Weimann v Allphones Retail Pty Ltd

BACKGROUND 3 The parties have been locked in substantial disputation for some time. Part of that history is described in the recent Full Court decision Allphones Retail Pty Ltd (ACN 008 168 090) v Weimann [2009] FCAFC 135 (at [40]-[45]). 4 As part of the process by which the group action franchise disputation has continued, an extensive mediation was conducted in both Perth and Adelaide over various dates as a result of which documents were produced. The question is whether the document ultimately produced evidences an oral agreement in relation to settlement of the proceeding (the Weimann proceeding). 5 For the reasons which follow, I am unable to conclude that any binding agreement was reached.

THE MOTION 6 Mr Weimann has sought orders that: 1. Notice be provided to group members of the terms of the settlement set forth in the document entitled 'Agreed Outline of Mediation Settlement - New Agreement' annexed to the affidavit of Robyn Aline Chew sworn 21 October 2009 and filed herein on or before a date to be fixed by the Court. 2. The Court fix a date by which any group member may opt out of the proceedings. 3. Pursuant to s 33V(1) of the Federal Court Act, the proceedings be dismissed upon the terms of settlement set forth in the document entitled 'Agreed Outline of Mediation Settlement - New Agreement' annexed to the affidavit of Robyn Aline Chew dated 21 October 2009. 4. The respondent pay the applicant's costs of the motion.

CONFIDENTIAL EVIDENCE 7 Subsequent to the hearing in this matter, Allphones made a request through correspondence with my chambers that annexure 'A' to these reasons (annexure 'RAC-11' to the affidavit of Ms Robyn Aline Chew sworn 21 October 2009) not be published publicly as an annexure to these reasons. By consent, the parties have agreed that both annexures 'RAC-11' and 'RAC-8' to the affidavit of Ms Chew, being annexures 'A' and 'B' to these reasons, be confidential. 8 Sections 17 and 50 of the Federal Court of Australia Act 1976 (Cth) (FCA) relevantly provide: 17(1) Except where, as authorized by this section or another law of the Commonwealth, the jurisdiction of the Court is exercised by a Judge sitting in Chambers, the jurisdiction of the Court shall be exercised in open court. … 17(4) The Court may order the exclusion of the public or of persons specified by the Court from a sitting of the Court where the Court is satisfied that the presence of the public or of those persons, as the case may be, would be contrary to the interests of justice. 50 Prohibition of publication of evidence etc. The Court may, at any time during or after the hearing of a proceeding in the Court, make such order forbidding or restricting the publication of particular evidence, or the name of a party or witness, as appears to the Court to be necessary in order to prevent prejudice to the administration of justice or the security of the Commonwealth. 9 The proceeding was conducted in open court in accordance with s 17 FCA. As to s 50 FCA, I am satisfied that the request of the parties for me to make confidentiality orders in respect of the annexures is appropriate. The basis of my conclusion in relation to the substantive motion is sufficiently evident from the reasons but the disclosure of the alleged detailed outcome of the mediation when settlement was not achieved can not be appropriate especially when there is to be a trial of the mediated proceeding within a short period of time. Such disclosure may be prejudicial within the meaning of s 50 FCA. 10 The confidential annexures will be available to Judges of this Court and otherwise, only on a limited basis in accordance with specific orders.

