CONTRACTS - Formation - Agreement - Intention to make concluded bargain - Where the whole of the evidence indicates that negotiations are not complete
Source
Original judgment source is linked above.
Catchwords
CONTRACTS - Formation - Agreement - Intention to make concluded bargain - Where the whole of the evidence indicates that negotiations are not complete
Judgment (3 paragraphs)
[1]
Solicitors:
File Number(s): 2019 / 266184
[2]
Judgment
The issue in this case is whether, on or about 3 May 2019, the parties entered into a binding and enforceable agreement to resolve all matters in dispute between them.
The plaintiff, Mr Paul Owen, contends that the parties did agree to resolve all matters in dispute between himself and the defendant, and seeks a declaration and consequential relief to that effect. The defendant is Ms Amanda Amy Owen. Ms Owen was, until her recent divorce from Mr Owen's son, Matthew, Mr Owen's daughter-in-law.
At various times during the dispute, both parties have been represented by a solicitor. Ms Cherri Maree Lewis represented Mr Owen and a solicitor called Mr Murray Lake represented Ms Owen.
However, Mr Owen's statement of claim appears to have been prepared by Matthew Owen, and Ms Owen prepared her defence herself.
At the hearing, which took place on 26 February 2020, Matthew Owen initially sought to conduct the proceedings on behalf of his father, and Ms Owen appeared by herself without representation. Early in the hearing, when the Court came to appreciate that Ms Owen and Matthew Owen had recently been divorced, Mr Owen was required to conduct his claim himself, which he then did.
The hearing was conducted on the basis of the pleadings and affidavits made by Mr Owen, Ms Lewis and Ms Owen, and the documents annexed to those affidavits. There was brief cross-examination of both parties by the other, but little was established by that process. Ms Lewis was not required for cross-examination.
The dispute giving rise to the present proceedings initially arose out of the will of the late Sharyn Louise Owen, who was Mr Owen's daughter, and who passed away on 23 November 2016.
The deceased made a will on 13 November 2016, in which she bequeathed her whole estate to Mr Owen and his wife.
Probate of the last will of the deceased was granted to Mr Owen by this Court on 7 March 2017.
For many years before the deceased made her final will, the deceased's previous will named the two daughters of Ms Owen and Matthew Owen as her beneficiaries.
On 27 September 2017, according to JusticeLink, Ms Owen filed a summons in the Local Court at Newcastle against a number of defendants, including Mr Owen and a hospital, apparently for the purpose of obtaining medical records relating to the deceased.
Ms Owen commenced proceedings in this Court on 7 May 2018, as tutor for one of her daughters, claiming an order revoking the grant of probate of the deceased's last will in favour of Mr Owen, and the issue of a new grant of probate to give effect to the earlier will under which the daughters were beneficiaries.
After one of the parties to the Local Court proceedings agreed to grant Ms Owen access to the deceased's medical records, on 23 October 2018, the Local Court made orders by consent of the parties that the proceedings were withdrawn and dismissed and that the parties were to bear their own costs of the proceedings.
On 11 March 2019, at an interlocutory hearing before Lindsay J, his Honour made the following orders by consent:
…
2. ORDER that the plaintiff be granted leave to discontinue these proceedings on condition that the proceedings be dismissed as a bar to commencement of any further proceedings claiming the relief claimed in the statement of claim filed on 7 May 2018.
3. ORDER that the proceedings be dismissed.
4. ORDER that the plaintiff's Tutor pay 75% of the costs of the defendant in the proceedings, such costs to be assessed on the ordinary basis.
…
On 27 March 2019, Ms Lewis wrote a letter to Mr Lake. The letter included the following:
…
After review of our file and removal of all costs associated with the proceedings in the Local Court our client's costs in the matter total $117,570.96. In accordance with Order 4 your client is to pay 75% of these fees. This comes to a total of $88,178.22.
We note that your client's property at 84 Max Purnell Street, Forde, ACT is due to settle on 30 April 2019 and that your client is entitled to received (sic) funds in excess of this amount from the sale. In the circumstances, we request that your client please sign the enclosed irrevocable direction to pay authorising the solicitors acting on the sale to pay our clients (sic) costs from the proceeds of sale.
Should your client not agree to provide the authority by 4:00 PM on Monday 1 April 2019 we have been instructed to take formal steps toward recovering the debt from the sale proceeds and note that this will likely further increase costs, which we shall seek be also borne by your client.
…
As I understand it, the property referred to in the letter was the former matrimonial home of Ms Owen and Matthew Owen, which was being sold as a consequence of matrimonial proceedings between them. That may well have been why Ms Lewis had knowledge of the sale and the proposed date for completion.
Although the claim for $88,178.22 in the 27 March 2019 letter is correctly calculated at 75% of the amount that Ms Lewis determined was Mr Owen's total costs of the probate matter, it does not follow that the effect of order 4 made by Lindsay J on 11 March 2019 was that Ms Owen became indebted to Mr Owen for $88,178.22.
The amount of the costs payable by Ms Owen to Mr Owen fell within the definition of "ordered costs" in s 63 of the Legal Profession Uniform Law Application Act 2014 (NSW) (the Act). Section 68 of the Act entitled Ms Owen to make an application for an assessment of the legal costs claimed by Mr Owen in accordance with the costs assessment rules. The effect of s 76 of the Act is that, in conducting an assessment of ordered costs, the costs assessor must determine what is a fair and reasonable amount of costs for the work concerned. When the relevant assessor has determined the application, s 70 of the Act requires the costs assessor to issue a certificate that sets out the determination. Subsection (5) has the effect that the filing of the certificate in the registry of a relevant court is taken to be a judgment of that court for the amount of unpaid money referred to in the certificate.
In cases where the application for assessment of ordered costs is made by the person liable to pay the costs, the effect of clause 35(2) of the Legal Profession Uniform Law Application Regulation 2015 and Form A3 will be that the details of the costs claimed by Mr Owen would be identified, and Ms Owen would be given an opportunity to challenge the reasonableness of the claim in the course of the assessment process.
On 27 March 2019, Ms Lewis sent an email to Ms Owen that apparently attached a copy of the 27 March 2019 letter to Mr Lake. The email stated that it had been sent directly to Ms Owen because Ms Lewis had received an out of office message from Mr Lake advising that he would not be monitoring his email account until after 23 April 2019.
The attached irrevocable authority and direction was addressed to the solicitors retained on the sale of the property and, if signed by Ms Owen, would have authorised and directed the solicitors to pay $88,178.22 to Mr Owen from any monies received on Ms Owen's behalf from the sale.
On 29 March 2019, Ms Owen replied to Ms Lewis, with a copy to Mr Lake, as follows:
…
I understand the order is to pay costs assessed on the ordinary basis as opposed to solicitor/client costs, excluding all costs associated with the proceedings in the Local Court. I am not sure how you have arrived at the figure of $117,570.96 and would appreciate an itemised invoice. Once received, I will be seeking a review by the courts to ensure the costs reported are correct and reasonable.
The sale of my property is expected to be settled on 30 April 2019, where the funds received will be paid directly to the outstanding debts I have accumulated for both my divorce and estate matter legal fees. I do not anticipate there will be any funds remaining to cover the costs for this matter.
