Plaintiffs v Defendants

1 The 1st third party, Joy Lorraine Allan ("Allan") and the 2nd third party, McDonald Real Estate Mulgrave Pty Ltd ("McDonald Real Estate") (collectively "the Third Parties") seek a declaration that the third party proceeding between the Third Parties and the defendants, Khay Suong Taing ("Taing") and Hakly Lao ("Lao") (collectively "the Defendants") has settled. If the declaration is made by the court, the Third Parties also seek that the third party proceeding be dismissed.

2 The plaintiffs, Bruce Thomas Cook, Beverley Joan Trende and Riverend Park Pty Ltd ("the Plaintiffs") are not before the court. The Plaintiffs had claims against the Defendants and the Third Parties. There is no issue that all claims made by the Plaintiffs have settled.

3 McDonald Real Estate appears by way of 1 of its directors, John Wysham. The parties consented to the court dispensing with the rule requiring a corporation to retain a solicitor to take any step in a proceeding. In the circumstances, which are unnecessary to set out, it was appropriate to allow the corporation to have 1 of its directors appear on its behalf.[1]

4 For the reasons that follow, a declaration will be made that the third party proceeding has settled. Also, the claims made by the Defendants against the Third Parties will be dismissed.

5 The Plaintiffs made claims against the Defendants in relation to a contract of sale of land, namely 88-128 Riverend Road, Bangholme in the State of Victoria ("the Land"). The Plaintiffs were the vendors and the Defendants were the purchasers. The Defendants failed to settle on the due date. As a result, the Plaintiffs sought the amount of $3,311,051.90, alternatively damages, together with interest and costs. The Defendants made a third party claim against the Third Parties. Allan was an employee of McDonald Real Estate at all relevant times. The Defendants alleged misrepresentations were made by the Third Parties concerning features of the Land and the use to which the Land could be put. It was alleged these misrepresentations induced the Defendants to enter into the contract of sale with the Plaintiffs. After the Third Parties were joined, the Plaintiffs also made claims against the Third Parties for indemnity or contribution.

6 On 2 May 2014, the court ordered that the proceeding be set down for trial on all issues, commencing 16 June 2014. In addition, orders were made for the filing and service of outlines of evidence, the preparation and filing of a court book and a mediation to be held. The mediator was ordered to report back to the court by no later than 7 June 2014 as to whether the mediation had finished.[2]

7 In accordance with the orders of the court, a mediation took place on 27 May 2014. For the purposes of that mediation, the parties executed a mediation agreement ("the Mediation Agreement"), which included the following terms:

(1) "Mediation" means all steps taken to attempt to resolve the Dispute by mediation and to secure the execution of a settlement agreement, whether prior or subsequent to the execution of this agreement (emphasis added): cl 1.

(2) If, after consultation with the Parties, the Mediator forms the view that the Mediator will be unable to assist the Parties to achieve resolution of any of the Dispute the Mediator may terminate the appointment as Mediator by informing the Parties of that termination: cl 8.

(3) A Party may at any time terminate the Mediation by giving written notice terminating the Mediation to each other Party and to the Mediator: cl 27.

(4) In the absence of notice by a Party terminating the Mediation the Mediation will be terminated only upon execution of a written settlement agreement in respect of the Dispute. Oral or handshake Terms of Settlement will not be binding on the Parties. Such settlement agreement shall be written and drawn up and executed by the Parties at the earliest possible time after the terms of settlement have been agreed on AND the Parties consent to the Mediator assisting them in the drafting of any Terms of Settlement reached, ...: cl 29.

8 No settlement was achieved at the mediation held on 27 May 2014. The mediation was not adjourned or refixed. In short, the mediator and the parties left the mediation without making any formal arrangement for the continuation of the mediation.[3] However, neither the mediator nor any party stated that the mediation was terminated, or any words to that effect.

9 On 30 May 2014, the mediator sent a letter to the court stating that the mediation had concluded. The mediator also reported that the parties had settled the matter, subject to the parties "executing Deed of Settlement". The letter said the parties would be seeking orders from the court in due course. A copy of this letter was not sent to the parties.

10 It is unfortunate that the mediator reported to the court in the manner in which he did. The order of the court, consistent with the Supreme Court (General Civil Procedure) Rules 2005 (Vic), only sought a report as to whether or not the mediation had finished. Subject to any order or direction of the court to the contrary, a mediator should not go beyond stating whether or not a mediation has finished when reporting to the court. It is critical for the integrity of the regime of confidentiality pursuant to which a mediation is conducted that, save for stating whether or not a mediation is finished, mediators refrain from disclosing any details to the court of the outcome, or details of or relating to communications conducted before, during the course of, or after, the mediation.

C. Communications between the parties shortly after mediation

11 On 29 May 2014 at 8.10 pm, the solicitors for Allan, Moray & Agnew ("Allan's Solicitors") sent an email marked "without prejudice" to the solicitors for the Defendants, Pointon Partners ("the Defendants' Solicitors"). In that email, Allan's Solicitors referred to a conversation held with the Defendants' counsel at the mediation and confirmed "that our client is prepared to bear her own costs in settlement of the third party claims against her". It was stated that Allan's position was subject to execution of formal releases in her favour from the Defendants. There was no suggestion of mutual releases. The email concluded:

Could you kindly confirm the above is agreed and if we should prepare the settlement documentation.

We look forward to your prompt response.

At 8.14 pm on 29 May 2014, Allan's Solicitors sent a copy of this email to MST Lawyers, the solicitors for McDonald Real Estate ("McDonald Real Estate's Solicitors").

12 On 30 May 2014 at 9.19 am, the Defendants' Solicitors sent an email to McDonald Real Estate's Solicitors marked "without prejudice". That email confirmed "the [D]efendants have now resolved the claim with the [Plaintiffs] and that the Plaintiffs are in the process of preparing a deed of settlement". It was not suggested that the resolution of the dispute between the Plaintiffs and the Defendants was subject to execution of the deed. The email continued:

Our clients reject your client's offer to resolve the proceeding with your client by way of payment of its costs.

Nevertheless, our clients are prepared to resolve the proceeding with your client on the basis that each party bear their own costs and mutual releases be given.

We look forward to hearing from you at your earliest convenience.

There was nothing in the email to suggest that the offer made by the Defendants' Solicitors on behalf of the Defendants to McDonald Real Estate was subject to the execution of terms of settlement or any other condition.[4]

13 At 9.25 am on 30 May 2014, the Defendants' Solicitors rejected the offer contained in the 29 May 2014 email from Allan's Solicitors. In an email headed "without prejudice", they responded in the following terms:

We refer to your email below and confirm that our clients agree to resolve the proceeding with your client on the basis that each party bear their own costs and that mutual releases be given.

We look forward to receiving a draft deed of settlement from you.

In contrast to the previous offer from Allan's Solicitors, this counter-offer was not stated to be subject to execution of formal releases. Although a draft deed was expressly referred to, there was nothing to suggest that the simple offer of resolving the proceeding by each party bearing her or his own costs and giving mutual releases was subject to a document being executed or some other condition.

