By Statement of Claim filed on 21 December 2017, the Plaintiffs ("Leahy parties") claim a declaration that an agreement to settle a dispute in proceedings in the New South Wales Civil and Administrative Tribunal ("NCAT") is valid and enforceable and ought to be specifically performed and an order for specific performance of that agreement. By Notice of Motion filed on 21 December 2017, the Leahy parties sought an order that the NCAT proceedings be stayed pending determination of these proceedings or such other order of the Court. The Leahy parties were insistent upon the fact that the matter was listed today for determination of that motion only, and not for determination of the ultimate claims made in their Statement of Claim.
The parties gave little attention, in the course of submissions, to the basis of the Court's jurisdiction to stay the NCAT proceedings. I will proceed on the basis that it is at least necessary for the Leahy parties to establish that there is a serious question to be tried that there is a valid and enforceable settlement agreement between the parties in the NCAT proceedings and that the balance of convenience warrants the stay. It seems to me that those propositions must, at least, be uncontroversial, since it is difficult to see why the Court would stay the NCAT proceedings if there was no seriously arguable claim that there was an enforceable settlement agreement or if the balance of convenience did not warrant the grant of the stay.
The approach which the parties have adopted does have one difficulty, however, to which I drew attention in the course of submissions. The Court has been taken to all, or virtually all, of the evidence which would be necessary to determine this claim on a final basis, and the parties have spent as long in evidence and submissions as they would be expected to take if this matter were being determined on a final basis. Nonetheless, the matter is not being determined on a final basis, and there remains the risk that, if the Court reaches a decision adverse to the Leahy parties on an interlocutory basis, they could pursue this application at the same time as the NCAT proceedings, which would not have been stayed, were pursued by the Defendants, who are the applicants in the NCAT proceedings ("Hill parties"). That would have the consequence that the parties would incur the costs of pursuing two parallel proceedings, one of which would almost inevitably be wasted, depending upon the final outcome. It is to be hoped that common sense, the parties' interest in avoiding unnecessary costs and the legal representatives' obligations to promote the just, quick and cheap resolution of the real issues in dispute in the proceedings, under s 56 of the Civil Procedure Act 2005 (NSW) would avoid that result. I nonetheless have regard to the possibility of that result in determining whether to stay the NCAT proceedings.
The Leahy parties rely on the affidavit of their solicitor, Mr Hadi Boustani dated 20 December 2017, which refers to the circumstances of a mediation on 7 December 2017 and subsequent conversations between the respective solicitors on 8 December 2017. The Defendants rely on the affidavit of their solicitor, Mr John English, affirmed 5 January 2018. However, there was a dispute between the parties as to whether that affidavit had been served on Friday, or only this morning, and in the circumstances the Defendants only read paragraphs 1 and 24-25 of that affidavit, which refer to the relief which is sought in the NCAT proceedings and annex the Points of Claim relied on by the Hill parties in the NCAT proceedings. The Hill parties also tendered an annexure to the documents filed in NCAT, which contains a map of the area surrounding the relevant properties, indicating in particular the area as to which there is a dispute as to a carriageway in respect of the properties (Ex D1).
By way of background, the Hill parties commenced the NCAT proceedings on 19 May 2017, as is apparent from the Commercial List application which is Annexure M to Mr English's affidavit. The Hill parties sought, inter alia, orders under the Agricultural Tenancies Act 1990 (NSW) for the payment of amounts of money, said to be due for repairs to a shed on the property in 2003 and arrears for payments claimed against the Leahy parties under a licence agreement. The Points of Claim also referred to a purported termination of the licence agreement by the Hill parties and a dispute as to a right of carriageway and as to the Hill parties' conduct in locking a gate across that carriageway. It appears there was or is a dispute in NCAT as to whether it has the capacity to determine that dispute.