JURISDICTION 11 The Court has jurisdiction to enforce a settlement by way of its accrued jurisdiction (Needlework Warehouse Pty Ltd v Chansonette Pty Ltd (2005) 226 ALR 252; We Two Pty Ltd v Shorrock (No 2) (2005) 220 ALR 749 and Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd [1956] VLR 555). 12 In Roberts VLR 555, the view taken by the Full Court of the Supreme Court of Victoria was that in simple cases a compromise will be enforceable on a motion for judgment in the proceeding. In Cairns, Australian Civil Procedure, 7th ed, the author summarises the conditions for enforcement in this manner as being: · The proceeding must still be on foot; · Any stay of the proceeding must be lifted; · The claim must be for the payment of money on a common account such as for a debt or for money for work and labour; · The compromise must also be on the terms that the defendant must pay the plaintiff an agreed amount on an agreed date; · The defendant must have agreed to submit to judgment in default of payment. 13 If those conditions are fulfilled the Court will enforce the compromise in the proceedings to which the compromise relates. It is when the compromise involves an issue going beyond the scope of the original proceedings that it cannot be enforced in those proceedings. In that situation, further proceedings are required (Crisp & Gunn Co-operative Ltd v Hobart Corporation (1963) 110 CLR 538). Perhaps of greater importance is the analysis in Roberts [1956] VLR 555 (at 564) in which Smith J said: In deciding whether justice can be done under the summary procedure the Court, of course, needs to consider a variety of matters involving questions of degree. These, I think, must include the extent to which extraneous matters are involved, how substantial are the questions to be determined, to what extent questions of credibility are likely to arise, and whether pleadings and discovery may be desirable. 14 There is a further complication, however, as the proceedings are representative proceedings under Pt IVA of the FCA. As the proceedings are representative proceedings they may not be settled without approval of the Court (s 33V(1) FCA). 15 At this stage no opt out date has been set by the Court as required by s 33J FCA. Although the group members have apparently been informed of the alleged agreement, the Court is still required to consider whether formal notice should be given to them under s 33X(4) FCA. 16 The approach which has been taken by the parties is that those issues will be addressed once the Court has determined whether or not Allphones is bound by the terms of the settlement agreement.

THE 'AGREEMENT' 17 Mr Weimann contends that a concluded oral agreement was reached in the terms recorded in the document which is attached to these reasons as Annexure 'A'. That document is said to evidence the oral agreement. He contends that Allphones purported to repudiate the agreement by purporting to amend its 'offer' on Wednesday, 14 October 2009. Mr Weimann and the other franchisees represented in this proceeding seek to enforce the agreement.

CIRCUMSTANCES LEADING UP TO AND SURROUNDING THE REACHING OF THE ALLEGED AGREEMENT 18 The argument raised dictates that the context in which the oral 'agreement' was reached be closely examined even though this is in its nature a summary proceeding. I propose to take the majority of the summary on this topic from the affidavits of Ms Chew and her husband and partner in the legal practice of 'chew+matthews', Mr Idris Mark Owain Matthews. 19 An affidavit was also sworn by the Allphones' solicitor, Ms Fiona June Steffensen and another by Mr Anthony Richard Mitchell who is the Chairman of the Board of Directors of Allphones. 20 In light of the conclusion I have reached, it is unnecessary to express views in relation to credibility. The fact that I am taking most of the information surrounding the circumstances giving rise to the alleged agreement from the evidence of Ms Chew is largely because it is more comprehensive, more detailed and was, in substantial measure on the key issues, uncontentious. 21 I also consider that it is undesirable in light of the conclusion that I have reached to express views one way or another on the topic of credibility. There is an imminent trial. The conclusions I have reached require no determination on the basis of credit. I should also indicate that while there were a significant number of objections raised to the evidence led for Allphones, it is unnecessary to resolve those in detail as the evidence for Mr Weimann may be accepted as correct without changing the conclusion as reached. I will, however, say something in due course about evidence of subjective intention or belief. 22 Relevantly, the story starts on about 29 August 2008. Allphones that day sent to Mr Weimann and his wife a notice of dispute (the Notice of Dispute). It was in standard form and sent to other Allphones' franchisees. By the Notice of Dispute, Allphones was commencing the dispute resolution process in order to resolve the issues set out in the notice. Allphones proposed in the document that the disputes be resolved by negotiation or if they could not be resolved by negotiation, by mediation. It recognised the fact the Australian Competition and Consumer Commission (ACCC) had brought proceedings against Allphones and three of its executives alleging that in various respects the conduct of Allphones towards its franchisees had been misleading and deceptive, unconscionable and in breach of the Franchising Code of Conduct (the Code). 