14 In an email at 5.34 pm on 30 May 2014 to the Defendants' Solicitors, Allan's Solicitors referred to the email sent that morning, and attached a draft deed of settlement and release ("the Draft Deed"). The "without prejudice" email asked for confirmation that the Draft Deed was in order. It also stated that Allan's Solicitors had taken the liberty of including McDonald Real Estate in the Draft Deed. However, Allan's Solicitors stated they were not aware of the status or the terms of any resolution between McDonald Real Estate and the Defendants. The email was copied into McDonald Real Estate's Solicitors. The email concluded with the following:

As the deed ought to be straightforward, we would be grateful for your early reply so that we can arrange for execution of the deed by our client.

We look forward to hearing from you and [McDonald Real Estate's Solicitors].

In contrast to the email from Allan's Solicitors sent on 29 May 2014,[5] the covering email did not state that any agreement was subject to execution of formal releases or any other condition.

15 The Draft Deed provided for the third party claims against Allan and McDonald Real Estate to be struck out with no order as to costs. It also contained releases and covenants not to sue. Finally, it contained a confidentiality clause. The confidentiality clause had not been previously discussed. Given the introduction of confidentiality to the proposed agreement, this communication amounted to a counter-offer by Allan.

16 On 2 June 2014, Allan's Solicitors sent an email to the Plaintiffs' solicitors, Kalus Kenny Intelex ("the Plaintiffs' Solicitors"), copied into McDonald Real Estate's Solicitors. That email attached a draft deed of settlement and release between the Plaintiffs and the Third Parties ("the Plaintiffs' Draft Deed"). The email asked the Plaintiffs' Solicitors to confirm that the Plaintiffs' Draft Deed was in order and to insert the address details of the Plaintiffs so that Allan's Solicitors could arrange for execution. The email concluded with the following:

We have copied in [McDonald Real Estate's Solicitors] and prepared the proposed terms on the basis [McDonald Real Estate] also bears its own costs, although we do not know the status of [McDonald Real Estate's Solicitors'] client's position. If [McDonald Real Estate's Solicitors] could confirm that would be helpful.

We look forward to hearing from you and [McDonald Real Estate's Solicitors].

This email was not copied to the Defendants' Solicitors.

17 Neither the Defendants' Solicitors nor McDonald Real Estate's Solicitors responded to the email of 30 May 2014 attaching the Draft Deed.[6] Accordingly, on 3 June 2014, Allan's Solicitors telephoned the Defendants' Solicitors to inquire. Allan's Solicitors were informed that the Defendants' Solicitors had not heard back from McDonald Real Estate's Solicitors. The Defendants' Solicitors said they were intending to send a further email to McDonald Real Estate's Solicitors in this regard. The solicitor from Allan's Solicitors then said:

If you don't hear back from [McDonald Real Estate's Solicitors] by noon tomorrow then we will re-do the settlement documents excluding [McDonald Real Estate's Solicitors'] client.

18 The solicitor from Allan's Solicitors then specifically asked whether the Defendants' Solicitors had any issue with the wording in the Draft Deed. The response given was that the wording was otherwise okay. The solicitor from Allan's Solicitors took a contemporaneous note of this conversation. His evidence of the conversation was not disputed. Accordingly, the counter-offer made at 5.34 pm on 30 May 2014 by Allan's Solicitors[7] was accepted by the Defendants' Solicitors in this discussion (which still leaves the issue of the class[8] of the agreement reached).

19 At 5.00 pm on 3 June 2014, the Defendants' Solicitors sent an email to McDonald Real Estate's Solicitors, which included the following:

We refer to your email and note that our clients have instructed that they will not agree to payment of $11,000. We confirm our clients' position being that each party bear their own costs and note further that the first plaintiffs' (sic) solicitors have drafted a deed of settlement between our clients and the [T]hird [P]arties in this regard. Please confirm your client's position by 12 noon tomorrow, Wednesday 4 June 2014.

We note that should your client not agree to our clients' offer, we are instructed to vigorously pursue the claims against your client as contained in the third party notice. ...

For the avoidance of doubt, our clients are prepared to settle the proceedings against the other parties and pursue their action against your client in the third party proceedings.

...

Please let us have your response to our client's (sic) offer by noon Wednesday 4 June 2014.

Nothing contained in the email suggested the offer being made was subject to the execution of formal deeds of settlement or any other condition.

20 On 4 June 2014, the Defendants' Solicitors sent an email to Allan's Solicitors referring to the conversation of the previous day.[9] The email advised that McDonald Real Estate's Solicitors would be advising of their client's position by close of business that day. The email requested that Allan's Solicitors refrain from making any amendments to the Draft Deed until McDonald Real Estate's Solicitors had provided a formal response.

21 Also on 4 June 2014, the solicitor with the conduct of the matter on behalf of McDonald Real Estate was interstate. She requested and received from the Defendants' Solicitors an extension of time to respond. It was agreed that the offer made by the Defendants' Solicitors' email sent at 5.00 pm on 3 June 2014 would be extended to the close of business on 5 June 2014.

22 On 5 June 2014, there was a further discussion between the respective solicitors for the Defendants and for Allan. The Defendants' Solicitors stated that they thought there was an issue concerning the mutual releases between the Third Parties. Apparently, this issue had not been raised directly by McDonald Real Estate's Solicitors with Allan's Solicitors.

23 Also on 5 June 2014, McDonald Real Estate's Solicitors sent an email to the Defendants' Solicitors marked "without prejudice". After apologising for the delay in responding, the email stated that the Defendants' offer for each party to walk away and bear their own costs was accepted. It also stated that McDonald Real Estate's Solicitors were waiting for instructions regarding any reservation of rights by McDonald Real Estate against Allan. After stating that they expected to have those instructions later that day, McDonald Real Estate's Solicitors asked that they be provided with a deed of settlement by the Defendants' Solicitors.

24 Shortly after, in response to the previous email, the Defendants' Solicitors sent a "without prejudice" email to McDonald Real Estate's Solicitors noting that Allan's Solicitors had prepared a draft deed of settlement, (being the Draft Deed), as between the Defendants and the Third Parties, which included releases between Allan and McDonald Real Estate. The email inquired as to whether McDonald Real Estate's Solicitors could advise at their earliest convenience on McDonald Real Estate's position in respect of the Draft Deed to "avoid the need to repeat work already completed". It also inquired as to whether there was any problem with the email being forwarded to Allan's Solicitors "so that we can all stay on the same page". The further response from McDonald Real Estate's Solicitors, sent soon after, agreed there was no need to repeat the work completed. It was stated that the position would be made known "asap".

25 On the morning of 6 June 2014, McDonald Real Estate's Solicitors sent an email to the Defendants' Solicitors stating that they were conscious of the email that had been sent by the court.[10] The email stated that McDonald Real Estate's Solicitors were waiting for final instructions from McDonald Real Estate concerning the release of Allan. The email also stated that McDonald Real Estate had no issue with the agreement between the Plaintiffs and the Defendants.