The parties attended a mediation on 7 December 2017 which appears to have extended over much of the day and evidence was led, without objection by either party, as to the course of offers in the course of that mediation. The parties appear to have made several successive offers and counter offers, commencing early in the mediation and continuing until late in the day. A detailed record of those offers is Annexure A to Mr Boustani's affidavit, and I was taken to them in detail in the course of submissions. The matters to which those offers were directed turned upon who was to pay what in respect of any settlement, questions of sharing of plant and equipment and custody of a set of large Birmingham scales, as to which consensus seemed to have been readily reached, and the question of the release of the right of carriageway, the matter which was raised in NCAT although there was, as I noted, or is, a dispute as to whether NCAT had the ability to determine it. Offers and counter offers were made throughout the day as to different amounts of payment, and the Leahy parties consistently took the position throughout the day that the carriageway should remain, and the Hill parties throughout the day consistently took the position that the carriageway should be released, until late in the afternoon, at 4.40pm, when it appears the Hill parties put an offer which contemplated a payment by them, in a lower amount, if the Leahy parties retained the carriageway, and in a somewhat higher amount if, implicitly, the Leahy parties released the carriageway and the Hill parties "get" the carriageway. Subsequent counter offers were made, reducing the difference in the amounts in issue between the parties until, at 5.57pm, the Hill parties made a somewhat differently structured offer in a higher amount, which is recorded by a note "get easement". The mediation appears then to have concluded, with the Leahy parties seeking further time to respond to that offer on the basis that it "looks favourable" and the offer then being withdrawn by the Hill parties.
On the next day, conversations continued between the parties, in which the Leahy parties appear to have taken as their starting point one of the offers made by the Hill parties at 4.40pm on the previous day, as developed in subsequent discussion as to the amount, and the Hill parties put the alternative offer which had been made in the higher amount at 5.57pm back "on the table" and also raised a further question as to a water connection to another property. The Leahy parties appear to have rejected the Hill parties' alternative offer, but reiterated the 4.40pm proposal, initially on the basis that only the dispute between the parties as to the shed on the properties would be determined first, and everything else dealt with later, but, possibly inconsistently, subsequently putting an offer on the basis that the question of the carriageway would also be addressed.
In the course of a without prejudice conversation between the solicitors, at 12.07pm, Mr English had advised Mr Boustani that the Hill parties would be "tied up" until 1pm. In a second without prejudice conversation at 1.51pm, Mr English had advised Mr Boustani that the Hill parties had left Sydney, presumably to return to country New South Wales where they are resident, and would like to "mull over [the Leahy parties'] offer". Mr English had requested an extension of time to accept the offer, which Mr Boustani had indicated was unlikely to be offered in the relevant circumstances.
At 2.18pm, Mr Boustani sent a letter setting out terms of a relatively complex proposed settlement which was described as a Calderbank v Calderbank offer. That letter referred to aspects of the NCAT proceedings and to a possible application by the Leahy parties in this Court claiming reimbursement of amounts paid in respect of the sheds and yards. That letter then set out an offer to settle the matter in three paragraphs, the third paragraph of which had eight subparagraphs, which was to remain open until 4pm that day. Paragraphs 1 and 2 of that offer contemplated that the Hill parties' claims in NCAT would be dismissed whereas the Leahy parties' claims in NCAT would be discontinued. Paragraph 3 referred to a deed of release and settlement, which was to include payment by the Hill parties of a specified amount within 28 days; address various other aspects which appear to have elements in common with the discussion at the mediation on the day before; and would also provide for:
"A release by [the Hill parties] in favour of [the Leahy parties] for the matters the subject [of the NCAT proceedings] including but not limited to any application by [the Hill parties] against [the Leahy parties] seeking the extinguishment of the right of carriageway in favour of the [Leahy parties] of [the Hill parties'] property".
That letter also contemplated further releases in respect of claims by the Leahy parties over the sheds and yards, which appeared to relate to the foreshadowed further proceedings in the Supreme Court, and, subject to receipt of the settlement sum by the Leahy parties, dismissal of the NCAT proceedings.
Mr Boustani leads evidence of a conversation with Mr English, at 2.27pm in which Mr English said "my clients agree to your clients' offer in principle, I need to work on the Deed and probably won't be able to have something to you until next week". Mr Boustani's evidence is that he responded "that should be fine" and Mr English is said to have said that he would send an email "accepting your offer in writing". That email was sent at 2.35pm and, consistent with what is attributed to Mr English in the oral conversation, indicated that:
"I confirm as discussed that my clients have given in principle agreement to your clients' offer subject to a suitable deed being agreed between the parties."
That email also recorded Mr English's intent to "amend our deed" (presumably the Hill parties' draft deed) and have a "draft" to Mr Boustani on Monday, which appears to have contemplated that the document would be a draft for discussion rather than a final version of a deed.
