references to 'settlement in principle,' praying that 'this will work,' [if] 'it will resolve favourably in the final form' and to a further hearing 'if it doesn't work.'
54. Masterton argued that its subsequent conduct was reflective of its intention and understanding that the parties were immediately bound in that it provided certificates under cover of a letter which referred to the agreement reached on Monday, 29 July 2019 and tried to make arrangements to do the work. The provision of the certificates was a minor matter as it already had them. The reference to the agreement reached may be given some weight, although on any view there was agreement, it was just not binding and it was not with Jennifer Kuehn. The attempt to make arrangements to commence the work is consistent equally with an expectation that whilst there was not yet final agreement, there would be. That this was the expectation is supported by Brian Frauenfelder's letter of 27 August 2019 which referred to it being agreed that a deed would be prepared and signed which was currently being organised and that in the meantime, he would be coordinating all of the appropriate remedial works as directed by the Tribunal. Also, it is to be remembered that the work was to correct defects in Masterton's construction.
55. As to subsequent conduct, more important, to my mind, is the fact that terms in the deed proffered by Masterton are inconsistent with the intention which it says the parties had and, in some respects, not in accordance with what it alleges was agreed.
56. Added to what has been said earlier (including that clause 2.6 is inconsistent with what was recorded on the transcript), the following observations may be made: 1. Recital K refers to the parties having on 29 July 2019 agreed to settle the dispute between them 'in terms set out in this Deed.' The draft deed, however, contains the following provisions (which cannot fairly be described as immaterial) which had not been agreed (at all, let alone by Jennifer Kuehn): clauses 2.6, 2.12, 3.1, 3.2 and 6; 2. Recital L contains an acknowledgement that the parties had taken advice and had regard to the risks and costs of the dispute and proceedings. Reference to this acknowledgement cannot be found on the transcript; 3. Clause 2.5 makes no provision for the review and certifications referred to in Items No. 4 and No. 5 of attachment 1; 4. Clause 2.12, to which there is no reference to be found on the transcript, is protective only of Masterton; 5. Clause 3.1 contains a release in wide terms which cannot be found on the transcript and takes effect only upon exchange of the deed; 6. Clause 3.2 requires Michael and Jennifer Kuehn to file a notice of discontinuance, which would require Jennifer Kuehn to be a party to the proceedings, and a vacation of any extant orders for costs. No reference to this is to be found on the transcript; 7. Clause 6 imposes confidentiality. No reference to this is to be found on the transcript. This provision was plainly important to, and in the interests of, Masterton rather than Michael Kuehn, given that the matter concerned complaints about Masterton's workmanship. The subsequent attempted imposition of confidentiality is inconsistent with the existence of a binding agreement the terms of which had supposedly been reflected on the transcript of a hearing in open court.

CONCLUSIOn

1. In summary, the following objective factors, in no particular order of precedence, point against an immediately binding agreement and heavily outweigh those pointing in the opposite direction: 1. omission of Jennifer Kuehn from the arrangement; 2. absence of any articulation of agreement as to how Jennifer Kuehn would become a party to the alleged settlement; 3. express contemplation that a deed would be signed; 4. contemplation that further terms had to be agreed and embodied in the deed; 5. omission from the terms articulated of matters of importance, including procedures for review of the certification of the slab and Jennifer Kuehn's position in relation to the proceedings; 6. articulation of obligations, especially Masterton's payment obligations, performance of which was dependant on the execution of the deed; 7. lack of precision in the articulation of the terms of the agreement, including the nature of additional terms that were to be included and the entitlement on the part of the Kuehns to use material relied upon with respect to the slab; 8. statements made by the Senior Member inconsistent with immediate bindingness to which no one present demurred; 9. adjournment of the proceedings for a further hearing on the merits if the matter did not resolve; 10. subsequent conduct, in particular the proffering of the draft deed containing terms inconsistent with immediate bindingness of what was articulated on 29 July 2019.

RESULT

1. Pursuant to s 73(1) of the Civil Procedure Act 2005 (NSW), I determine that the proceedings between the plaintiffs and the first defendant have not been compromised or settled between them.
2. The proceedings against the second, third and fourth defendants are dismissed.
3. I will hear the parties on costs (if this is necessary) and as to the further conduct of the matter, including whether the proceedings should be transferred to NCAT or the District Court.
4. I will stand the matter over to 21 August 2020 to enable short minutes to be brought in and to deal with any issues that remain to be determined. Any party which wished to make a submission on costs or as to the forum for the future conduct of the matter should provide a brief outline of no more than 3 pages to my Associate by 19 August 2020.

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: 11 August 2020