23 The Notice of Dispute recorded that on or about 22 August 2008, the ACCC had written to Allphones' franchisees seeking expressions of interest to participate in proposed proceedings against Allphones pursuant to s 87(1B) of the Trade Practices Act 1974 (Cth) (TPA). Allphones observed that it was likely to be some time before either of the existing Court proceedings or any contemplated proceedings could be finally resolved. As the matters in dispute impacted on the business directly, Allphones sought to resolve them as soon as possible. 24 Allphones identified the principal issues arising from the Court proceedings that should be addressed by negotiation or mediation between Allphones and its 'eligible' franchisees (being those franchisees party to an Old Agreement being a franchise agreement entered into with Allphones before Allphones adopted its New Agreement in September 2007 (the Old Agreement)). They were: 1. whether or not Allphones was or is entitled to charge to eligible franchisees and/or deduct from payments to them certain amounts charged or deducted during certain periods for the services or capital improvements said to be carried out by Allphones; 2. whether Allphones was or is entitled to charge to eligible franchisees and/or deduct from payments to franchisees other amounts charged or deducted during certain periods; 3. whether Allphones was or is obliged to share with the eligible franchisees certain bonuses received from carriers to the extent that such bonuses have not been shared with them; 4. whether Allphones was or is obliged to share with the eligible franchisees certain payments of the nature of co-op advertising, support and rebates received from handset and equipment suppliers to the extent that the payments have not been shared with them; 5. whether certain statements Allphones has made in brochures and on its website were false and misleading and caused any loss or damage as a result; 6. whether Allphones has committed breaches of the Code and whether any eligible franchisees have suffered any loss or damages as a result; 7. whether information Allphones has supplied or is supplying to eligible franchisees about charges and receipts of the kinds referred to in 1, 2 and 3 above about carrier commission rates have been adequate; 8. whether the arrangements for any franchisees' association had been appropriate; 9. whether Allphones has imposed stock hold or commission hold on eligible franchisees in circumstances where it was not entitled to do so and whether any eligible franchisee has suffered loss or damage as a result; and 10. whether the terms of the Old Agreement provide for payments to franchisees, whether as MTAC or MTSC or otherwise in respect of data revenue, broadband revenue, upgrades and value added services. 25 The dispute resolution process, according to the Notice of Dispute, was to take place in accordance with the provisions under cl 24 of the Old Agreement. Those provisions do not require amplification at this stage. 26 Allphones nominated a timetable for various steps to be taken in relation to negotiation and mediation and indicated that it would invite the ACCC to participate in the mediation and that if the ACCC chose not to do so, Allphones intended to keep the ACCC informed of the mediation's progress. 27 Allphones indicated in the notice (cl 9) that it sought an outcome which involved: · Allphones making a monetary payment to eligible franchisees; · Allphones and eligible franchisees entering into a deed of release; · Allphones and eligible franchisees entering into a New Agreement. 28 The object was to: result in a settlement of all outstanding disputes with each Eligible franchisee which provides a final resolution of past issues and establishes an appropriate platform for the future success of the Allphones business model for the benefit of all Eligible Franchisees. 29 On 16 April 2009, Mr David Gaszner, a partner in a firm of solicitors in Adelaide was appointed as mediator (the Mediator) for the mediation in respect of all franchisees represented by chew+matthews. 30 Each of the clients of chew+matthews have executed mediation agreements in identical terms. Under those agreements both Allphones, as franchisor and each of the franchisees: 1. Appointed Mr Gaszner (the Mediator) to assist them to resolve the dispute between the parties. (The Mediator accepted the appointment). 2. Agreed to try to resolve the dispute consistently with the principles of the Code. 3. Were not to be bound by any comments, suggestions, advice, opinions, statements or recommendations of the Mediator in relation to the issues in dispute. 4. Agreed that the Mediator was entitled to meet with any of the parties or their advisors, jointly or separately. 5. Agreed that the parties 'shall attempt to resolve the dispute by mediation and shall instruct their advisors accordingly'; and 6. Undertook to attend or be represented before the Mediator by persons with 'full authority to settle the dispute within any range and on any terms that can reasonably be anticipated and the parties agree to inform the Mediator immediately should they not have such authority to settle'. (emphasis added) 31 The dispute related to all of the issues detailed in the Notice of Dispute given by Allphones. 