It appears that the settlement "in principle" collapsed by 12 December 2017, four days after it was achieved, when Mr English advised Mr Boustani by letter that the Leahy parties' offer had only been open for acceptance for a matter of hours; that the Hill parties had not had the opportunity to obtain Counsel's advice; and then made a further counter offer. A dispute then developed as to whether a binding settlement had been reached by the correspondence on 8 December 2017, with the Leahy parties contending that it had been, and the Hill parties responding that their acceptance of the proposal in Mr Boustani's letter had stated that the agreement was "only in principle and subject to a suitable deed being agreed between the parties".
With that background, the issues raised by this application are in relatively narrow compass. They involve, first, a question as to the status of any contract arising from the conversation and exchange of a letter and email on 8 December 2017 and, second, a related question as to any content of the agreement reached between the parties.
The first question is whether the conversation, the letter and the email responding to it on 8 December 2017 gave rise to a settlement agreement with binding effect. A question of that kind depends upon the intention of the parties to make a concluded bargain, which is related to but not the same as the question whether the parties have reached agreement upon such terms as are legally necessary to constitute a contract: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548. In Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 360-362, the High Court identified three categories of case which may exist where parties which have been in negotiation reach agreement upon terms of a contractual nature. The first category of case is one where the parties have reached finality and intend to be immediately bound to the performance of the relevant terms, but propose to have the terms restated in a form which will be fuller or more precise, but not different in effect. A second case, not likely applicable here, is that where the parties have reached complete agreement, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. A third case, for which it appears the Hill parties may contend, is one in which the intention of the parties is not to make a concluded bargain, unless and until they execute a formal contract. In Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628 McLelland J identified a fourth case, where the parties were content to be bound completely and exclusively by the terms they had agreed, while expecting to make a formal contract in substitution for the first contract, containing, by consent, additional terms.
The question of intent to reach a binding settlement was also considered by the Court of Appeal in Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313; (2015) 90 NSWLR 605, where Beazley P (with whom Bathurst CJ generally agreed and Meagher JA agreed) noted (at [64]-[65]) that, whether the parties intend to be immediately bound, where they have reached agreement as to the terms of a contract but have also agreed that a further agreement is to be executed, is to be determined objectively having regard to the outward manifestations "of the parties' intentions". Her Honour also observed (at [65]) that the question was "what each party by words and conduct would have led a reasonable person in the position of the other party to believe". Her Honour also observed that the three classes of case in Masters v Cameron above no longer applied, if they ever were, as strict categories, and that the commercial context and surrounding circumstances of the parties' dealings were relevant to whether a binding agreement had come into existence. Her Honour also noted, relevantly to the present case, that it was probable, as a matter of commercial reality, that if the parties had intended to be bound immediately before a deed was signed, one or other of the solicitors would have said so, and there is no such express statement in this case. To the contrary, the critical conversation on which the Leahy parties rely uses the language "agree to your clients' offer in principle" and, in the case of the email, uses the language "my clients have given in principle agreement to your clients' offer", and was also "subject to a suitable deed being agreed between the parties".
Mr Tyson, who appears with Ms Laing for the Hill parties, draws attention to the New Zealand decision in BP Oil New Zealand Ltd v Van Beers Motors Ltd (unreported, 10 March 1992), approved by a unanimous Court of Appeal in Oracle New Zealand Ltd v Price Waterhouse Administration Ltd [2010] 1 NZLR 553, where the Court held that the words "in principle" are read, when used by a commercial party, as indicating that it lacked an intention at that time to enter into a binding contract. That approach is broadly similar to that which was taken by Brereton J in Cacace v Bayside Operations Pty Ltd [2006] NSWSC 572 at [18], where his Honour observed that the phrase "agreed in principle" is often used to indicate that "although consensus on a matter has apparently been reached, there is not yet a final agreement" and that the words "settled in principle" refer to a "state of consensus somewhat short of 'settled'". I appreciate that, in some cases, there may be countervailing considerations which displace the view which his Honour expressed, and the decision in Masters v Cameron is one possible example of such a situation, and the decision of the Court of Appeal in Sayed v National Australia Bank Ltd [2013] NSWCA 304 is another. In Boyd v Feeney [2017] NSWSC 1595, I followed the view expressed by Brereton J, and noted that the language "in principle" seemed to me to indicate something short of a binding commitment, although there were also other factors in that case, to which Mr White draws attention, which displaced the settlement there having binding effect.