26 Later that day, at 4.39 pm, the Defendants' Solicitors sent an email to McDonald Real Estate's Solicitors, copied to Allan's Solicitors, asking whether or not the instructions had been received regarding the release of Allan by McDonald Real Estate.

27 There were then discussions between the solicitors for the Third Parties in which McDonald Real Estate's Solicitors sought that McDonald Real Estate's costs be paid by Allan. These discussions did not involve the Defendants' Solicitors.

28 On 10 June 2014 at 2.24 pm, McDonald Real Estate's Solicitors sent an email to Allan's Solicitors, consisting of a single line, stating that McDonald Real Estate had now instructed its solicitors to accept each of the Plaintiffs' and the Defendants' offer with releases. The acceptance was not stated to be subject to execution or any other condition. The email was not marked "without prejudice".

29 As a result of receiving this email, later that afternoon Allan's Solicitors telephoned the Defendants' Solicitors to check whether the Defendants' Solicitors had received the same email (see paragraph 28 above). Contact was also made by Allan's Solicitors with the Plaintiffs' Solicitors to confirm they had been similarly informed. In each case that confirmation was provided.

30 Having had these discussions with the respective solicitors, Allan's Solicitors then sent an email to McDonald Real Estate's Solicitors at 2.50 pm on 10 June 2014 clarifying whether the parties were agreed to resolve on the terms of the 2 sets of settlement documentation, dealing with the Plaintiffs' claims against the Third Parties and the Defendants' claims against the Third Parties, with mutual releases between all parties. Allan's Solicitors sent no such email to the Plaintiffs' Solicitors or the Defendants' Solicitors. At 3.55 pm that day, a response was sent by McDonald Real Estate's Solicitors to Allan's Solicitors simply stating "Yes". Neither of these emails was marked "without prejudice".

31 Accordingly, at 4.13 pm on 10 June 2014, Allan's Solicitors sent a further email to the solicitors for each of the parties, which attached the Draft Deed,[11] the Plaintiffs' Draft Deed,[12] and a final deed of settlement. The email was not marked "without prejudice". The email stated:

I understand the [P]laintiffs and the [D]efendants all agree on the wording of their relevant deed. In relation to the deed with the [P]laintiffs, we await address details of the [P]laintiffs for insertion prior to execution. ... I can then circulate the execution copy of that document. In relation to the deed with the [D]efendants, an execution copy in pdf form is attached.

We have copied in the solicitors for the other parties so we are all clear on the position.

32 A further email was sent at 5.23 pm on 10 June 2014 by Allan's Solicitors to the solicitors for all other parties. That email attached deeds executed by Allan. The email stated that Allan's Solicitors looked forward to receiving copies executed by the respective clients of the other solicitors as soon as possible. The email was not marked "without prejudice".

33 Also at 5.23 pm on 10 June 2014, the Defendants' Solicitors sent an email to the Defendants. That email stated:

We refer to previous communications in relation to the above matter and advise that the [T]hird [P]arties have agreed to release each other from all claims relating to this proceeding.

Accordingly, please arrange for the attached deed of settlement to be signed and then please forward the original by express post to our office.

34 At 9.40 pm on 10 June 2014, the Defendants' Solicitors received an email from Taing's son in response to the email referred to in the previous paragraph. That email stated he would arrange for his father, Taing, to execute the Draft Deed and return it by post.

35 On 11 June 2014 at 8.42 am, McDonald Real Estate's Solicitors sent an email to the solicitors for each of the other parties. That email stated that McDonald Real Estate's Solicitors were instructed that the director of McDonald Real Estate had signed the deeds of settlement. The email was not marked "without prejudice".

36 At 8.57 am on 11 June 2014, the Defendants' Solicitors sent an email to Lao asking him to advise urgently if it was not the case that the Defendants had agreed to settle on the basis of the agreed terms of settlement with the Third Parties.[13] No further instructions were obtained by the Defendants' Solicitors before the matter came on for hearing at 10.00 am on 11 June 2014.

37 As a result of non-compliance with the pre-trial court orders,[14] an email had been sent by the court to the parties on 30 May 2014 noting that no witness outlines had been filed. Amongst other things, the email required the witness outlines to be filed promptly. This email was sent at a time when the court had not seen the mediator's letter to the court.[15]

38 None of the parties in the proceeding responded to the email by filing any witness outlines. Further, the court book was due to be filed on 2 June 2014, which also did not occur.

39 On 3 June 2014, a further email was sent by the court. That email noted the absence of any response from the parties and the failure to comply with the court orders in a number of respects. Inquiry was made as to whether the parties intended the matter to proceed to trial on 16 June 2014. It was stated the parties were in danger of losing the trial date. A response was required by 12 noon the following day.

40 Later on 3 June 2014, the Plaintiffs' Solicitors responded stating that the parties had been informed by the mediator that he had written to the court advising that the proceeding had settled, subject to the parties agreeing on and executing a deed of settlement. The email said that the solicitor could be contacted, but otherwise the court would be advised once all parties had executed the deed of settlement. This email was copied to all other parties.

41 The court was not provided with any further progress reports by any party.

42 On 10 June 2014 at 12.52 pm, the parties were sent an email by the court. That email required advice to be given on the status of the matter by 4.00 pm that day. The email concluded with the following:

If the parties cannot confirm that the deed of settlement has been signed by 4 pm, the matter will be listed for directions tomorrow morning at 10.

43 No such confirmation was forthcoming and the matter was listed for directions.

44 The solicitors representing each of the parties appeared before me on 11 June 2014. The solicitor appearing on behalf of the Plaintiffs, Peter Lettieri ("Lettieri"), stated that the parties had agreed on a form of deed which was currently being executed. He said that 1 of his clients was in central Australia and it would take some time to have the deed signed and returned. In response to a query as to whether the client was contactable by email, the court was informed that his access to email was sporadic. Lettieri then said as follows:

We've got instructions as to the final form of deed. It didn't change, we just had to get it approved by all the parties and that was done yesterday.

(Emphasis added.)

HIS HONOUR: So you have now got instructions that he will definitely sign in that form?

LETTIERI: That's correct, your Honour, yes.

HIS HONOUR: So the matter can be treated as settled?

LETTIERI: Correct, your Honour.

HIS HONOUR: Yes, is everyone else content with that position, so I can vacate the trial date, can I?

LETTIERI: Certainly, your Honour, yes.

The transcript does not record any other solicitor responding. However, the solicitor having the care and conduct of this matter on behalf of McDonald Real Estate gave evidence on this application that the transcript of 11 June 2014 accurately reflected her recollection, save that when I asked the last question referred to in the above passage, each of the solicitors, including the solicitor appearing for the Defendants, answered by saying words to the effect of "yes".