Given my current financial circumstances I understand I can request consideration of a payment plan from yourself. Are you able to advise what you require in order to determine an appropriate payment plan.
I look forward to hearing from you shortly.
Clearly, by this email, Ms Owen sought an itemised invoice from Ms Lewis so that she could assess the legitimacy of the claim. Ms Owen, in referring to "a review by the courts to ensure the costs reported are correct and reasonable" was making a lay reference to the assessment process referred to above.
Ms Owen candidly advised Ms Lewis that the balance of the proceeds of sale that she expected to receive on 30 April 2019 had been allocated to other debts incurred by her from the family and probate proceedings. That could not be considered as any intention to avoid paying any amount found to be payable under the costs order as a result of the assessment process. Ms Owen's obligation to pay legal costs to Mr Owen was not an immediately payable debt for an identified sum. Ms Owen was entitled to pay her other debts as and when they fell due.
Ms Owen, having been open about the fact that she may not have a balance from the sale of the property that would be sufficient to pay the amount of the costs determined by the assessment to Mr Owen, referred to the fact that she might need "a payment plan", and asked Ms Lewis "to advise what you require in order to determine an appropriate payment plan". Ms Owen signed the email "Warm regards".
On 8 April 2019, the solicitors who were acting on the sale of the property for Ms Owen and Matthew Owen sent an email addressed to both of them. The email said:
I received a telephone call from the legal representative of Paul Owen as executor of the state of the late Sharon Owen. The call was a 'courtesy call' to notify us that they have received instructions to apply for an injunction in relation to the disbursement of the settlement proceeds relating to the sale of 84 Max Purnell Street. The grounds of the application are related to a costs order against you, Amanda. I do not have any further information.
At this stage we have not received anything formal and we will, of course, notify you once anything further has been received.
The receipt of this email prompted Ms Owen to send a further email to Ms Lewis on 9 April 2019, with a copy to Mr Lake. The email said:
I have been advised by Diana Tozer yesterday that you have received instructions to apply for an injunction in relation to the disbursement of the settlement of proceeds relating to the sale of 84 Max Purnell Street, Forde, please see attached for your information.
I refer to your email and letter dated Wednesday 27 March 2019. I say the following:
1. I put you on notice that upon receipt of an itemised invoice, I will be applying for a cost assessment of same.
2. There is therefore no current discernible debt to be protected by your client.
3. Upon receipt of an accepted Costs Certificate, I will of course discuss payment options with your office.
4. I am not aware of your client having an acceptable cause of action given that the costs order has nothing to do with my family law property matter. Your client was not a party to the proceedings.
5. You are not at liberty to seek to dictate what financial resources I use to pay the costs order - especially now that I have put you on notice that I will be having the costs assessed.
6. Therefore, any premature application, or any application, to the Court concerning a stay of the distribution of settlement monies will be defended and I will accordingly seek costs against your client in the event that he is unsuccessful.
Ms Owen was clearly within her rights in making the assertions in this letter. She once again clearly informed Ms Lewis that she would be applying for a cost assessment after receiving an itemised invoice. Although Ms Owen was obliged to Mr Owen under order 4 made by Lindsay J, the amount of the debt had not been determined. The debt could not be enforced until the amount was determined. Mr Owen did not have any right to force Ms Owen to pay the amount of $88,178.22 out of any fund available to Ms Owen, and, in particular, did not have any right to force her to pay him the unquantified debt in preference to any other creditors of Ms Owen whose debts may have been due and payable.
As the learned editors of Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th edition, 2014, LexisNexis Butterworths) say at [21-435]: "A Mareva order does not give a preference to the plaintiff over other creditors". While Mr Owen did have an order the fruits of which he had a right to protect, the jurisdiction to make an order must be exercised sparingly in circumstances and only where the defendant's dealing with the property is intended to defraud creditors.
On 18 April 2019, Ms Lewis sent an email to Ms Owen, with a copy to Mr Lake, which said:
I refer to your recent email correspondence requesting a copy of our tax invoices.
Could you please advise whether Mr Lake is still representing you in this matter or whether you have another solicitor acting on your behalf in Mr Lake's absence where we may direct correspondence?
It has also come to our attention that you will be overseas at the time of the scheduled settlement of the Forde property - could you please advise when you will be returning to Australia?
Ms Lewis said in evidence that she did not receive a response to this email.
Ms Owen gave evidence that, at the time of this email, she was on an overseas family holiday, and asserted that Mr Owen and Ms Lewis were aware of that fact and that she would not be in a position to respond.
It appears that nothing further happened until 26 April 2019, when Ms Lewis instructed her agent in the Australian Capital Territory to file and serve, on Ms Owen and the conveyancing solicitors, an Originating Process seeking injunctive relief preventing release of $131,000 to Ms Owen. Ms Lewis gave evidence that the amount of $131,000 was calculated on the basis that it covered Mr Owen's claim for $88,178.22 under the order made by Lindsay J, plus an estimated $40,000 for the further costs of the ACT proceedings.
On 26 April 2019, an email was sent, apparently by Ms Lewis' ACT agent, to a Senior Deputy Registrar of the ACT Supreme Court. A copy of the email was sent to Ms Owen and Mr Lake.
The email sought leave for the electronic filing of an Originating Application, a General Form of Judgment, and affidavits of Ms Lewis and Mr Owen.
The attachments to the email are not included in the annexure to Ms Lewis' affidavit in these proceedings.
The Originating Application is an annexure to the affidavit of Mr Owen that was read in evidence. It sought a freezing order against Ms Owen in respect of the value of the funds held by the conveyancing solicitors, which prevented Ms Owen from instructing the solicitors to transfer an amount up to $131,000 until further order of the Court.
The affidavits of Mr Owen and Ms Lewis were annexed to Ms Owen's affidavit in the proceedings.
Mr Owen's affidavit, affirmed on 24 April 2019, gave evidence of Mr Owen and his wife making a loan of $200,000 to Ms Owen and Matthew Owen to enable them to pay out a mortgage of $198,000 secured by the property whose proceeds of sale were intended to be the subject of the freezing order. The relevance of this evidence, save insofar as it might have confused the application, is obscure.
Ms Lewis' affidavit, affirmed on 26 April 2019, explained Mr Owen's claim for costs under Lindsay J's judgment, and gave an outline of the correspondence considered above, including that Ms Owen had confirmed her request for the costs to be assessed, and that she intended to seek a payment plan to pay the costs once assessed.
The affidavit said, in par 17, that Ms Owen had indicated that she had other debts and that she intended to give priority to payment of those debts over the debt due to Mr Owen.
It is to be noted that neither of the affidavits attached copies of the tax invoices relevant to Mr Owen's costs, or contained any explanation as to how those costs had been calculated.
On 29 April 2019, Murrell CJ made a freezing order on an ex parte basis limited to the amount of $110,000. The Originating Application was made returnable on 6 May 2019, and the order was given effect until that date.
There was no carve out for Ms Owen's legal costs or living expenses.
