Ter Wisscha v Verlindan

Background

1. On 28 September 2021 these proceedings were commenced by way of a statement of claim. At that time, the plaintiff was represented by Shine Lawyers.
2. At all material times, the defendant was the plaintiff's personal trainer and that the plaintiff suffered an injury while undertaking a training session with the defendant. Liability is an issue.
3. In or about early to mid-2018, the defendant instructed the plaintiff to commence performing clean and jerk exercises.
4. On 1 October 2018 the Defendant instructed and/or directed the Plaintiff to perform a clean and jerk exercise with a weight of 120kg without a squat or dip being performed and/or without using his legs to bear weight.
5. The Plaintiff performed the clean and jerk exercise as directed and/or instructed by the Defendant.
6. As the Plaintiff was performing the clean and jerk exercise, the Plaintiff felt pain in his neck, down into his right arm and felt disoriented.
7. On or about 4 October 2018 the Plaintiff returned to the gym and was instructed and/or directed by the Defendant to perform some weight training exercises targeting the chest area; however, the Plaintiff experienced loss of strength and power in the right arm when attempting the exercises.
8. The Defendant then directed and/or instructed the Plaintiff to return to the gym the following day with kickboxing pads for their next personal training sessions.
9. For the following two weeks the Defendant instructed and/or directed the Plaintiff in a new training regime which consisted of tackling bags and/or persons, wrestling and core stability exercises.
10. Following two weeks, the Plaintiff attempted a return to weight training by performing a body weight push up; however, he immediately collapsed and experienced immediate pain and discomfort in his right neck, shoulder, upper back, arm, hand and fingers.
11. On 1 November 2018 the Plaintiff was required to undergo emergency cervical spine surgery.
12. The parties consented to court-ordered mediation. The mediation took place on 1 February 2024. Mr Campbell Bridge SC was appointed as the mediator by the parties. The matter did not resolve at during mediation, however settlement discussions continued thereafter.
13. On 22 March 2024, the defendant's solicitor sent a letter to the plaintiff's solicitors, Mr Andrew Stewart (Mr Stewart) and Mr Nasser Hamowi (Mr Hamowi) of Stewart Law. In short, the letter offered to resolve the proceedings on two alternative bases: 1. pursuant to an Offer of Compromise, for judgment in favour of the defendant and each party bear its own costs; or 2. by payment of $250,000.00 to the plaintiff, inclusive of his costs and disbursements, subject to agreed terms.
14. On 25 March 2024, Mr Hamowi sent an email to the defendant's solicitor indicating the offer was being considered.
15. Later that day, the defendant's solicitor received a further email from Mr Hamowi, confirming that the offer was accepted, "in particular, payment of $250,000.00 being the settlement sum", and requesting transfer of the monies to the trust account of Stewart Law.
16. Shortly thereafter, the defendant's solicitor received a phone call from Mr Stewart. During that conversation, the following was discussed in relation to the settlement: 1. Mr Stewart asked if the defendant's solicitor had received Mr Hamowi's email. This was confirmed. 2. Mr Stewart asked how quickly the funds could be paid. 3. The defendant's solicitor said that this depended on how quickly Centrelink could issue a clearance, and then funds were generally paid within 28 days of the clearance being issued. 4. The defendant's solicitor indicated that she would send standard settlement terms to Mr Stewart and Mr Hamowi, to review.
17. Following this conversation, the defendant's solicitor sent an email to Mr Hamowi acknowledging his acceptance of the offer and confirming that she would draft standard terms formalising the payment of the settlement sum and the Medicare and Centrelink monies. She advised that these terms would be provided shortly thereafter.
18. The defendant's solicitor then emailed Mr Hamowi a copy of the proposed consent judgment containing the standard terms to facilitate payment of the settlement sum.
19. Also on 27 March 2024, in reliance on the acceptance of the offer and the resolution of the proceedings, the defendant's solicitor notified various people that the matter had resolved.
20. On 5 April 2024, the defendant's solicitor emailed Mr Hamowi and requested that the consent judgment be signed and returned so that she could commence the settlement process.
21. On 10 April 2024, having not received any response to her email, the defendant's solicitor emailed Mr Hamowi again, noting the impending directions hearing, and suggesting an adjournment of two weeks to enable the consent judgment to be filed.
22. On 11 April 2024 the defendant's solicitor emailed Mr Hamowi again, noting the matter remained listed.
23. Later that day Mr Stewart emailed the defendant's Solicitor saying that his client was "still considering their position on the settlement offer", noting that it remained open until 19 April 2024. In response, the defendant's solicitor confirmed that the offer had already been accepted.
24. In a further email from Mr Stewart that day, he advised that his client was "traversing his position and does not accept the offer".
25. On 16 May 2024, the plaintiff's solicitors on the record filed a notice of ceasing to act.