46 The solicitor for the Defendants who appeared on 11 June 2014 provided an affidavit in which she stated that she did not believe she actually said the word "yes" in response to the question from the court. However, the affidavit continued:

I would not dispute that my demeanour, including the possibility that I nodded, would have created the impression of my assent to his Honour's question as to whether the matter could be treated as settled. My response to his Honour reflected my understanding of my instructions at that time.

There is no issue that each of the solicitors answered in the affirmative to the court's inquiry, either by stating "yes" or nodding to the court.

47 I then went on to inquire what orders ought to be made that day.

48 I was told that orders could not be made disposing of the matter because, until the deeds were "formally executed", the orders could not be submitted, but that there would be "orders coming in due course". I was then invited to adjourn the matter, without making any other orders. I agreed, stating that I would do so "on the understanding that the matter has settled". I again inquired as to whether or not the trial date should be vacated and I was told that was the appropriate thing to do. Accordingly, the matter was adjourned "for further orders". There was no suggestion that any further hearing would be required.

49 I concluded by thanking the parties for their attendance, stating that the court needed to know 1 way or the other as to where the proceeding was at. I stated that the emails that had been sent to the court previously did not make it clear that the trial was definitely going to go off.

50 As at 11 June 2014, I understood that the court had been informed that the proceeding had settled and that the parties were bound by the settlement, despite the fact that the formal documentation had not been signed by all the parties. Having read the transcript, that understanding remains.

51 I do not accept the Defendants' submissions that, by referring to the matter being "treated as settled" at a point in the exchange, the court was acknowledging the claims the subject of the proceeding had not actually settled. In my view, that is not the ordinary meaning to be attributed to those words. In any event, those words, uttered in the context of the remainder of what occurred at the hearing, make it abundantly clear that the court was being told the proceeding had settled, even though not all parties had signed the agreed documents.

52 Although the timing is not clear, some time after the directions hearing, but by the end of the week of the directions hearing, the Defendant's Solicitors received a deed executed by Taing, which deed was in the same form as the Draft Deed. However, no such document executed by Lao was received.

53 On 16 June 2014, Allan's Solicitors sent an email to the solicitors for the other parties referring to "the settlement of this matter" and asked when it was that they would receive executed copies of the settlement deeds. There was no response from any party suggesting that the proceeding had not settled because all deeds had not been signed; nor was there any suggestion that the Defendants or any other party may not sign, or had changed their mind in that regard.

54 On 17 June 2014, the Plaintiffs' Solicitors couriered to the Defendants' Solicitors the executed deed as between the Plaintiffs and the Defendants.

55 On 19 June 2014, Allan's Solicitors sent a further email to the Defendants' Solicitors asking for an update on when the executed settlement deed would be forwarded.

56 On 20 June 2014, McDonald Real Estate's Solicitors forwarded an executed deed on behalf of McDonald Real Estate.

57 On 23 June 2014, the court sent an email to all the parties. It noted that the trial date had been vacated on 11 June 2014 and that the matter had been adjourned for further orders. The email concluded:

Please advise whether the deed of settlement has now been signed by all parties, and further orders can now be made finalising the proceeding.

58 On 24 June 2014, Allan's Solicitors yet again inquired of the Defendants' Solicitors when the executed deeds of settlement would be forwarded. They also asked whether or not the Defendants' Solicitors had responded to the court, and that, if so, a copy of that response was sought.

59 At a point in time which is unclear on the evidence, the Defendants' Solicitors received instructions that the Defendants wanted to reconsider their position in relation to the Third Parties.[16]

60 As a result of these instructions, on 26 June 2014, the Defendants' Solicitors sent, via email, a letter to Allan's Solicitors and McDonald Real Estate's Solicitors. The letter acknowledged that the proceeding as between the Plaintiffs and the Defendants had settled. However, it stated that, in relation to the claims between the Defendants and the Third Parties, the issues had not been finally resolved as the Draft Deed had not been executed. The letter stated that, now that the Defendants' liability to the Plaintiffs had crystallised, the Defendants were "giving further consideration as to whether or not they wished to proceed against the [T]hird [P]arties, in an attempt to recover their losses". The letter stated it was anticipated that those instructions would be given to the Defendants' Solicitors by close of business on 30 June 2014.

61 Within a minute of sending this letter, a letter was also sent to the court by the Defendants' Solicitors in the following terms:

We refer to your email dated 23 June 2014 and note as follows:

1. The deed of settlement as between the [P]laintiffs and the [D]efendants has been executed. It is to be immediately noted that the [T]hird [P]arties are not parties to that deed.
2. No proposed deed of settlement between the [D]efendants and [T]hird [P]arties has as yet been executed.
3. We expect to be able to clarify the position as between the [D]efendants and [T]hird [P]arties by close of business Monday 30 June 2014 and will further communicate with you as to the required further listing of the matter, whether that be upon the resolution of the whole of the proceeding including the third party proceeding, or for further directions for the disposition of the third party [proceeding].

62 On the evidence, it is plain that before these 2 pieces of correspondence were sent, there had been no suggestion from the Defendants' Solicitors, since 3 June 2014 (when the agreement between the Defendants and Allan might be said to have been reached);[17] or alternatively, since 5 June 2014 (when the agreement between the Defendants and McDonald Real Estate might be said to have been reached);[18] that the Defendants were "giving further consideration" to the issue of settlement as between the Defendants and the Third Parties.

63 Almost immediately, a response was received from McDonald Real Estate's Solicitors. After some initial comments,[19] and after noting briefly what had occurred in relation to the execution and return of the deeds by the Third Parties, the email concluded by requesting that the Defendants' Solicitors immediately rectify the position with the court and the other parties. In short, a strong view was expressed by McDonald Real Estate's Solicitors that the matter had already settled.

64 Soon afterwards, an email was also sent by Allan's Solicitors. That email, in effect, stated there had been no prior suggestion by the Defendants that there had been no settlement in this matter.[20] The email continued:

The terms of the settlement were agreed over 2 weeks ago and both our client and McDonald Real Estate have subsequently executed and sent to you the settlement deed which further confirmed the terms on which settlement had been reached. The court also vacated the trial date based on the fact that the matter had settled and that execution of the formal deeds was in progress.

Your letter is the first time the asserted absence of any settlement has been raised by your clients despite communications in the interim which referred to the settlement.

65 Notwithstanding the above correspondence, on 30 June 2014, the Defendants' Solicitors sent an email to the court asking for the matter to be relisted so that the Defendants could proceed with their claims against the Third Parties.