With all respect to Murrell CJ, I will not treat her Honour's preparedness to grant an ex parte freezing order on the material that was before her as signifying an acceptance by her Honour that the claim was a proper one. Rather, I would view it as being of the nature of ex parte freezing orders made from time to time by duty judges in this Court, whereby such orders are made for a very limited period to preserve the position pending the opportunity for the Court to consider on a proper basis, when the defendant is able to respond, whether it is appropriate to continue the freezing order.
On 29 April 2019, Ms Lewis sent an email to Ms Owen, with a copy to Mr Lake.
Ms Lewis referred to her 18 April 2019 email and noted that she had not received a reply from Ms Owen regarding whether Mr Lake was still acting on her behalf. Ms Lewis repeated her request for that information. She then said:
…
In the interim, please find enclosed by way of service a sealed copy of Orders made by the Supreme Court of the ACT today. We note that the matter has been listed for final hearing on 6 May 2019 at 11am.
On 1 May 2019, Ms Owen sent a further email to Ms Lewis, with copies to the solicitors at Ms Lewis' ACT agent, as well as counsel briefed for Mr Owen.
The email, which was set out as if written as a letter, relevantly said:
I refer to your email correspondence of 26 and 29 April 2019.
I can confirm I will be self representing in this matter as I can no longer afford any further legal fees.
I have been overseas from Thursday 18 April until Tuesday 30 May 2019. This was previously advised to Matthew Paul Owen on numerous occasions, the son of Paul Owen, whom I assume has passed this information onto Paul, your client.
Following court orders dated 29 April 2019, I confirm the following:
On 27 March 2019 I received an email from yourself with an attached letter claiming total costs incurred, excluding local court fees is $117,570.96, with 75% being $88,178.22 payable by myself. You requested I authorise to pay the sum claimed on disbursements of proceeds from the sale of 84 Max Purnell Street, Forde by 1 April 2019 otherwise you would take formal steps to recover the debt.
On 29 March 2019 I wrote to you via email requesting itemised invoices and advising I would be seeking an assessment of costs once received.
On 8 April 2019 I received an email from my property conveyancer, Diana Tozer advising they had received from yourself instructions to apply for an injunction in relation to the disbursement of the settlement of proceeds relating to the sale of 84 Max Purnell Street Forde.
On 9 April I wrote to you again via email requesting itemised invoices and advising I would be seeking an assessment of costs once received.
[Ms Owen then provided the information concerning her financial position required by order 7 of the freezing order made by Murrell CJ. That included that the total amount that Ms Owen expected to receive from the sale of the property was $132,212.26. Ms Owen said that her net assets were $61,316.77 in deficit].
As per Court order 8(b) objection, I provide the following:
1. You have failed to provide repeated requests for itemised invoices within legislative timeframes.
2. You have failed to provide an opportunity of assessment of costs
3. There is therefore no current discernible debt to be protected by your client.
4. I have confirmed upon receipt of an accepted Costs Certificate, I will of course discuss payment options with your office.
5. I am not aware of your client having an acceptable cause of action given that the costs order has nothing to do with my family property law matter. Your client was not a party to the proceedings.
6…
7. You are not at liberty to seek to dictate what financial resources I use to pay the cost order
8. You have no understanding of my personal circumstances financially and the events that have occurred during the court proceedings
As per court order 10 varied, I propose the following:
1. Your client files a Notice of Discontinuance;
2. I do not oppose the freezing Order in the amount of the original $88,178.22 claimed, until such time as the costs have been assessed for the estate matter.
3. Each party is to bear their own costs
4. You provide the requested itemised invoices by close of business on 2 May 2019
This offer is open for acceptance until close of business on 2 May 2019 after which it will be automatically withdrawn.
Should the offer not be accepted within the stated timeframe and I am successful in obtaining judgment in terms more favourable than the above then I shall rely on this letter in relation to any application for costs.
I look forward to hearing from you shortly.
It is little wonder that Ms Owen had to state that she would be representing herself in the matter as she could no longer afford any further legal fees. The effect of the freezing order had been to freeze $110,000 out of the only liquid fund of about $130,000 that she was expecting, without any carve out to enable her to pay her legal fees. Given the financial position disclosed by Ms Owen, she may well have found it difficult to afford legal representation anyway.
In due course, it will be necessary for the Court to consider the legal effect of relevant communications in detail. However, it is convenient to make some initial observations about aspects of the communications in the context in which they were made.
Plainly, Ms Owen reiterated her position concerning her intent to take steps to have the costs that she was obliged to pay to Mr Owen assessed.
In par 2 of Ms Owen's offer to settle the matter, she agreed not to oppose the original $88,178.22 being frozen until the assessment process had been completed.
It is obvious from the terms of Ms Owen's letter that her proposal for settlement was directed at the proceedings that Mr Owen had commenced in the ACT Supreme Court to freeze her assets, and not her entitlement to have the costs order assessed.
On 2 May 2019, Ms Lewis sent an email to Ms Owen to which she attached the tax invoices that Ms Owen had requested.
On 3 May 2019 at 10:07 AM, Ms Lewis sent an email in the following terms to Ms Owen:
Without prejudice save as to costs.
I refer to our correspondence of yesterday enclosing our tax invoices for the estate proceedings. As previously indicated 75% of our client's total costs of the proceedings in the Supreme Court of NSW are $88,178.22.
On 27 March 2019 we wrote to you offering that our client would accept this amount in final satisfaction of the costs order and requested that you provide an irrevocable authority to Snedden Hall and Gallop Lawyers to pay this amount from the sale proceeds of your property at 84 Max Purnell Street, Forde.
As you refused this offer, our clients were forced to commence proceedings in the ACT Supreme Court to seek a freezing order to protect the costs order of the NSW Supreme Court. This has caused our client to incur further costs.
In accordance with your legal rights you have indicated that you will be seeking assessment of our costs. While we are happy to comply with this request, we note that this process could take considerable time and may increase the costs payable by you at the end of the matter.
Despite this, it is our clients' preference for the matter to be conducted without the need for ongoing proceedings so that both parties can move on. We have therefore been instructed that our clients are willing to compromise and accept the following amount on a commercial basis by way of final settlement of all matters between the parties:
(a) You provide an irrevocable direction for Snedden Hall and Gallop Lawyers to transfer the amount of $95,000 to our trust account by 2:00pm this afternoon;
(b) Our client will agree to discontinue their application in the ACT Supreme Court for freezing of the balance of funds thereby saving the parties any further costs associated with these proceedings and the cost assessment;
We have attached an irrevocable direction to Snedden Hall and Gallup Lawyers to this email. If you are willing to accept our client's offer we request that you please sign the attached direction and forward it to Snedden Hall and Gallop before 2:00pm today. Once this has been received we will write to the Court on behalf of the parties and request that the hearing on Monday be vacated. This will save costs to both parties.
In the event that you do not agree to the above offer, we are instructed to proceed with the freezing order and shall seek to recover our client's costs of the proceedings against you. [Underlining added]
This is an unfortunate letter for Ms Lewis to have written to Ms Owen in circumstances where she had recently ceased to be legally represented, and Mr Owen had obtained a dubious freezing order against Ms Owen that froze all but about $20,000 of her expected liquid funds.