32 The Mediator and Mr Mitchell as Chairman of Allphones and Ms Chew initially met on 19 September 2009 in Perth. After that meeting they agreed to continue the mediation in Adelaide on and from 29 September 2009. 33 A substantial number of franchisees were represented at the mediation on and from 29 September 2009 in Adelaide. The majority were represented by chew+matthews. Some were represented by Mr Michael Birch of Birch Partners, another firm of solicitors. 34 The mediation was adjourned on 2 October 2009 and resumed on 12 October 2009 in Adelaide at the Mediator's offices. It was attended by the Mediator, Ms Chew, Mr Matthews, Mr Birch, Mr Mitchell and Ms Steffensen. Ms Chew notes that on arrival at the Mediator's offices, the Mediator showed Ms Chew and Mr Matthews to what has been described as meeting room B. They were subsequently joined by Mr Birch. The three legal representatives of the franchisees discussed their clients' joint initial proposal for resolution of the dispute insofar as it concerned their clients executing New Agreements. Ms Chew by that stage had already drafted the initial proposal after consultation with Mr Birch, Mr Matthews and her clients. 35 At about 11.30 am that day, Mr Birch, Mr Matthews and Ms Chew joined the Mediator, Mr Mitchell and Ms Steffensen in another meeting room (meeting room A). Ms Chew says she gave an oral presentation of her initial proposal to Mr Mitchell and Ms Steffensen. She relied on handwritten notes prompting her for introductory remarks and relied on a prepared draft of the initial proposal dated 9 October 2009 in order to prompt her on the terms of the initial proposal. She made notes on that document during the initial meeting. 36 After that presentation, Mr Birch then informed Mr Mitchell and Ms Steffensen of the proposal advanced by the franchisees in respect of the topic of fees and charges, saying that the franchisees should not be paying the fees and charges but in the interests of reaching agreement, the franchisees, in consideration of Allphones giving up rebates, were prepared to sign up to the New Agreement if Allphones were prepared to not charge the franchisees who were in the mediation any fees and charges other than retention fees which would be 'capped'. Ms Steffensen inquired as to what charges Mr Birch was referring, to which he indicated all of the charges and Ms Chew pointed out that the charges were listed in cl 9 or cl 7 of the New Agreement. She produced a copy of the New Agreement and found the relevant clause and discussed the types of fees listed, what they related to and there ensued a short discussion on some of the issues raised by the initial proposal. At the conclusion of this the franchisees' representatives left meeting room A and returned to meeting room B. 37 On returning to that room, Ms Chew amended the document containing the initial proposal to reflect her handwritten notes on the documents and the other comments made by Mr Birch during the earlier presentation. The amendment was made by editing a Microsoft Word document and underlining (by tracking) the amended portions (Franchisees' Proposal V1). At some point while this process was ensuing, the Mediator came into meeting room B and asked the franchisees' representatives whether they had a proposal on the issue of compensation to which Ms Chew replied 'Our proposal is 100 cents in the dollar. They have had a year to make an offer on compensation and they have never offered us anything'. 38 At approximately 12.30 pm, the Mediator returned to meeting room B and asked whether the representatives of the franchisees had (in electronic format) a Word document of the proposal as the Allphones' representatives wanted to mark-up that Word document with their counter-proposal. The Mediator produced a USB flash drive and Ms Chew copied the amended document to it. 39 In the following two and a half hours, Mr Mitchell came into meeting room B on a couple of occasions to inform the franchisees' representatives of the conversations he had been having with personnel in Allphones. On one of those visits he produced an email from Mr Tony Baker concerning the pricing of accessories and handsets. 40 At about 3.00 pm, the Mediator delivered to the legal representatives of the franchisees an amended version of the Franchisees' Proposal V1 with the amendments underlined saying 'here is their proposal'. A copy of that proposal (Allphones' Proposal 1) is annexed to these reasons as Annexure 'B'. 41 The Mediator left the room while the franchisees' representatives discussed the amendments and made notes on the document. Some 20 minutes later, the franchisees' representatives returned to meeting room A and joined the Mediator, Mr Mitchell and Ms Steffensen. Ms Chew said 'Thank you for your proposal. There are just a few issues we want to respond to and get clarification on'. She said that first, the franchisees would not be writing to Allphones about the mark down policy. She said that in their view it was a breach of the TPA to do so and needed to be withdrawn. There was discussion on that issue but it was not clear on the evidence whether or not it was resolved. 