1. Were the negotiations of the parties' solicitors after 27 May 2014 subject to the terms of the Mediation Agreement?

66 The Defendants contended that the negotiations after 27 May 2014 between the Defendants and the Third Parties (as well as the Plaintiffs) remained subject to the terms of the Mediation Agreement. This was put on the basis that: the mediator never terminated his appointment as mediator; no party gave written notice terminating the mediation; and there was no written settlement agreement executed by the parties before 11 June 2014. Respectively, reliance was placed on cll 8, 27 and 29 of the Mediation Agreement in making these submissions.[21]

67 Before addressing this contention, it is necessary to refer to some further correspondence.

68 On 29 May 2014, an email was sent by the Plaintiffs' Solicitors to the mediator confirming that the Plaintiffs and the Defendants had reached a settlement in the matter. It was stated that they were in the process of preparing a deed of settlement in that regard. The email further stated that the Plaintiffs and the Third Parties had reached a settlement in respect of the Plaintiffs' notice of contribution. Again, it was said a settlement deed was being prepared. However, the email stated that negotiations were still occurring between the Defendants and the Third Parties. This email does not appear to have been copied to any other party at the time.

69 On 30 May 2014 at 7.46 am, the mediator sent a response, addressed to the solicitors for all the parties. In that email, the mediator thanked the solicitors for their efforts and stated that, based on the communication received the previous day (which was included in the email), he intended to advise the court that the matter had settled and the parties would seek appropriate orders in due course. He also stated that, as he was leaving for overseas the following Monday, he needed to file his report that day.

70 The Plaintiffs' Solicitors then wrote to the mediator stating that, for the purpose of clarity, the matter had been settled "subject to terms being agreed". In response to the further email from the Plaintiffs' Solicitors, the mediator responded, copying in the solicitors for all the parties, stating that he would confirm in his letter to the court that the matter had "settled subject to executing Deed of Settlement with orders to be sought from the Court". It is curious that the mediator expressed himself in such a manner given that it did not reflect what had been the subject of the emails from the Plaintiffs' Solicitors. In any event, the mediator then sent a letter to the court (as set out in paragraph 9 above).

71 The above correspondence demonstrates that, from 30 May 2014, at the very latest, the mediator intended to have no further part in the negotiations between the parties. It is not alleged that an agreement was struck between the Defendants and the Third Parties prior to this time. Accordingly, in my view, strictly it is unnecessary to determine whether the negotiations up to Friday, 30 May 2014 were the subject of the Mediation Agreement.

72 Thus, the simple question to address in relation to the negotiations after that time is whether, in the absence of any participation from the mediator, the parties' relations were still subject to the Mediation Agreement.

73 As already noted, the mediation was conducted pursuant to an order of the court.[22] Although there are legislative provisions governing a court-referred mediation,[23] "mediation" is not defined for these purposes.

74 In AWA Ltd v Daniels,[24] Rolfe J referred to a mediation in the following terms:[25]

Mediation is somewhat analogous to "without prejudice" discussions between parties, or more usually their legal representatives, in an attempt to settle litigation. As I understand it there are some significant differences.

Firstly, the mediation is presided over by a person trained as a mediator, whose role it is, by the taking of various procedures, to ascertain the matters truly in dispute, the basis for any such dispute and the reasons why the matters are in dispute. That having been achieved it is [her or his] function to encourage the parties to resolve the dispute(s) on the basis of some "give and take". [She or he] does not adopt the role of a judge or a detached chairman. Rather [she or he] participates actively in the processes to which I have referred with a view to bringing about a settlement.

Secondly, the negotiations and discussions are carried out by or in the presence of the parties, rather than only by their legal representatives. The parties, as I understand it, are encouraged to confer. They may well bring forward commercial or other considerations, unrelated to the precise issues in the litigation, as a reason for settlement. The parties are usually authorised to make concessions and admissions and, if a settlement is achieved, to implement it.

Thirdly, the nature of the procedure perhaps demands a greater degree of frankness and disclosure than in other forms of settlement negotiations ...

(Emphasis added.)

75 In the Macquarie Dictionary, the noun "mediation" is defined as "action in mediating between parties, as to effect an agreement or reconciliation".[26] The word "mediate" is defined to include:[27]

1. [T]o bring about (an agreement, peace, etc) between parties by acting as mediator. 2. to settle (disputes, etc) by mediation; reconcile. 3. to effect (a result), convey (a gift), etc, as or by an intermediary or medium. 4. to act between parties to effect an agreement, compromise, or reconciliation. 5. to occupy an intermediate place or position. 6. acting through, dependent on, or involving an intermediary agency; not direct or immediate.

76 Consistent with the ordinary meanings of "mediation" and "mediate", legal dictionaries also define such terms in a manner which includes a neutral third party attempting to facilitate a mutually agreeable solution between parties.[28]

77 As set out above,[29] the term "mediation" was defined in the Mediation Agreement. However, the definition is circular insofar as it defines it as steps being taken "by mediation". Accordingly, the meaning of "mediation" for the purposes of the Mediation Agreement is entirely consistent with the use of that term as it is understood generally.

78 It must follow that, on 30 May 2014, at the very latest, the mediation had ceased. With the mediator departing for overseas, any negotiations that occurred after that time could not sensibly be viewed as part of a mediation. Accordingly, the terms of the Mediation Agreement, including cl 29, ceased to have any operation by 30 May 2014.

79 In case I am wrong about it being unnecessary to make a determination about whether the Mediation Agreement applied prior to 30 May 2014, I am of the view that, after the parties ceased attending the mediation on 27 May 2014, the parties were no longer subject to the Mediation Agreement. There are a number of reasons for this.

80 First, there was no communication by any party seeking to extend the mediation beyond 27 May 2014. As already noted,[30] the mediation was not adjourned or refixed, as may often occur when parties wish to continue a mediation.

81 Secondly, the relevant communications between the solicitors of the Defendants and the Third Parties did not include the mediator.

82 Thirdly, the parties themselves were not involved in the negotiations. They were conducted entirely by the solicitors. This meant that, from 29 May 2014 onwards, when negotiations resumed, there was a fundamental difference in the nature of the negotiations to those that were occurring at the mediation.

83 Fourthly, there was nothing in the communications themselves between the solicitors which suggested they or their clients thought the terms of the Mediation Agreement still applied.

84 Fifthly, although the Plaintiffs' Solicitors communicated with the mediator, it seems that was for the purpose of the mediator being able to report to the court as to the state of negotiations,[31] rather than any continuation of the mediation. The communications from the mediator made it perfectly clear he had no intention of continuing the mediation.

85 When the conduct of the parties on and after 27 May 2014 is objectively viewed, it is clear that no party was operating on the basis that the Mediation Agreement was still on foot. In short, based on contractual principles, if the Mediation Agreement had not been terminated, then it had been mutually abandoned.[32]

86 Even if I am incorrect about the status of the Mediation Agreement and, contrary to my findings, it remained on foot after 27 May 2014, by reason of the 5 matters set out in paragraphs 80 to 84 above, the solicitors were not conducting themselves pursuant to the Mediation Agreement. They were simply engaged in without prejudice negotiations, without the involvement of the mediator or the parties. These fundamentally different negotiations were not conducted &#8[33]by mediation".33

87 It follows that the attempt to impose the terms of a previous mediation regime onto negotiations that occurred between solicitors after the mediation must fail. The terms of the Mediation Agreement do not change what otherwise would objectively be understood to be the nature and intention of those subsequent negotiations.