In my view, it is a mischaracterisation of Ms Lewis's 27 March 2019 letter to Ms Owen to describe it as an offer that Mr Owen would accept the $88,178.22 "in final satisfaction of the costs order", provided Ms Owen signed the irrevocable authority. The letter was a simple demand and contained no element of compromise.
Ms Lewis' 3 May 2019 email contained a clear acknowledgement that Ms Owen would be enforcing her legal rights by seeking an assessment of the costs.
However, the email made an offer in terms that are objectively capable of being understood as being an offer to settle all disputes between the parties. The aspects of the email that I have underlined would probably be understood by many persons, particularly lawyers, as being intended to mean that the offer of settlement was to apply to both the freezing order proceedings and Mr Owen's entitlement to be paid a portion of his costs in the probate proceedings.
Ms Owen did not respond to Ms Lewis' offer by 2 PM on 3 May 2019.
On Friday 3 May 2019 at 3:34 PM, Ms Owen replied to Ms Lewis' email by saying:
I have just read your email and agree to your offer. Unfortunately I do not have access to a printer until Monday morning to print and sign the attachment. However I am hoping this email will suffice until Monday morning.
Viewed in isolation, this response by Ms Owen to Ms Lewis' earlier email of the same date would appear to be an acceptance of the offer made in that email, so that the existence and terms of any contract between the parties would depend upon the proper legal analysis of the two emails.
Ms Lewis gave evidence in her 28 October 2019 affidavit, at par 35, of a conversation that she had with Ms Owen at about 4:50 PM on 3 May 2019, after Ms Lewis received Ms Owen's acceptance email:
Lewis: I have just received your email stating that you would like to accept our offer?
Owen: Yes, I do not want to travel to Canberra on Monday, and I do not want to spend all weekend preparing for this. I just want it over.
Lewis: Paul would like it to end as well. It has all gone on for too long now.
Owen: I do not have access to a printer. I received your email on my phone and the only way I can print the authority is when I go to work on Monday morning.
Lewis: The matter is listed in Court at 11:00am on Monday. Given that it is already so late in the day, Ms Lee is going to travel to Canberra to attend Court anyway. If you can return the signed authority to us, and to Snedden Hall & Gallop Lawyers, first thing Monday morning so that they can release the funds to us before about 9:30am, we will discontinue the matter by consent and not seek additional costs.
Owen: Yes, I can get into work about 7:00am and will do it straight away.
Lewis: You may need to call Snedden Hall & Gallup to confirm your instructions to release the funds to us once you have sent the authority back to them. That way they know the matter is urgent. If we do not receive the funds in time, we will proceed with seeking a final Order and will also seek an Order for costs.
Owen: Yes, it will be done early on Monday.
Lewis: I will send you an email this afternoon confirming this.
On a fair reading of this conversation, it would be understood by most reasonable objective observers as only being concerned with the settlement of Mr Owen's claim for a freezing order. There was no explicit reference to the settlement of Mr Owen's claim for legal costs, and the only inferential reference to this claim may have been Ms Lewis' statement: "It has all gone on for too long now". In my view, the primary focus of the conversation was the resolution of the freezing order application.
The terms of this conversation show that Ms Lewis did not treat Ms Owen's acceptance email as having created an immediately binding contract enforceable by both parties. Ms Lewis made it clear that Mr Owen would make his application for a freezing order on the following Monday, and seek an order for costs against Ms Owen, if the irrevocable authority was not provided by 9:30 AM on Monday morning.
It is unfortunate that Ms Lewis conveyed to Ms Owen that an order for costs would be sought. It is most unlikely that the Court would have made an order for costs against Ms Owen on such an interlocutory application, even if it had extended the freezing order. The most probable order that the Court would have made, if Mr Owen had succeeded in obtaining an order extending the freezing order, is an order that Mr Owen's costs be costs in the cause: Baller Industries Pty Ltd v Mero Mero Leasing Pty Ltd [2019] NSWSC 1067 per Ward CJ in Eq at [18]. A possible alternative would be an order that Mr Owen's costs be the plaintiff's costs in the cause: see His Eminence Metropolitan Petar, Dieses and Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Incorporated (No 2) [2007] NSWCA 142 at [23]-[27]. It is most unlikely that, if Ms Owen did not contest the application, the Court would have made an interlocutory costs order against her.
Ms Owen dealt with the events of 3 May 2019 in pars 35 and 36 of her affidavit.
She said that she accessed Ms Lewis' 3 May 2019 email after the 2 PM deadline. Before she sent her email to Ms Lewis at 3:34 PM, she contacted Ms Lewis' office and was informed that Ms Lewis was not currently available. She said to the person to whom she spoke that she wanted to discuss the court proceedings the next Monday and the email received from Ms Lewis. She told the person that, as she said in her affidavit, "the email and offer outlined in the 'Irrevocable Authority and Direction' were confusing and inconsistent", but that she understood that the offer had expired. Ms Owen then gave evidence: "I confirmed I would agree to paying $95,000 into trust, however would like to discuss the terms with Ms Lewis". Ms Owen then said: "It was requested that I send an email to Ms Lewis confirming acceptance of the $95,000 offer and advised they would contact Ms Lewis to request a call back to discuss and confirm the terms, given the timing of events".
The terms of this conversation may be relevant to the legal significance of what would otherwise appear to be Ms Owen's unqualified acceptance email. Ms Owen said to the person in Ms Lewis' office that she found the terms of the offer "confusing and inconsistent". Ms Owen said that she wished to discuss the terms. It was in this context that Ms Owen was advised to send the acceptance on the basis that Ms Lewis would call her back "to discuss and confirm the terms".
Ms Owen's evidence that she spoke to someone in Ms Lewis' office is confirmed by an email at 4:10 PM on Friday 3 May 2019 from Di Kennedy in "Conveyancing", which said in the subject line: "Amanda Owen … - Please call about Court on Monday".
Ms Owen gave the following evidence concerning her discussion with Ms Lewis later on 3 May 2019:
Ms Lewis contacted myself at 4:45pm on 3 May 2019 following request from her office. I confirmed I was not happy that a freezing order has been made while I was overseas and when invoices and a cost assessment has not yet occurred and couldn't understand how this can occur. Ms Lewis confirmed the Plaintiff was concerned how I was going to pay the costs and this was why a freezing order had been instigated. I confirmed the email and actual offer 'Irrevokable (sic) Authority and Direction' were confusing and inconsistent, however understood this had now expired. I confirmed not having enough leave to attend court in Canberra on Monday 6 May 2019, nor could arrange or afford legal representation to attend on my behalf. I confirmed standing by my previous offer on the 1 May 2019, whereby I was willing to request transfer of the claimed amount of $88,178.22 into their trust account if the Plaintiff filed a notice of discontinuance. However, given the timing of events, circumstances and the amount the Plaintiff claimed, I would agree to $95,000 to be held in trust if the Plaintiff would not be pressing the Order or seeking costs of the Order for the Supreme Court ACT matter only. Ms Lewis agreed and confirmed the money would be held in trust and wanted myself to sign the previous 'Irrevocable Authority and Direction' and return it to her to accept the offer discussed. I confirmed I had no access to a printer however would complete this on Monday morning around 7am when in the office next. There were no other agreements that the cost assessment would not take place or that all matters between the parties had been finalised. I requested Ms Lewis to put everything in writing as to what was discussed and agreed. Ms Lewis confirmed she was already going to do this. Ms Lewis also confirmed she would require the signed 'Irrevocable Authority and Direction' before 9.00am and requested that I call Snedden Hall & Gallop first thing Monday morning to confirm the direction to pay $95,000 into their trust account. A few minutes after the phone call ended an email was received from Ms Lewis outlining the agreement that was reached.