42 There was discussion concerning a proposed amendment to cl 5(c). Mr Birch said it was necessary to add the words 'by the Franchisor' after 'terminated' in that clause and required another minor adjustment of detail which Ms Steffensen noted. The franchisees' representatives required the fees and charges section to be changed so that 12 months would be changed to 24 months. This was also noted by Ms Steffensen. Ms Chew raised the question as to why, in relation to cl 11 dealing with transparency, the provision of reports was subject to 'best endeavours' to which Mr Mitchell responded that there has been an undertaking to discuss with the carriers the provision of the reports. Ms Chew said 'Ok fair enough. What about the retention reports?'. 43 There was then discussion about the various other statements and a short discussion on whether to prescribe a set period for the provision of tax invoices prior to any set-offs made by Allphones against franchisees' commissions. 44 At the conclusion of that discussion, Mr Birch said 'I am happy to leave it as reasonable'. Ms Chew said 'Yes, perhaps it is best to leave it as "reasonable"'. She then struck out the words '7 days' written next to item 12 of Allphones' Proposal 1. 45 Ms Chew then asked a question concerning cl 14.4 and, in particular, what was meant by 'subject to drafting'? She had pointed out that there was a relocation clause in the template agreement for franchisees who hold their own lease and suggested that clause be used. Mr Mitchell responded to that saying that 'when AllVentures holds the lease, then it is a little different. It's not so straightforward'. Ms Chew responded that it was irrelevant because the location was always subject to the franchisor's consent, however she was happy with leaving that issue ('subject to drafting') as being 'subject to drafting'. 46 At the completion of this exchange, Ms Chew said 'That is all of our comments. To recap, we want all the changes to 5(c), fee relief for 24 months and the best endeavours obligation should not apply to the MTSC statements'. Ms Steffensen said 'Ok we will discuss that'. The franchisees' representatives then left the room and returned to meeting room B and were only there for a few moments before either Ms Steffensen or the Mediator called them back into meeting room A. 47 The next event of major significance to Mr Weimann's claim is that Ms Chew says that at approximately 4.00 pm, on return to meeting room A, Ms Steffensen said words which, in substance, were 'Allphones accepts your proposal'. Everyone was in attendance. Ms Chew said 'Thank you. That is great'. Mr Birch said something similar. Ms Steffensen then: 1. read out the changes to be made to 5(c); 2. confirmed that 12 months would be replaced with 24 months with respect to the fee relief; and 3. MTSC statements would not be subject to the best endeavours obligation. 48 Ms Chew placed a tick next to 24 that she had written in item 9, fees and charges annexed to item 11(iii) in the Allphones' Proposal 1 as Ms Steffensen spoke. 49 After some pleasantries, the Mediator said words to the effect that 'now the hard work had been done, it was necessary to attend to the practicalities of who would be drafting the side agreement and amending the New Franchise Agreement'. Ms Steffensen said to Ms Chew 'why don't you draft the changes to clause 16.3, since you said you had some standard wording and also clause 7.10 of the New Agreement'. Ms Chew agreed and made a note of that on Allphones' Proposal 1 and volunteered to draft the 'side agreement'. 50 Ms Steffensen said she would draft the release. Ms Chew also noted that on her copy of Allphones' Proposal 1. Ms Steffensen then said 'What about the deeds of release?'. Either Mr Birch or Mr Matthews said the 'deal is not contingent upon deeds of release for the ACCC action' which Ms Chew confirmed. Mr Matthews sought confirmation that the release was only sought in respect of the Weimann proceeding. There were exchanges about this, ending with Mr Mitchell making it clear that 'We understand that this deal only relates to the Weimann action'. He said 'I want the Weimann action to settle'. To that, Ms Chew identified two of the franchisees who would not settle. The Mediator asked 'What has to happen to settle the Weimann action?' to which Ms Chew said 'The Settlement Agreement needs to go before the Judge and he needs to approve it' to which Mr Mitchell said 'I want the opportunity to settle the ACCC action also. What will it take to settle the ACCC action as well?' and Mr Matthews said 'a cheque to our clients' to which Mr Birch suggested that Mr Mitchell should make an offer. Mr Mitchell said that the problem was that the franchisees were expecting 'telephone numbers'. He continued with words to the effect 'I cannot discriminate between those franchisees that have already signed deeds of release and those that haven't'. 51 To this the Mediator said the 'mediation would remain open', to which Ms Chew asked 'Isn't the mediation over?'. Ms Steffensen said 'It is a formality, the mediation has to remain open until the final documents are signed'. The Mediator said 'That is correct' to which Ms Chew said 'Well I want everyone to be clear that it is going to take some time for me to contact clients to let them know the deal and then document the side agreement and have them all signed up'. This delay appeared to be accepted. 