88 There are a number of well-established principles relevant to the determination of the issues before the court.

89 The key question for the court to determine is whether the communications between the parties' solicitors expressed, objectively,[34] an intention to make a concluded bargain.[35] In answering that question, it is instructive to refer to the 3 classes of agreement[36] identified by the High Court in Masters v Cameron,[37] where it was stated:[38]

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 classes. 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.

In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common.

90 Later in the judgment, after observing that the 3rd class of agreement is fundamentally different to the first 2 classes, it was recognised that there is no special form of words which necessarily indicates into which class an agreement may fall.[39] The issue is to be determined objectively, based on the intention disclosed by the language the parties have employed.

91 After observing that language such as "subject to contract" or "subject to the preparation of a formal contract" usually, though not intractably, produces the result that there is no binding contract before execution, a passage of Sir George Jessel MR in Winn v Bull[40] was quoted:[41]

It comes, therefore, to this, that where you have a proposal or agreement made in writing expressed to be subject to a formal contract being prepared, it means what it says; it is subject to and is dependent upon a formal contract being prepared. When it is not expressly stated to be subject to a formal contract it becomes a question of construction, whether the parties intended that the terms agreed on should merely be put into form, or whether they should be subject to a new agreement the terms of which are not expressed in detail .

92 In ascertaining the intention of the parties, the court looks not only to the communications and surrounding circumstances, including the commercial context, up to the time at which it is said that the agreement was entered into. The court may also refer to subsequent communications in order to determine whether it was in the contemplation of the parties that they be bound before a final agreement was duly executed.[42]

93 As to the commercial context, it was observed in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd[43] that, in making a judgment concerning the intention of the parties for the purposes of "a Masters v Cameron dispute", a most significant feature of the commercial context relates to the subject which the parties regard, or ordinarily would be expected to regard, as matters covered by their contract. In this regard, Gleeson CJ stated as follows:

In some cases, such as transactions involving the sale and purchase of land, or leases, courts may properly feel well equipped to form a view on such matters without the need for much evidence. In many cases, however, ... there is a need for evidence in one form or another as to what subjects would be regarded as requiring agreement between the parties. In this case the best evidence on that subject is to be found in the actual communications between the parties and, in particular, in the issues which they in fact addressed when they set about drafting their detailed contract.

(Emphasis added.)

94 One feature of any agreement which may assist a court in determining the intention of the parties is the level of complexity of the agreement. Generally speaking, the more complex the documentation, the less likely the parties would have intended to create a binding contract without an executed document.[44]

95 Further, the intention of the parties is to be ascertained by a consideration of the communications that occur between the solicitors, rather than any instructions that the clients may have given their solicitors. In circumstances where the clients had no direct involvement in the negotiations, it is not relevant to consider whether the instructions given to the solicitors accorded with the communications made by the solicitors to the opposing parties. If the solicitors, by their conduct, settled the proceeding then that conduct bound their clients.[45]

I. Defendants' contentions on the commercial context

96 The Defendants submitted that there were 2 matters relevant to the context in which the negotiations between the parties took place.

97 First, it was submitted that, because the proceeding involved the sale of land, it would be expected that nothing would be considered binding unless and until an agreement had been duly executed. This submission may have had some force insofar as the negotiations between the Plaintiffs and the Defendants were concerned.[46] The dispute between them concerned a contract of sale of land, albeit that no relief was sought to enforce any contract. However, as between the Defendants and the Third Parties, a straightforward claim was made for damages based on the Third Parties allegedly engaging in misleading or deceptive conduct. That subject matter does not give rise to any presumption as to the manner in which the parties may have agreed to be bound in relation to a settlement.

98 Secondly, reliance was placed upon the fact that insurers were representing Allan. It was submitted that ordinarily an insurer would require executed deeds of settlement, including releases, before it would agree to settle a proceeding. No evidence was before the court to support this submission.

99 It was submitted on behalf of Allan that the existence of insurance was irrelevant to the court's considerations and did not form part of the relevant surrounding circumstances or commercial context.[47] Assuming, without deciding, that I may properly take into account that Allan was insured, I do not accept an assertion from the bar table that insurers are not generally minded to enter into binding agreements in either the 1st or 2nd classes identified in Masters v Cameron.[48]

100 At least at the threshold, the existence of an insurer, ordinarily, ought to be considered a neutral factor when objectively viewing the communications and the nature of a dispute in order to determine the true intention of the parties. It can readily be envisaged that, in certain circumstances, an insurer, like other persons involved in commercial litigation, may want the certainty of a binding agreement notwithstanding the lawyers involved have not had the opportunity to reduce the agreed terms to a formal document and have it executed.

101 The relevant context is a commercial one. The claims made in the proceeding were monetary claims, including claims for damages. All parties had solicitors acting for them. Those solicitors were conducting the negotiations on behalf of their clients. The clients did not participate directly in any of the negotiations following the mediation.

102 As between the Defendants and the Third Parties, the agreed terms were simple; the parties were willing to walk away from the proceeding bearing their own costs, provided that mutual releases were given. Confidentiality was also agreed, but the wording of the relevant clause was never in issue.[49]

103 In appropriate circumstances, it could be expected that some solicitors, armed with such instructions, would be willing to agree to settle a commercial dispute on such a basis, without the need for formal deeds of settlement to be executed; even more so when, as in this case, the agreement to settle on such terms was already recorded in writing between the solicitors and was not complex.

104 On the facts of this case, given the nature of the dispute, the intention of the parties is to be discerned principally by the communications between the solicitors.

105 The communications show that the proposal to settle put forward by Allan's Solicitors on 29 May 2014[50] was rejected. That offer was put on the basis that the Defendants unilaterally give releases, which were required to be executed before any agreement was binding. The counter-offer from the Defendants' Solicitors to Allan's Solicitors on 30 May 2014, requiring mutual releases, made no stipulation that any agreement would be subject to execution. Also, that counter-offer was preceded by an email of the same day from the Defendants' Solicitors to McDonald Real Estate's Solicitors in which an offer was put that each party bear their own costs, and mutual releases be given, without any mention of the need to execute the relevant document.

106 There was then correspondence back and forwards between the respective solicitors, the detail of which is not necessary to repeat. The simple observation to make is that all the solicitors agreed on the relevant wording before 11 June 2014 (being the date of the directions hearing) and no solicitor was suggesting the proposed agreements were subject to the parties executing the agreed documents. On the contrary, the language used suggested the parties intended to be immediately bound.[51] The facts of this case are quintessentially of the 1st class of agreement discussed in Masters v Cameron.[52]

107 The Defendants submitted that the use of the language "agreed to resolve" rather than "agreed" in some of the email correspondence[53] showed that the parties intended that documents needed to be executed before any party was bound. With respect, when read in context, I do not accept that phrase carries the meaning or connotation contended for. In short, when the communications are viewed as a whole, the contrary intention is apparent. This was fortified by what was stated to the court (and therefore by each party to each other party) on 11 June 2014.[54]

108 Furthermore, any communications by the mediator as to his understanding of the events, whilst an objective fact to the extent they were communicated between the parties, were not contractual in nature. Such communications cannot override the intention otherwise readily apparent from the solicitors' communications, including what was stated to the court after the mediator ceased to act.