According to this evidence, Ms Owen advised Ms Lewis that she found the 3 May 2019 offer email "confusing and inconsistent". Ms Owen deposes to the making of an oral agreement in which she agreed to the amount being held in trust by Mr Owen's solicitors being increased to $95,000, but this was on the condition that the application for a freezing order and costs not be pursued, and did not involve a compromise of the dispute concerning the amount of the costs payable by Ms Owen to Mr Owen.
Mr Owen did not cause Ms Lewis to make an affidavit in reply to pars 35 and 36 of Ms Owen's affidavit, so that, even though Ms Owen's account is somewhat different to the evidence given by Ms Lewis in her affidavit, Ms Lewis has not specifically contradicted any of the evidence in response given by Ms Owen.
At 5:01 PM on 3 May 2019, Ms Lewis sent an email in the following terms to Ms Owen:
Further to our discussion, I confirm that if you are able to sign the irrevocable authority and return it to me by email before 9:00am on Monday (6 May 2019) and then call Snedden Hall & Gallop to confirm your direction to pay the funds to our trust account, our barrister, Ms Lee, will mention the matter on your behalf and advise the Court that we have received payment and will not be pressing the Order. We also confirm that on this basis we will not be seeking costs of the Order.
If we do not receive the written authority and confirmation from Snedden Hall & Gallop that they have your verbal authority from you to release the funds by 9:30am we will need to proceed with the application at 11:00am.
If you have any issues with signing the documents on Monday morning please call me immediately on 0427 561 707.
The terms of this email are at least consistent with Ms Owen's evidence concerning her conversation with Ms Lewis. The email deals with the determination of the application for a freezing order, and says nothing about the dispute concerning the costs payable by Ms Owen to Mr Owen.
At 7:56 AM on Monday 6 May 2019, Ms Owen sent an email to Ms Lewis and Ms Owen's conveyancing solicitor, which said:
Please find below a signed irrevocable direction to Snedden Hall and Gallop Lawyers directing to immediately pay the sum of $95,000.00 to Walsh & Associates Lawyers and Conveyancers Trust Account on behalf of Paul Owen.
Unfortunately my work scanner is not working and given the current circumstances I am hoping the below will suffice.
@Cherri Can you please confirm with both myself and Diana Tozer that the hearing scheduled today has been vacated and the freezing order lifted?
@Property User Diana, I have left a message with yourself, I understand you are not in the office until 9am. Can you please give me a call on … once you receive this message.
The Irrevocable Authority and Direction addressed by Ms Owen to her conveyancing solicitors stated:
1. I, Amanda Amy Owen hereby irrevocably authorise and direct my solicitors Snedden Hall & Gallop to immediately pay the sum of $95,000.00 to Walsh & Associates Lawyers and Conveyancers Trust Account on behalf of Paul Owen from funds held by you on my behalf arising from the sale proceeds of my property at 84 Max Purnell Street, Forde, ACT.
2. I, Amanda Amy Owen acknowledge that I am unable to revoke this authority and it is on this basis that Paul Owen has agreed that payment to them in accordance with the event of settlement of the sale.
3. The agreement constituted by this irrevocable authority is acknowledged by the signing hereof by myself, by Walsh and Associates Lawyers and Conveyancers on behalf of Paul Owen.
On 6 May 2019 at 12:51 PM, Ms Lewis forwarded to Ms Owen an email received from Ms Lewis' Canberra agent, which advised that the Supreme Court had made the following orders by consent:
1. Freezing order made on 29 April 2019 be vacated;
2. Application filed on 26 April 2019 be dismissed; and
3. No orders as to costs of the Application, including the freezing order.
On 17 May 2019, Ms Owen sent a lengthy email to Ms Lewis that attached a Costs Assessment Application in respect of order 4 made by Lindsay J on 11 March 2019 and related documents.
Ms Owen then set out a summary of the history of the communications that she had had with Ms Lewis, and then continued:
… On 3 May 2019 you wrote to me requesting I sign an irrevocable direction to Snedden Hall and Gallop Lawyers for the value of $95,000.00. Once received you confirmed you would write to the Court on behalf of the parties and request that the hearing on Monday be vacated.
On 3 May 2019 I wrote to you and confirmed I would accept the offer, however was not in a position to sign and scan the irrevocable direction to Snedden Hall and Gallop Lawyers until Monday 6 May 2019.
On 3 May 2019 you wrote to me and confirmed that if I sign the irrevocable authority and return it to yourself by email before 9:00am on Monday 6 May 2019 and then call Snedden Hall & Gallop to confirm my direction to pay the funds into your trust account, your barrister, Ms Lee, will mention the matter on my behalf and advise the Court that you have received payment and will not be pressing the Order. You also confirm that on this basis you would not be seeking cost of the Order.
On 6 May 2019 I wrote to you and provided a signed irrevocable authority and direction for $95,000.00 to be paid to your trust account and confirmed that I had contacted Snedden Hall & Gallop as requested. Please see Attachment 6 - Email re Irrevokable authority and direction …
On 6 May 2019 you wrote to me and confirmed settlement funds had been received and that the Applicant does not press the continuation of the freezing order. As a result, Orders were made as follows:
1. Freezing order made on 29 April 2019 be vacated;
2. Application filed on 26 April 2019 be dismissed; and
3. No orders as to costs of the Application, including the freezing order.
Following review of the provided itemised invoices and information I (sic) contained, I can now confirmed (sic) the following amounts are objected by myself, the Costs Applicant …
Ms Owen then set out a schedule that broke up the amounts of costs claimed by Mr Owen into various categories, stated the amounts objected to, and then described the basis of the objections in short form under the heading "Objection Code". Ms Owen objected to $109,856.65 of the total claimed, which was put at $132,738.91.
Ms Owen attached a full breakdown of her objections to the costs claimed by Mr Owen to her email, and then advised that under the Legal Profession Uniform Law Application Regulation 2015, Mr Owen had 21 days to provide any objection or information. Ms Owen said she would then proceed to lodge the application for the cost assessment.
Ms Owen responded to this email on 7 June 2019. Among other things, she relied upon the terms of the 3 May 2019 email to Ms Owen, particularly the words "by way of final settlement of all matters between the parties" and "[save] the parties any further costs associated with these proceedings and the cost assessment", to support her conclusion that: "You are now not entitled to apply for costs assessment of the NSW proceedings as you gave up that right by agreeing to our client's offer to settle on 3 and 6 May respectively…"
Ms Owen made a costs assessment application dated 8 June 2019.
On 4 September 2019, the costs assessor appointed to deal with Ms Owen's application advised the parties that he had no power to determine the question of whether there had been a settlement between the parties and that he would continue with the assessment.