52 Mr Mitchell reinstated his desire to settle the Weimann proceeding at which point Mr Birch said that he had to leave to catch his flight to Sydney and said that he needed to talk about those of his clients that were in the mediation but who had already signed New Agreements. Ms Chew said that she also had two clients who have already had to sign the New Agreement but they would like to be able to sign the side agreement. Ms Steffensen asked why those clients should have the benefit of the mediation settlement to which Ms Chew said 'Because they were told by Allphones that if they signed the New Agreement they would get the benefit of any changes that were subsequently agreed and they are a part of the mediation and know about the benefits and concessions that the rest of the Mediation Clients will receive under the side agreement'. 53 Mr Birch left and Ms Chew continued to discuss the topic of individual clients of chew+matthews who would need further discussion between the parties in order for them to sign the New Agreement and the side agreement. Ms Steffensen said 'why don't we record this directly into the agreed document' and stood up to type in the amendments into the computer which was positioned in the corner of the room. Mr Birch stood up, shook hands and left, thanking people and bestowing his 'full authority in the capable hands of Robyn and Idris in respect of any tidying up of the document that may be necessary'. 54 On departure by Mr Birch, the Mediator projected the Allphones' Proposal 1 onto a large screen which everyone in the room could see. Ms Steffensen then amended the document by typing her notes from her earlier discussion with Mr Birch regarding Mr Birch's three clients. Ms Chew and all others were able to see changes being made as the document was projected onto the screen. There was discussion about the detail concerning those clients who were not part of the settlement agreement. 55 After discussion about two particular franchisees, Ms Chew said to Mr Mitchell 'What a mess, but I think this deal will sort them out' to which Mr Mitchell said 'No, I think there was some funny business going on there. Allphones tried to do the right thing, but it all got messed up'. After discussion on these matters, Ms Steffensen then rolled back to the top of the document on the screen and asked 'What is the title of the Document?'. 56 After some exchanges it was agreed that the title should be 'Agreed Outline of Mediation Settlement, 12 October 2009 - New Agreement' (the Agreed Outline). 57 Ms Steffensen then made further amendments to the Agreed Outline. She made changes to cl 5(c) to the period of fee relief and to the section on transparency, typing in 'mutual releases in relation to the Weimann proceeding' at the end of the table in the Agreed Outline. Ms Chew said that the franchisees would want the normal boiler plate clauses including a clause that provides for the side agreement to prevail over any inconsistency in the New Agreement. Ms Steffensen included the words 'Side agreement to prevail'. 58 Ms Steffensen then typed in the section headed 'Attendees at the Mediation' in the document. The Mediator then left the room and collected printed copies of the Agreed Outline which the parties began reading. In the course of that reading, Ms Chew said to Ms Steffensen 'The points raised in item 1 are not really necessary. The agreement on the rebates is that the position remains unchanged'. Ms Steffensen then deleted the first two paragraphs in item 1 and typed 'the new agreement applies unchanged in respect of rebates'. There was also discussion about where the third paragraph on local incentives should go as it did not really belong under the heading 'rebates'. That was shifted to paragraph 2 by Ms Steffensen. 59 Ms Chew then observed that it would be necessary to change the words such as 'offer' or 'propose'. Ms Steffensen and Ms Chew discussed deleting para 2 of item 2. That was agreed. They continued working through the Agreed Outline with Ms Steffensen either deleting or changing text in accordance with agreement between the two solicitors. At some point during this process, Ms Chew took over from Ms Steffensen. 60 There was discussion about keeping 'the deal' confidential and how that could be achieved and whether or not Ms Chew would circulate the Agreed Outline. It was agreed to include the fact that it was confidential on the top of the document. Ms Steffensen who was then back in front of the computer typed in 'Without Prejudice and Confidential' on the top of the Agreed Outline to which Mr Mitchell objected as it was legal language. He suggested that it needed to 'state something like confidential and not to be circulated'. That was agreed. 61 Mr Birch's name which had been omitted was added to the list of mediation attendees. There were colons next to each name, Ms Chew asked what they were for and Ms Steffensen said 'for all of us to sign the document'. Ms Chew said 'Why do we have to sign it? Michael can't sign he's not here'. The Mediator said that 'Michael can sign it tomorrow'. 62 Ms Chew said 'but I need to talk to all of my clients first' to which Ms Steffensen became frustrated and said 'You told us you had full authority. What have we been doing all day? This is totally unacceptable'. The Mediator said 'She is right. Everyone did say they had full authority and it is a requirement of the mediation'. Ms Chew said that she did have full authority but she had to discuss the deal with the clients. She had 'a file of instructions from all of my clients with all of their individual issues and they will be asking why those matters were not reflected in the deal and I will have to manage that'. She said, alternatively, 'we can through all of my individual instructions and change the document to reflect them. We can go back to two and a half years for the fee relief'. 