109 It is unnecessary to say precisely when the parties struck an agreement of the 1st class identified in Masters v Cameron.[55] Suffice to say that what was stated to the court on 11 June 2014 made it clear that, by this point in time, such an agreement had been reached. The fact that all the parties were willing to vacate the trial date, that the wording of the settlement deeds had been agreed between all parties, and all parties either expressly or implicitly represented that the terms of the deeds had been agreed and would be signed in that form made the position perfectly clear.

110 As was stated by Bergin CJ in Eq in Humphris-Clark v Lazaridis:[56]

The conduct of the parties in having the court note that the matter was settled, rather than informing the court that the matter was settled in principle, and in abandoning the trial, is conduct that evidences an intention to be immediately bound by their agreement.

111 There is nothing in the contemporaneous communications between the parties to suggest that any of the solicitors were not complying with the court orders because, although the matter had not settled, it was likely to settle. That said, no explanation has been given as to why the court orders were not complied with. Such non-compliance cannot be explicable on the basis that a binding settlement had been agreed (at least up until 3 or 5 June 2014, when it might be said that the relevant agreements between the Defendants, and respectively Allan and McDonald Real Estate were reached[57]).

112 Senior counsel on behalf of the Defendants submitted that the fact that the parties had failed to comply with the pre-trial orders was not a relevant surrounding circumstance for the purpose of ascertaining the intention of the parties. In particular, it was submitted that, when considering the position as at 11 June 2014, no account should be taken of the fact that the time had passed for outlines of evidence to be filed and served and for a court book to be filed. It was further submitted that "9 times out of 10" solicitors will hold off on complying with court orders if they believe the matter is likely to settle, so as to avoid incurring the costs of complying with those orders.

113 In many cases it would be expected that the non-compliance with court orders would be an objective fact which might be relevant to determining the intention of the parties. However, given the submission made in the preceding paragraph, combined with some of the facts in the case (see paragraph 111 above), I have not taken the failure to comply with the pre-trial orders into account.

114 However, lest it be thought that I have accepted the submission, it has long been recognised in the commercial list, and now the commercial court, that the fact that the parties are in settlement discussions is no basis to justify non-compliance with court orders. Indeed, such an approach is contrary to the overarching purpose[58] with which the parties, the lawyers, and the court, must comply.[59]

115 There is no proper basis for a party to ignore court orders no matter how likely a settlement appears to be. Unless and until a matter is settled, court orders must be complied with. If it is thought that unnecessary costs will be incurred as a result of compliance, the solution is to apply to the court for an extension of time. Absent special circumstances, this should be done before the relevant time has arrived, giving sufficient time to comply if an extension is not granted.

116 It is a matter for the court, not the parties, as to whether or not an extension ought to be granted. As is usual practice, any variation of existing orders may be sought on the papers, especially if the position is agreed between the parties. If this approach is taken the cost is minimal, but the effect is to allow the court to ensure that the relevant overarching obligations[60] are met.[61]

117 If there be any substance to the submission put on behalf of the Defendants that solicitors routinely ignore court orders when settlement appears to be imminent, then the course of conduct said to be commonplace must cease.

118 Submissions were made concerning the use of the words "without prejudice" in the written communications between the parties. It was submitted by the Defendants that the use of this term made it less likely that the parties intended to be bound unless and until executed deeds of settlement were completed. Obviously, each case must depend on its own facts. However, the mere fact that, in negotiations leading up to the agreement, the words "without prejudice" are used does not, of itself, indicate any particular intention of the parties. It is entirely consistent with an agreement being reached of the 1st class referred to in Masters v Cameron[62] for the communications to be treated as "without prejudice" until that agreement is struck.[63]

119 Further, the facts as set out above appear to demonstrate that the solicitors ceased using "without prejudice" at or after a time when, as the court has found, binding agreements were likely to have been reached.[64] In other words, if the use of "without prejudice" is considered relevant to determining the objective intention of the parties, then it supports the conclusion the court has reached in any event.

120 For the reasons set out above, a binding settlement was reached between the Defendants and the Third Parties and each of them by 11 June 2014, at the very latest. In the circumstances, it is appropriate to make a declaration to reflect this fact. Given there is no issue between the parties before the court that the proceeding has settled between the Plaintiffs and the Defendants, together with the fact that the Plaintiffs are not before the court, the declaration will be confined to the agreements reached between the Defendants and the Third Parties.[65] Further, an order will be made dismissing the third party proceeding.

[1] Supreme Court (General Civil Procedure) Rules 2005 (Vic), rr 1.17, 2.04; Ilford Tower Pty Ltd v Equity One Mortgage Fund Ltd [2014] VSCA 16; (2014) 306 ALR 144, 146-147 [11]-[17] (Warren CJ, Tate JA and Sifris AJA); Worldwide Enterprises Pty Ltd v Silberman [2010] VSCA 17; (2010) 26 VR 595, 601-602 [32]-[41], (Weinberg JA, with whom Bongiorno JA agreed).

[2] See Supreme Court Rules, r 50.07(4).

[3] The mediator told Allan's Solicitors (see par 11 below) that an offer had been left open by the Defendants for the Plaintiffs' consideration. However, as between the Defendants and the Third Parties there were no ongoing negotiations at that time. (The email sent on 29 May 2014 does not suggest Allan had formally left an offer open for consideration: see par 11 below.)

[4] The offer contained in this email was rejected and a counter-offer was put that McDonald Real Estate would settle on the basis that the Defendants pay its costs. That in turn was rejected by the Defendants. The evidence does not disclose the details of these communications.

[7] See par 14 and 15 above.

[10] See par 39 below.

[13] This communication responded to an earlier communication which was successfully objected to. However, it is important to note it was that earlier communication that prompted this email.

[14] See par 6 above.

[15] See par 9 above.

[16] The evidence is that these instructions were received "[a]fter the matter had settled with the Plaintiffs".

[17] See par 18 above and par 109 below.

[18] See par 23 above and par 109 below.

[19] These comments expressed opinions about the conduct of the Defendants' Solicitors. The evidence was objected to, however, it was admitted, subject to an order under s 136 of the Evidence Act 2008 (Vic).

[20] An order was also made under s 136 of the Evidence Act in relation to the opinions expressed in this communication.

[21] See par 7 above.

[22] At pars 6 and 7 above.

[23] See, for example, Supreme Court Act 1986 (Vic), ss 24A, 27A; Supreme Court Rules, r 50.07; Civil Procedure Act 2010 (Vic), s 3 "appropriate dispute resolution".