Mr Owen pleaded the making of the contract with Ms Owen that he seeks to enforce in these proceedings in par 13 of his statement of claim, as follows:
13. On 3 May 2019, the Plaintiff and Defendant reached an agreement to settle all matters between the parties.
Particulars of Agreement
a. On 3 May 2019, Ms Lewis emailed the Defendant on the behalf of the Plaintiff with an offer of compromise, to settle all matters between the parties.
b. The terms of the offer were:
i. that a sum of $95,000 is payable to the plaintiff on a commercial basis by way of final settlement of all matters between the parties;
ii. the Defendant to provide an irrevocable direction for Snedden Hall and Gallop Lawyers (the lawyers engaged to sell the property) to transfer the amount of $95,000 to Walsh and Associates Trust account on behalf of the Plaintiff; and
iii. the Plaintiff agrees to discontinue the application in the ACT Supreme Court for freezing of the balance of the funds without any further order for costs.
c. On 3 May 2019 at 15:34, the Defendant responded to Ms Lewis' email unequivocally accepting the offer, stating that "I have just read your email and I accept your offer";
d. Following receipt of the Defendant's correspondence, Ms Lewis telephoned the Defendant to arrange the logistics of finalising the settlement and then confirmed those logistics in a further email to the Defendant at 17:02 on 3 May 2019.
Mr Owen alleged in par 14 that, on 6 May 2019, performance of the contract was completed which settled all matters between the parties.
Paragraph 15 of the statement of claim makes clear that Mr Owen's case is that the contract was made finally on 3 May 2019. There, Mr Owen alleged that he acted in reliance upon the matters being settled between the parties, principally by discontinuing the proceedings in the ACT Supreme Court, without any order as to costs and releasing the additional frozen monies. Particular (a) to that allegation was: "On 3 May 2019, the defendant unequivocally accepted the offer made by the plaintiff".
In her defence, Ms Owen denied that she had made an agreement with Mr Owen, as alleged by him, to settle all matters between the parties.
Ms Owen responded, in par 14 of her defence, by relying upon Ms Lewis' 3 May 2015 email at 5:01 PM, to allege that the true agreement was that Mr Owen's application for a final freezing order would be settled on the basis that Ms Owen would give an irrevocable authority to her conveyancing solicitors to pay $95,000 of Ms Owen's share of the net proceeds of sale into Ms Lewis' firm's trust account, to be held pending the completion of the costs assessment that Ms Owen had stated she intended to commence.
Before I begin the consideration of which of these competing claims is correct as a matter of law, it will be appropriate that I deal with a preliminary matter.
In her brief written submission provided to the Court by email on 26 February 2020, Ms Owen submitted: "2. $95,000 paid was under duress where there has been threatened pressure and unlawful conduct from the Plaintiff and the Plaintiff's solicitor…".
Ms Owen did not raise the issue of duress or any other vitiating factor in her defence. Ms Owen did allege, in par 9, that Ms Lewis forwarded correspondence to her directly while Mr Lake was still acting for her, and that that was a breach of the relevant Solicitors Conduct Rules. That allegation is not, however, one that in the circumstances of this case is capable of vitiating any contract that may have been made between the parties.
It may be true that Ms Owen correctly asserted to Ms Lewis that she had a statutory right to a costs assessment, that the amount of her debt to Mr Owen would not be ascertained until the completion of that process, and Mr Owen had no right to force Ms Owen to pay him the money he claimed, before the completion of the assessment process, in preference to her other due and payable debts. Ms Owen did not threaten to dissipate her funds to deny Mr Owen the fruits of his judgment. She candidly advised that her obligation to pay creditors whose debts were currently due might make it necessary for her to access a payment plan so that she could pay her debt to Mr Owen, after the completion of the costs assessment. Mr Owen's application for a freezing order was the antithesis of when such an order should properly be sought. Ms Lewis, on Ms Owen's behalf, nonetheless threatened to prosecute the application on 6 May 2019, knowing that Ms Owen could not afford legal representation and that she could not get time off work to appear for herself. To the extent that Mr Owen incurred further legal fees on the freezing order application, he achieved an outcome to which he was not entitled.
Nonetheless, the application for a freezing order was a claim by Mr Owen that was capable of forming the basis of a valid contractual compromise. The fact that Mr Owen's conduct placed Ms Owen at a considerable practical disadvantage does not, of itself, prevent a finding that a contract had been made in the absence of a pleaded claim by Ms Owen that any such contract was vitiated by some principle of law.
The reality of the circumstances in which Ms Owen found herself may nonetheless have some relevance, as being part of the factual context, to the application of the principles that govern when a binding contract is formed between parties. That is a matter that is best left for consideration when those principles are considered.
The general principle is that a binding contract is made between parties, after one of the parties makes an offer of the terms for the agreement, when the other party accepts the offer: J D Heydon, Heydon on Contract (2019, Thomson Reuters) at [2.10] (Heydon on Contract). There are cases when the evidence does not establish the making of an offer and its acceptance, but the Court can properly infer from the circumstances that the parties entered into a binding contract. This exceptional circumstance does not arise in the present case.
Mr Owen's case is that Ms Lewis' email sent at 10:07 AM on 3 May 2019 was a valid offer: see par 56 above. The legal meaning of that email does not depend upon how either party subjectively understood it. Rather, "[t]he legal rights and obligations of the parties turn upon what their words and conduct would reasonably be understood to convey, not upon actual beliefs or intentions": Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 at [34] per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ.
In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 (ABC v XIVth), Gleeson CJ, with whom Hope and Mahoney JJA agreed, approved an extract from the speech of Lord Diplock in Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 at 502, where his Lordship said:
… What he promised is determined by ascertaining what his words and conduct would have led the buyer reasonably to believe that he was promising. That is what is meant in the English law of contract by the common intention of the parties. The test is impersonal. It does not depend upon what the seller himself thought he was promising, if the words and conduct by which he communicated his intention to the seller would have led a reasonable man in the position of the buyer to a different belief as to the promise; nor does it depend upon the actual belief of the buyer himself as to what the seller's promise was, unless that belief would have been shared by a reasonable man in the position of the buyer…
The meaning of Ms Lewis' 3 May 2019 must be determined by applying this principle, which requires an assessment of how the email would have been understood by a reasonable person in the position of Ms Owen.
Ms Owen returned to Australia from a family holiday overseas on about 1 May 2019, to learn, by means of an email from Ms Lewis on 29 April 2019 that, on that date, the ACT Supreme Court had made a freezing order against her in the amount of $110,000, and that the final hearing of the application would be on 6 May 2019. Ms Owen was not able to afford legal representation, and must have been in a quandary. Ms Owen responded by email on 1 May 2019, which summarised preceding correspondence, complied with the injunction in the interim freezing order that she provide information concerning her financial affairs, and made an offer that she would not oppose the making of a freezing order for the amount of costs claimed by Mr Owen, pending the assessment of the costs order: see par 49 above.
It was in this context that Ms Owen received Ms Lewis' 3 May 2019 email.
Although Ms Owen must have been at a disadvantage when she received Ms Lewis' email, in respect of understanding its meaning, that meaning must be determined on the basis of "what was the fair meaning of the offer addressed to persons of ordinary intelligence": Maskelyne v Stollery (1899) 16 TLR 97 at 99 per Lord Macnaghten, as cited in Heydon on Contract at [2.50] fn 14.