63 Mr Mitchell said 'No no we don't want to change anything. I understand that you have to recommend the deal to your clients'. Mr Matthews said 'To be clear, the words in this document will not change'. Someone said that it was an Agreed Outline and Ms Chew said 'Yes it is stated to be agreed at the top' and 'I want to talk to my clients through this deal and point out the benefits for them and why this is a good deal for them' to which Mr Mitchell said 'I understand that and if they don't take their legal advice then they are stupid. If you have trouble getting anyone over the line then we can talk with them together'. Ms Chew said 'Thank you Tony. You know which franchisees that you and I will have to have a discussion with. They are the ones identified in the additional issues'. 64 Mr Mitchell said 'Why don't we get the Mediator to sign the document' and Ms Chew agreed. Mr Mitchell said 'I am good for something' and Ms Chew said 'Tony you were critical to reaching this settlement. It never would have happened without you'. The Mediator signed the mediation agreement in the presence of those still in the room and there were parting comments including Ms Chew shaking Mr Mitchell's hand thanking him again for his assistance and Mr Mitchell saying 'We have to settle the Weimann action' to which Ms Chew said 'Don't worry Tony it is settled'. 65 On the following day, the Mediator circulated the Agreed Outline now in the form annexed to these reasons as Annexure 'A' and bearing his signature. 66 On the following day Ms Steffensen forwarded an email to all those in attendance including the Mediator saying We are instructed that Allphones amends its offer of settlement set out in the document distributed by [the Mediator] yesterday in the following manner: 1. The sunset period identified in items 2 and 6 be amended to refer to the "a period of any unexpired portion of a Mediation Franchisees' initial term or 24 months, whichever is greater" (so as to mirror item 8); 2. As to item 14, Allphones amends that offer to read that "Allphones offers to pay Mediation Franchisees the sum of $200,000 (to be paid by Allphones into the Mediation Franchisees' solicitors trust account and distributed amongst the Mediation Franchisees in their sole discretion) provided that mutual releases are granted in respect of all claims relating to, arising out of, or in connection with matters referred to in the Notice of Dispute or alleged or pleaded in the Weimann proceedings". 3. In the event that this offer is not accepted by each of the Weimann Group Members, Allphones settlement offer is withdrawn. We note that the 14 day "standstill" in the Weimann proceedings expires today, and that the consent minutes of order require the exchange of proposed directions by Friday. Allphones will not consent to any further extension. Allphones position is that any further settlement discussions can occur and parallel to the prosecution of the proceedings, as is the usual case in commercial litigation. (emphasis added)

WAS THERE AN AGREEMENT? 67 While on the one hand the email from Allphones two days after the intensive mediation process would have been at the very least surprising to Mr Weimann, that does not necessarily dispose of the issue. If there were other significant loose ends or matters undecided in the agreement evidenced by the Agreed Outline, it was open to Allphones to continue to negotiate as part of the attempted completion process. 68 Summary judgment, as this application effectively is, can only be the preserve of the clearest of cases. The very fact that it was necessary to strenuously cross-examine two of Allphones' deponents in relation to the oral agreement may well suggest that this is not such a clear cut case. The fact that I was strenuously urged by counsel for Mr Weimann to reject parts of the oral evidence of Allphones' deponents and the fact that the contract may only be certain if certain clauses were severed each strongly militate against a binding and concluded agreement having been reached - but especially one in respect of which summary judgment could be obtained. 69 These comments are not intended in any way to be critical of the process that has been taken by Mr Weimann because the whole purpose of mediating was to endeavour to avoid a trial and Mr Weimann was entitled to advocate his view that an agreement had been reached with only a few matters of detail to be resolved in good faith. I am unable to conclude for reasons that follow that it can be said that the parties had reached a binding agreement so as to dispose of the proceedings. 70 Before doing so, I should address the primary arguments advanced for Mr Weimann in favour of a binding agreement. 