[24] Unreported, Supreme Court of New South Wales, Rolfe J, 18 March 1992 (BC9201994). See also 789Ten Pty Ltd v Westpac Banking Corporation [2004] NSWSC 594, [17], [27] (McDougall J).

[26] Macquarie Dictionary (5th ed, 2009), 1038.2, col 2.

[28] See, for example, P Butt et al, Encyclopaedic Australian Legal Dictionary (LexisNexis, as at 11 September 2014); Black's Law Dictionary (10th ed, 2009) 1129.10, col 2-1130.4, col 2. For completeness, reference is made in cl 17(b) of the Mediation Agreement to the "Practice Standards for Mediators operating under the National Mediator Accreditation System". Those practice standards include a section entitled "Description of a mediation process". That description makes it plain that the mediation process involves the support of a mediator.

[30] See par 8 above.

[31] Which, as has already been observed at par 10 above, went beyond the proper function of the mediator.

[32] See, for example, Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd [2014] VSCA 32, [19] (Nettle and Beach JJA and McMillan AJA); DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423, 434.4 (Stephen, Mason and Jacobs JJ, Aickin J agreeing).

[33] See the Mediation Agreement, cl 1: par 7(1) above.

[34] See, for example, Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603, 655 [262] (Campbell JA).

[35] Abadeen Group Pty Ltd v Bluestone Property Services Pty Ltd [2009] NSWCA 386; (2009) 14 BPR 27,133, 27,144, [110] (Sackville JA, with whom Hodgson and Campbell JJA agreed); Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 548E (Gleeson CJ).

[36] It has been suggested in a number of cases that there is a 4th class of agreement. On the facts of this case, it is unnecessary to consider this line of authority: see, for example, Geemaz Management Pty Ltd v Geelong Motors Pty Ltd [2013] VSC 571, [16] (Croft J); Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101, 110 [24] (Ipp J, with whom Pidgeon J agreed); Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628D (McLelland J); Sinclair, Scott & Co Ltd v Naughton [1929] HCA 34; (1929) 43 CLR 310, 317.7 (Knox CJ, Rich and Dixon JJ); but see also GJ Tolhurst, JW Carter and E Peden "Masters v Cameron - again!" (2011) 42(1) Victoria University Wellington Law Review 49.

[37] [1954] HCA 72; (1954) 91 CLR 353 (Dixon CJ, McTiernan and Kitto JJ).

[40] (1877) 7 Ch D 29, 32.5.

[41] [1954] HCA 72; (1954) 91 CLR 353, 363.4.

[42] Abadeen Group Pty Ltd v Bluestone Property Services Pty Ltd [2009] NSWCA 386; (2009) 14 BPR 27,133, 27,144, [112] (Sackville AJA, with whom Hodgson and Campbell JJA agreed) and the cases there cited; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 547G-548A (Gleeson CJ, with whom Hope and Mahoney JJA agreed) and the cases there cited.

[43] (1988) 18 NSWLR 540, 548C (Gleeson CJ, with whom Hope and Mahoney JA agreed).

[44] Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] VicRp 55; [1994] 2 VR 106, 138.1 (Brooking J), 176.5-177.2 (Tadgell J), 198.10-199.3 (JD Phillips J).

[45] Needlework Warehouse Pty Ltd v Chansonette Pty Ltd [2005] FCA 1525; (2005) 226 ALR 252, 265 [83] (Lindgren J); Donellan v Watson (1990) 21 NSWLR 335, 342C (Handley JA); Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634, 649.4 (Stephen J, with whom McTiernan ACJ agreed), 658.9-659.1 (Mason J); Chown v Parrott [1863] EngR 503; (1863) 14 CB(NS) 74, 83.2 (Erle CJ), 83.5 (Willes J), 83.7 (Byles J), 84.9 (Keating J) [1863] EngR 503; [143 ER 372]; Fray v Voules [1859] EngR 540; (1859) 1 EL & EL 839, 847.4 (Lord Campbell CJ)[1859] EngR 540; , [120 ER 1125].

[46] It is unnecessary to decide this issue.

[47] Reference was made to Lister v Romford Ice and Cold Storage Co Ltd [1956] UKHL 6; [1957] AC 555, 576.9 (Viscount Simonds).

[48] [1954] HCA 72; (1954) 91 CLR 353, 360.5.

[49] See pars 15, 17, 18 and 30 above.

[51] See pars 12-14, 17-19, 23 and 30 above. Also cf Needlework Warehouse Pty Ltd v Chansonette Pty Ltd [2005] FCA 1525; (2005) 226 ALR 252, 265-266 [86] (Lindgren J).

[52] [1954] HCA 72; (1954) 91 CLR 353, 360.5.

[54] See pars 44-46 above.

[55] [1954] HCA 72; (1954) 91 CLR 353, 360.5. Although it is unnecessary to make any finding as to precisely when agreement was reached, it appears that the agreement between the Defendants and Allan was reached on 3 June 2014, by way of the telephone conversation between the Defendants' Solicitors and Allan's Solicitors: see pars 17-18 above. Further, the agreement between the Defendants and McDonald Real Estate appears to have been reached on 5 June 2014 by way of the email from McDonald Real Estate's Solicitors to the Defendants' Solicitors: see par 23 above.

[56] [2010] NSWSC 318, [38]. See also, Grave v Blazevic Holdings Pty Ltd [2012] NSWCA 329, [21], [62]-[63].

[58] Civil Procedure Act 2010 (Vic), s 7.

[59] Cf comments of the Court of Appeal in the context of personal injuries litigation: Eaton v ISS Catering Pty Ltd [2013] VSCA 361, [55] (Neave JA, Hargrave and Dixon AJJA).

[60] Civil Procedure Act, ss 16, 19, 22, 24 and 25.

[61] If the matter cannot be dealt with on the papers, so be it. Any disproportionate costs incurred may be addressed by the court in due course.

[62] [1954] HCA 72; (1954) 91 CLR 353, 360.5.

[63] See, for example, Needlework Warehouse Pty Ltd v Chansonette Pty Ltd [2005] FCA 1525; (2005) 226 ALR 252, 265 [84] (Lindgren J). Of course, the fact a document is or is not marked "without prejudice" may not be determinative in deciding whether or not it conveyed a "without prejudice" communication. See, for example, Smith v Gould (Ruling No 1) [2012] VSC 210, [20] (Dixon J); White v Director of Housing [2003] VSC 124, [23] (Gillard J); Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11, [91] (Murray, Parker and McLure JJ); Unilever Plc v The Procter & Gamble Company [1999] EWCA Civ 3027; [2000] 1 WLR 2436, 2448A (Robert Walker LJ); Rodgers v Rodgers [1964] HCA 25; (1964) 114 CLR 608, 614.5 (McTiernan, Taylor and Owen JJ).

[64] See pars 28, 30, 31, 32 and 35 above.

[65] See Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564, 581.9-582.3 (Mason CJ, Dawson, Toohey and Gaudron JJ), 596.5 (Brennan J).