Returning to the question which I have to decide in this case, I remind myself that this is not a final hearing and the question which arises here is not to determine on a final basis whether there is, or is not, a binding agreement between the parties. As I noted above, the evidence and submissions might well have been sufficient to determine that question, but the basis on which the parties have conducted this application does not permit me to do so. The question is instead whether the Leahy parties have established sufficient argument to that effect to warrant a stay of the NCAT proceedings, such that those proceedings may not proceed until the question is determined in this Court on a final basis. I also remind myself of the questions identified by the Court of Appeal in Pavlovic v Universal Music Australia Pty Ltd above, namely whether, in the commercial context and surrounding circumstances, one party, relevantly the Hill parties, would have led a reasonable person in the position of the other, the Leahy parties, to believe that a binding settlement had been reached.
Here, Mr White emphasises that at least some elements of the settlement significantly overlapped with the matters which had been discussed, at considerable length, in the mediation the day before. Mr Tyson, in turn, points to matters which may tend against a settlement, on a binding basis, including the apparently deliberate use by a legal adviser of the words "in principle" in communicating his clients' position to another legal adviser; the complexity of at least some aspects of the proposal put by the Leahy parties' solicitor's letter of 8 December 2017, with its mixture of discontinuance and dismissal and its extension to other claims and other potential disputes; and the fact, known to both parties, that the Hill parties were then apparently travelling between Sydney and country New South Wales and, at least as a matter of probability, would not have had the opportunity to review the letter of 8 December 2017, and as a matter of the position later asserted by them, had not had the opportunity to seek Counsel's advice about it.
It seems to me that, in the relevant circumstances known to both parties, there is only a remote prospect that the Leahy parties could ultimately establish that a binding agreement came into existence when Mr English said to Mr Boustani, who then knew that Mr English's clients were in transit between Sydney and country New South Wales, that the offer was accepted "in principle", or confirmed that matter by email, incorporating a further reference to acceptance being subject to a "suitable deed to be agreed between the parties". It seems to me that that prospect is remote because, first, the words "in principle" were apparently deliberately added to the language used, and deliberately confirmed in writing, and would not likely be treated as surplusage; second, both parties would then know that a binding acceptance would have committed the Hill parties to a relatively complex arrangement, albeit addressing issues that had in large part been addressed at the mediation, in circumstances where they were in transit and were not likely to have been able to obtain Counsel's advice about it; and, third, real complexities would likely have arisen in documenting the releases, particularly in respect of matters which were connected to, but had not yet arisen in, the NCAT proceedings or the foreshadowed further proceedings in this Court.
I do not conclude that the Leahy parties' claim that a binding settlement was reached is unarguable, but it does seem to me that, as I noted above, it has only a remote prospect of success. The question then arises whether I should stay the NCAT proceedings, because a case has been brought, that has such a limited prospect of success. I am conscious that, if I do not stay the NCAT proceedings, both parties are exposed to the risk that they will waste costs, in the pursuit of parallel proceedings, where the determination of one will have the result that the costs of the other are likely wasted. However, it seems to me that that result can be avoided in two ways. The first, where both parties have emphasised that they are cost constrained and do not wish to waste costs, is that this interlocutory judgment today may influence the parties' thinking as to whether the Leahy parties' claim that a binding settlement exists should proceed to a final hearing. If that claim is to go to final hearing, I am satisfied that the matter warrants an early determination in this Court, which would avoid the risk of wasted costs of parallel proceedings. The issues arising in that determination would also be within relatively small scope, and are likely to duplicate, in large part, those which have been argued and determined before me today on an interlocutory basis. It seems to me that, where the Court can limit the risk of duplicated costs in that way, it is preferable that I do not stay, and thereby delay, the NCAT proceedings, where I have found that there is only a remote prospect that a binding settlement would ultimately be found to exist.
For these reasons, the Notice of Motion dated 20 December 2017 should be dismissed with costs. I make the following additional directions:
By noon on 30 January 2018, the Plaintiffs advise whether a final hearing of the proceedings is required, by letter or email to the Defendants' solicitors, with a copy to the Associate to Black J.
List the matter for directions at 9.15am before Black J on 31 January 2018.
Note that the directions hearing before Black J will likely be vacated if the Plaintiffs advise that a further hearing is not required, or if they advise that a hearing is required and the matter is listed in the Expedition List.
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Decision last updated: 19 January 2018