The law

1. The issue that falls for determination is whether a binding contract came into existence at the conclusion of the settlement discussions. Determining whether there is a legally binding and enforceable agreement is a matter of contract law and construction, and the below principles must be considered.
2. In Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 (Masters v Cameron) at [360] the High Court held that in circumstances where the parties conduct contractual negotiations and agree that the subject matter of their negotiations is to be dealt with by a subsequent formal contract, those circumstances would fall into one of three categories: 1. a case 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; 2. 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; and 3. a case in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
3. The High Court held that the first two categories were binding contracts, but the third category was not.
4. A fourth category, derived from the High Court's decision in Sinclair, Scott & Co v Naughton [1929] HCA 34; (1929) 43 CLR 310, was recognised by McClelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities (1986) 40 NSWLR 622 (at 628E). Under this category, parties are content to be bound immediately and exclusively by the terms which they had agreed upon while simultaneously expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.
5. Regardless of which category an agreement may fall within, it is necessary to look at the objective intention of the parties.
6. In GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, McHugh JA (with whom Kirby P and Glass JA agreed) said at [634] "The decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction."
7. In Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313 Beazley P (with whom Bathurst CJ and Meagher JA agreed) observed at [64] that: "Where parties have reached agreement as to all the terms of a contract, but also agreed that a further, formal agreement is to be executed the question for determination is whether the parties intend to be immediately bound. That is to be determined objectively from the 'outward manifestations' of the parties' intentions: Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 at [35] In Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, Mahoney JA set out (at 326G) three questions which are helpful to consider: Did the parties arrive at a consensus? (if they did) was it such a consensus as was capable of forming a binding contract?; and (if it was) did the parties intend that the consensus at which they arrived should constitute a binding contract?"
8. The issue of enforcing an agreement made at mediation was considered by Garling J in BJP1 v Salesian Society (Vic) Inc [2021] NSWSC 241. In summary, the factors that were considered relevant in assessing the parties' intention were: 1. the mediation was arranged pursuant to court orders and was an invariable part of the Court's management approach; 2. the mediation was a formal setting as indicated by the presence of the mediator, use of a mediation agreement and the fact that it was formally convened; 3. both sets of solicitors entered upon and negotiated during the mediation with the clear mutual understanding that any settlement agreed upon would be given effect to by the plaintiff entering into a deed and in usual form; 4. it is a well-known and commonly understood mechanism to file a notice of discontinuance once monies are paid; 5. the only contentious issue was in what sum the matter would resolve; 6. all parties present were authorized to negotiate; 7. the plaintiff was able to give instructions by telephone at any time during the mediation; 8. the language used during the mediation was clear, including the lack of any expression such as "settled in principle"; 9. the mediator indicated that the matter was settled and terminated the mediation; 10. there was no demur observable from correspondence after mediation concluded; and 11. there was no objection raised in relation to the deed after it was received.
9. There is no evidence that the plaintiff was not available at any time to provide instructions to his lawyers. Indeed, on 25 March 2024, Mr Hamowi sent an email to the defendant's solicitor indicating that the defendant's offer of compromise was being considered by the plaintiff.
10. It is well established that a solicitor is authorized to reach an agreement to settle proceedings, and that a solicitor has implied authority to enter into agreements with or without reference to their client: Waugh v HB Clifford & Sons Ltd [1982] Ch 374, [1982] 1 All ER 1095; Pavlovic v Universal Music Australia Pty Limited [2015] NSWCA 313 at [137].
11. The precise communications between plaintiff and his legal representatives are unknown.
12. However, on 27 March 2024, the following specific exchanges occurred: 1. at 11:40am, the defendant's solicitor received an email from Mr Hamowi, confirming that its earlier offer was accepted. 2. following this conversation, at 12:10pm, the defendant's solicitor sent an email to Mr Hamowi acknowledging acceptance of the offer and confirming that she would draft standard terms formalising the payment of the settlement sum, Medicare and Centrelink, and provide those shortly; and 3. at 2:06pm, the Defendant's Solicitor emailed Mr Hamowi a copy of the proposed consent judgment containing the standard terms to facilitate payment of the settlement sum.
13. I agree with Senior Counsel for the defendant that this case falls within category 1 of Masters v Cameron. It was the objective intention of the parties to be bound immediately to an agreement which resolved the plaintiff's claim with payment by the defendant of $250,000 which sum was inclusive of legal costs.
14. The subsequent conduct of the parties can also be considered when determining the existence of a binding contract.
15. In this case, it was not until 15 days later, on 11 April at 2:47pm, that Mr Stewart emailed the defendant's solicitor to advise that his client was still considering his position on the settlement offer.
16. No further communication occurred in relation to the terms of the Consent Orders after 27 March 2024. No objection has been raised by the plaintiff's lawyers as to the terms of the Consent Orders.
17. It is clear that there has been no issue with the Consent Orders that has prompted the plaintiff's change of mind.

Should the balance of the settlement monies be paid into court?