Looking at the 3 May 2019 email in isolation, it is reasonably clear that Ms Lewis began by referring to Mr Owen's claim for costs of $88,178.22, and then asserted in the second paragraph that she had, on 22 March 2019, made an offer that Mr Owen would accept this amount in final satisfaction of the costs order. It may be, as I have said above, that on 22 March 2019 Ms Lewis made a demand on behalf of Mr Owen, rather than an offer, but it is clear that Ms Lewis was referring to Mr Owen's claim for the legal costs.
Ms Lewis then wrongly asserted that, because Ms Owen refused the offer, Mr Owen was "forced to commence proceedings… to seek a freezing order", which had caused Mr Owen to incur further costs. Mr Owen was not forced to do anything, and availed himself of the process to gain a preference over other creditors.
Ms Lewis then referred to Ms Owen's legal right to seek an assessment of the costs but said "we note that this process could take considerable time and may increase the costs payable by you".
In the next paragraph, Ms Lewis referred to "our clients' preference for the matter to be conducted without the need for ongoing proceedings so that both parties can move on". The word "matter" is in the singular. Ms Lewis continued by referring to the willingness of Mr Owen "to compromise and accept the following amount on a commercial basis by way of final settlement of all matters between the parties". Depending on the meaning of "matters", in the plural, this statement does suggest a commercial outcome and a final settlement of those matters.
Finally, for present purposes, sub-paragraph (b) referred to the discontinuation of the freezing application "thereby saving the parties any further costs associated with these proceedings and the cost assessment".
I conclude that, on balance, a reasonable person of ordinary intelligence in the position of Ms Owen would, notwithstanding her difficult circumstances, have understood that Ms Lewis was offering on behalf of Mr Owen to settle finally both Mr Owen's claim for costs and the application for the freezing order.
Ms Owen's reply to Ms Lewis' email, on 3 May 2019 at 3:34 PM, included the words "and agree to your offer": see par 62 above.
I respectfully accept the statement of principle in Heydon on Contract at [2.300]: "Acceptance of an offer (or counter-offer) is conduct which, to a reasonable person in the position of the offeror, is a final and unqualified expression of assent to the terms of the offer (or counter-offer)".
On that principle, Ms Owen's reply email, considered in isolation and interpreted objectively, was an acceptance of the offer made earlier that day by Ms Lewis on behalf of Mr Owen.
However, I also respectfully accept the statement made in Heydon on Contract at [2.300]: "… Sometimes, however, communications might suggest a contract if they were the only materials to be considered, but other parts of the negotiations reveal that in truth matters were not settled between the parties at that point".
This proposition arises out of observations made in the speeches of Earl Cairns LC and Lord Selborne in Hussey v Horne-Payne (1879) 4 App Cas 311 at 316 and 323 respectively.
The Lord Chancellor said at 316:
… The second requisite in this case he proposes to supply through the medium of letters which passed between the parties, and it is one of the first principles applicable to a case of the kind that where you have to find your contract, or your note or memorandum of the terms of the contract in letters, you must take into consideration the whole of the correspondence which has passed. You must not at one particular time draw a line and say, "We will look at the letters up to this point and find in them a contract or not, but we will look at nothing beyond." In order fairly to estimate what was arranged and agreed, if anything was agreed between the parties, you must look at the whole of that which took place and passed between them.
This statement of principle, and the equivalent one made by Lord Selborne at 323, has been followed in the authorities cited in Heydon on Contract at fn 248.
The following statement of principle by Gleeson CJ in ABC v XIVth at 549 to 550 is also material:
This is not a case in which the parties have signed a single document which, because it contains some such expression as "subject to contract", gives rise to the problem in question. In such a case, the outcome of which will ordinarily turn upon the construction of the single document referred to, questions may arise as to the admissibility of extrinsic evidence in aid of the construction of the document: see Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 per Hope JA. The case involves the objective determination of the intention of the parties from a consideration of a series of communications exchanged by them in the context of their dealings over a period of time. In those circumstances it is both appropriate and necessary to have regard to the commercial circumstances surrounding the exchange of communications and, in particular to the subject matter of those communications: Allen v Carbone (1975) 132 CLR 528 at 531-532. Furthermore, as was noted earlier, it is proper to have regard to communications between the parties subsequent to the date of the alleged contract to the extent to which those communications throw light upon the meaning of the language which is being considered for the purpose of determining whether it expresses an intention one way or the other upon the critical matter. At the least, such subsequent communications will often form part of the context in which the particular exchanges in question are to be evaluated.
The consequence is that it is necessary to look at the whole of the evidence of what happened on 3 May 2019, and then on 6 May 2019, before any decision is made that the apparent offer and acceptance that occurred on 3 May 2019 created a binding contract on the terms set out in the offer.
Ms Owen gave evidence that, before she sent the putative acceptance to Ms Lewis, she called Ms Lewis' office for the purpose of talking to her about the terms of the putative offer: see par 69 above. I accept that some such conversation occurred, as the fact is corroborated by the internal office email that is referred to above at par 71. It appears that Ms Owen spoke to Di Kennedy.
I accept, as a fact, that Ms Owen had a conversation with a representative of Ms Lewis' office in the terms to which she deposed. Her evidence was not contradicted in Mr Owen's case. In cross-examination at T 14.30, Ms Owen was asked in relation to her evidence concerning the phone call to Ms Lewis' office: "Do you have any evidence to back that up?" Ms Owen accepted that she did not. As I have said earlier, there was objective evidence to corroborate the fact that some conversation took place - the only question was what was said. Although during the course of the hearing, Ms Owen clearly appeared to be upset, she struck me as a candid and intelligent person.
Importantly, Ms Owen told the person to whom she spoke that the terms of the email and offer "were confusing and inconsistent". Ms Owen was asked to send an email to Ms Lewis confirming acceptance of the offer, and advised that Ms Lewis would call back "to discuss and confirm the terms".
Although it has not been shown that the person to whom Ms Owen spoke had any particular authority to act for Mr Owen, the fact is that Ms Lewis' firm had an arrangement whereby the person to whom Ms Owen spoke did more than simply say that she would arrange for Ms Lewis to return Ms Owen's call. She gave advice to Ms Owen as to how she should respond to the offer, and as to what would then happen. In my view, this evidence may properly be taken into account in deciding whether, in fact, the putative acceptance was "a final and unqualified expression of assent to the terms of the offer".
Although that question is an objective one, and depends upon how a reasonable person in the position of the offeror would understand the terms of the apparent acceptance, I consider that Ms Owen was entitled to assume, given the circumstances in which the person in Ms Lewis' office had spoken to her, that what was said would be fully conveyed in substance to Ms Lewis, so that Ms Lewis would have that information when she considered the significance of Ms Owen's reply email.
It is appropriate, at this point, to make some observations concerning the reality of Ms Owen's assertion that she found the terms of Ms Lewis' offer to be confusing and inconsistent. That is relevant to, among other things, the likelihood that Ms Owen had the conversation that she deposed to.
First, the offer email was made in the immediate context of the imminence of the final interlocutory hearing of the freezing order application on 6 May 2019. That was the immediate issue to be addressed.
Mr Owen had made a claim that he was entitled be paid $88,178.22 in costs, but Ms Owen had made it as plain as she could that she intended to avail herself of her statutory right to have the costs assessed.
The email was written "without prejudice save as to costs". To a lawyer, that meant that it was a Calderbank offer. Calderbank offers are made in respect of particular proceedings. Calderbank offers may be effective if they relate to the proceedings at hand, but an offer that throws in an offer to settle unrelated proceedings is unlikely to be effective. As a layperson, Ms Owen would not have understood these subtleties, but they at least support her assertion that she was confused by the terms of the email.
Then, it appears that Ms Lewis was saying that Mr Owen would accept $95,000 as a commercial settlement for a $88,178.22 claim. Even assuming that Mr Owen had a basis for believing that he would be awarded the costs of the application for a freezing order, the supposed commercial offer involved no real element of compromise.
The email spoke in terms of "matters". Clearly the application for the freezing order was, as lawyers would understand, a current matter. Lawyers should be careful before they assume that laypeople understand what matters are. Although Mr Owen had a right against Ms Owen that she pay a proportion of his costs of the probate proceedings, which was no longer a matter because the proceedings had been dismissed, strictly, Ms Owen might not have appreciated that her desire to have the costs assessed was also a matter, because she had not initiated the assessment process.
Finally, in its context, the offer came out of the blue, so to speak. Ms Owen had only very recently received copies of the tax invoices from Ms Lewis, even though she had been requesting them for some time. Ms Owen had not been given enough time to analyse the tax invoices and form her own view, perhaps necessarily with some advice, as to what might reasonably be challenged.
Consequently, while superficially Ms Owen's 3 May 2019 offer may appear to be an objectively constructed offer applying to the two outstanding disputes, it was made at a time when Ms Owen was not realistically in a position to give it proper, objective thought.
An offeree who expresses a final and unqualified assent to the terms of an offer, which the offeree does not subjectively understand and finds confusing, will be bound it in law by the terms of the offer.
However, that is not what happened in this case. Ms Owen said to the person to whom she spoke before she sent her reply email that she found the offer inconsistent and confusing, and was told to confirm acceptance of the offer on the basis that Ms Lewis would call back to discuss and confirm the terms.
In those circumstances, I find that Ms Owen's reply email was not a final and unqualified expression of assent to the terms of the offer, notwithstanding that, viewed in isolation, the conclusion that it was a final and unqualified expression of assent would be unavoidable.
Further, Ms Owen gave uncontradicted evidence of the terms of her conversation with Ms Lewis at 4:45 PM on 3 May 2019: see par 72 above. Ms Owen repeated that the email and the offer were confusing and inconsistent.
Although this conversation occurred after the receipt by Ms Lewis of Ms Owen's 3 May 2019 reply, it is relevant because it is part of the whole of the dealings between Ms Lewis and Ms Owen that shows that the parties did not at the time intend, or understand, that Ms Owen's reply was an effective acceptance that created a final and binding contract at that time.
The reason is that, in fact, the parties did not treat the reply email as having created a final and binding contract at that time.
Ms Owen's evidence was that Ms Lewis agreed to hold the $95,000 in trust, if Mr Owen did not press the application for a freezing order, and that Ms Owen was to sign the Irrevocable Authority and Direction "and return it to her to accept the offer discussed".
Ms Lewis' evidence concerning this conversation is set out at par 64 above. One of the things that Ms Lewis claims to have said was: "… If you can return the signed authority to us… first thing Monday morning so that they can release the funds to us before about 9:30 AM, we will discontinue the matter by consent and not seek additional costs".
Ms Lewis did not assert that there was already a binding agreement, and she reserved the right to continue the application for the freezing order unless the Irrevocable Authority and Direction was received and confirmed on the Monday morning.
As I have observed above at par 65 , on Ms Lewis' version of the conversation, nothing was said about settling Mr Owen's claim for costs. It is most likely that Ms Lewis had in her own mind that that aspect of the proposed settlement was already understood by Ms Owen, and if the agreement became binding on 6 May 2019, because Ms Owen provided the Irrevocable Authority and Direction, any agreement that was made would settle the cost claim as well as the application for the freezing order. But Ms Lewis did not claim to have made any statement to that effect during the conversation.
The terms of the email that Ms Lewis sent to Ms Owen, in response to the conversation, are set out above at par 75. The email dealt solely with the settlement of the application for the freezing order.
Ms Lewis may well have had the subjective understanding that her email only concerned the mechanical aspects of settling the application for the freezing order, and that, by inference; any contract that arose would extend to the settlement of the cost claim as well. However, nothing was said about the latter issue, and a person in Ms Owen's position could reasonably have understood that the only aspect of the settlement that was then being proceeded with was the settlement of the application for the freezing order.
After all, Ms Owen had agreed that $95,000 of her funds would be held on trust by Ms Lewis' firm, and that was more than the whole of Mr Owen's claim.
Ms Owen made an application for an assessment of the costs that she owed to Mr Owen on 8 June 2019, after she had sent the email to Ms Lewis on 17 May 2019 giving notice of her intention to do so, and giving Mr Owen his statutory entitlement to reply. Ms Owen took that course notwithstanding the events of 3 and 6 May 2019. I am satisfied that this evidence shows that Ms Owen subjectively believed that she had not settled her claim to be entitled to apply for an assessment of the costs. Further, I am satisfied that Ms Owen would not have applied for the costs assessment if she had understood that she had bargained away her right to do so. Ms Owen's subjective understanding is not directly relevant to the question of the terms of the contract that was made on 3 or 6 May 2019. However, I consider that it provides some corroboration for Ms Owen's version of the discussions that took place on 3 May 2019.
While the wording of the two 3 May 2019 emails are clear, even if the meaning of the offer email could be confusing to a lay reader, the Court is in a position to construe the meaning of those emails. The evidence establishes, however, that those emails were exchanged in the context of conversations. There is only one version in evidence of the conversation that Ms Owen had with the person in the office of Ms Lewis before the acceptance email was sent. There are differences in the recollection of Ms Owen and Ms Lewis concerning the later conversation, although those differences are not acute, and neither witness said that there was any further conversation about settling the cost claim.
Mr Owen, as the plaintiff, has the burden of proving the terms of the contract. As I have accepted the evidence given by Ms Owen, and as I have concluded that Ms Owen's reply email on 3 March 2019 did not create a final and binding contract at that time, I find on the evidence that Mr Owen has not established, on the balance of probabilities, that the contract that was no doubt created when Ms Owen delivered the Irrevocable Authority and Direction, and the ACT Supreme Court proceedings were dismissed, included a term that Ms Owen abandoned her right to pursue a costs assessment in relation to the costs that she had been ordered to pay to Mr Owen.
Accordingly, I dismiss the proceedings. If Ms Owen has incurred any legal costs of the proceedings, she is entitled to an order that Mr Owen pay those costs on the ordinary basis. I order the plaintiff to pay the defendant's costs of the proceedings.
[3]
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Decision last updated: 19 March 2020