1. On 18 January 2022, Ms Vanessa Turner (Ms Turner), the defendant's solicitor received an email from Ms Charlene Carrigan (Ms Carrigan) at Shine Lawyers, noting that Shine Lawyers was no longer instructed. Ms Carrigan indicated that the file transfer was underway and they were awaiting a signed Deed.
2. On 11 May 2023, a Notice of Change of Solicitor was filed, appointing Mr Stewart, in place of Mr Adams.
3. On 23 May 2023, Ms Turner was notified of an equitable lien asserted by Adams & Co over any judgment or settlement sum.
4. On 21 June 2023, Ms Turner's colleague, Ms Sophie Vagenas, was notified of an equitable lien claimed by Shine Lawyers over any settlement or judgment sum.
5. Also on 21 June 2023, the defendant's solicitor caused an email to be sent to Mr Hamowi, confirming a lien had been asserted over any settlement or judgment sum by both Shine Lawyers and Adams & Co Lawyers.
6. On 30 January 2024, the defendant's solicitor received an email from Mr Adams, confirming that his firm held a judgment of $126,169.00 in the Supreme Court of NSW, against the plaintiff.
7. On 19 May 2024, the defendant's solicitor received an email from Mr Adams, again asserting the lien and requesting an update. Following this email, Mr Adams and the defendant's solicitor had a short email exchange in relation to the status of the claim.
8. On 30 May 2024, the defendant's solicitor received an email from Mr Stewart asserting an equitable lien over any settlement monies.
9. On 3 June 2024, the defendant's solicitor received a further email from Mr Adams regarding his asserted lien.
10. On 31 July 2024 and 4 August 2024, Mr Adams sent the defendant's solicitor two separate emails, seeking an update on the proceedings and against asserting his lien.
11. On 5 August 2024, the defendant's solicitor emailed each of the plaintiff's former solicitors, advising of the settlement, the dispute regarding the settlement, and the impending hearing of the Motion on 16 September 2024.
12. In this email, the defendant's solicitor notified of the defendants intention to also seek an order an order from the Court that, in the event the Motion was successful, the settlement sum less statutory repayments was to be paid into Court.
13. On 5 August 2024, the defendant's solicitor forwarded a copy of her email of 5 August 2024 to the plaintiff and provided a further copy of the Motion. She also notified the plaintiff that if the Motion was successful, the defendant intended to seek additional orders enabling the defendant to pay the settlement sum (less any amounts owing to Centrelink and Medicare), into Court.
14. At the time of affirming this affidavit, the defendant's solicitor has not received any response from the plaintiff to my email of 5 August 2024.
15. On 28 August 2024, the defendant's solicitor caused a letter to be sent to the plaintiff, serving the defendant's written submissions in relation to the Motion.
16. On 10 September 2024, the defendant's solicitor received an email from Mr Adams of Adams & Co Lawyers, confirming agreement to the proposal set out in her email of 5 August 2024. She had not received any response from either Mr Stewart of Stewart Law, or from Shine Lawyers to her email of 5 August 2024.
17. Brydens Lawyers Pty Limited v Uin; Gerard Malouf & Partners Pty Limited v Brydens Lawyers Pty Limited [2024] NSWSC 124 was a case concerning similar factual circumstances. In that case, Hammerschlag CJ in Eq ordered the monies should be paid by the defendant's solicitor into court. His Honour stated; "[40] This is not an occasion upon which the court can or should embark on any consideration of whether the settlement figure was inadequate. I have already observed that the settlement was reached on the advice of experienced senior counsel. There is a consent judgment finally disposing of Alice's claim on a final basis. It is also not within the jurisdiction of the Court to order that the proceeds of settlement be distributed on a random percentage basis, not according to law. [41] Alice's position on the legal fees is protected by the requirement for those fees to be the subject of a formal assessment. The additional costs involved may not be substantial but they are a consequence of her not accepting the quantum of the bills (which no doubt is perfectly understandable)."
18. In these present proceedings neither Lander & Rogers nor its solicitors have any interest in, nor should it bear the burden of, continuing to hold monies in trust.
19. I propose to order that the amount held by them, less what is apparently owed to Centrelink and Medicare, be paid into Court forthwith. I observe that Lander & Rogers acknowledge that money is payable to Centrelink and Medicare and are aware of the amounts owing.

THE COURT ORDERS THAT 1. Pursuant to s 73 of the Civil Procedure Act 2005 (NSW), that the Court enter judgment for the plaintiff in the sum of $250,000.00 inclusive of the plaintiff's costs and disbursements, in accordance with the terms of the Consent Judgment annexed and marked "A". varied as follows: 1. 'payment of the settlement sum by the defendant is to be satisfied by payment of the settlement sum (less any amounts deducted and paid into Centrelink Australia or Medicare Australia in accordance with orders 2 and 3 above into court'; and 2. by removal of orders 6 (b) and 6 (c). 1. Plaintiff to pay the costs of the defendant, of and incidental to this Notice of Motion. 2. Lander & Rogers are to pay into Court, out of the monies currently in their trust account, as a consequence of the settlement of proceedings 2021/00276620-1, the sum of $250,000 less the money that is payable to Medicare and Centrelink, forthwith.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 September 2024