71 The first of the indicia that the parties intended to be bound immediately was said to be evidenced by the departure of Mr Birch prior to the end of the meeting. It is an objective fact and I have so found that Mr Birch did leave prior to the end of the meeting and left the completion of matters on behalf of the franchisees in the hands of Ms Chew and Mr Matthews. However, I take that as being totally neutral to completion of an agreement. Mr Birch had a plane to catch, he made that clear as he left. Whether or not the loose ends were tied up on or after his departure or even if Mr Birch himself (who not insignificantly was not called to give evidence) was persuaded that a concluded and binding agreement had been reached, the test is an objective one. That is, objectively viewed, did each of the parties have the necessary intent to create legal relations and did they, in fact, do so? Mr Birch's departure is equally as consistent with needing to catch the plane in the hope that Ms Chew and Mr Matthews would be able to tie up the loose ends as it is with needing to catch the plane but, in fact, Ms Chew and Mr Matthews being unable to tie up the loose ends. It is one matter to desire to finalize agreement but another, objectively viewed, for that desire to be achieved. 72 The next fact relied upon by Mr Weimann is the removal of the language of 'proposal' and 'offer' from the document jointly by Ms Steffensen and Ms Chew and the substitution of words consistent with a concluded agreement. I would take this aspect as certainly going towards the intention of the parties to achieve a concluded agreement but taken alone, without proper analysis, it does not show that they achieved that objective. Certainly on the evidence of Ms Chew, which I have accepted, all of the parties at the mediation were keen to achieve an agreement. While other constructions might be open (even accepting the substance of her evidence entirely), the change of language in the document is consistent only with an intention to try to reach an agreement. In contrast, the fact that none of them signed the document other than the Mediator would strongly suggest that an agreement had not been reached. 73 Next, Mr Weimann relies on the importance placed by Ms Steffensen on the authority of those representing the franchisees. It is argued that whether such authority was held would be irrelevant if the document was only intended to be an offer and not a record of the parties' agreement. I do not consider that this is a powerful factor. Clearly it was central even to the making of a reliable offer that the franchisees had empowered their solicitors to do so. It would be equally as important for the making of a binding offer as the making of an acceptance. In saying this, I do not wish to be accepting that describing the document ultimately produced from the mediation (but not signed by anybody) as an 'offer' is accurate. Indeed, the title to the document which was a composite title achieved by joint contributions is in turn non-specific. Even the title 'Agreed Outline of Mediation Settlement - New Agreement' does not bear the precision which one might expect if firm agreement had been reached on each of the component elements of that which still had to be resolved. While the Agreed Outline might have been agreed, it is an outline that was agreed rather than an agreement, even in principle, as to every element in dispute. Some significant parts of it were still outstanding for determination. 74 Next and of greater importance I think is the argument that Mr Mitchell accepted that the matter had settled (as did Ms Chew). Accepting Ms Chew's evidence as to Mr Mitchell's desire to settle the Weimann proceeding, his expression of belief that the discussion had achieved a settlement, (assuming that belief also to be true), does not really carry the matter much further. It may be that a belief that was genuinely held at the completion of the mediation but on reflection and on consideration of the remaining issues and complexities required to be resolved it was an ill-founded belief or more of a hope. A statement that the complex litigation had settled from either party given that there had simply been oral exchanges perhaps evidenced by a jointly produced outline which left a number of matters outstanding does not, as a matter of objective fact, constitute a binding agreement. 75 The next factor to which weight is given by Mr Weimann is Ms Steffensen's acknowledgement that the holding open of the mediation was a 'formality'. One can understand why such a statement may be relied upon by Mr Weimann to support a submission that Allphones genuinely considered and conveyed that all substantive matters had been concluded and that the keeping open of the mediation was simply until the documentation was completed. I can accept that this factor may go towards an argument that there was an intention on the part of the parties to be bound immediately but it does not solve the question of whether, in fact, there was something by which they could be bound. 76 There is then Mr Mitchell's request that the Mediator sign the document (which the Mediator did). As to this, Mr Weimann argues that there would be no point in Mr Mitchell requiring the Mediator to sign the document if he did not wish to record the fact that the Mediator was confirming that the parties had reached agreement on the matters it contained. The whole topic of signature or lack of it to the document is something of a mystery. Allphones itself now contends that Mr Mitchell did not have authority to bind the Board at the mediation. I do not accept this argument. The execution of the mediation agreement with its confirmation of authority and the attendance in the mediation over several days and the outline of events on the evidence of Ms Chew whose evidence I have accepted in substance, make it clear that the whole purpose of the mediation was to reach an agreement to settle at least the Weimann proceeding. If that was so, one may wonder why none of the parties to the litigation was prepared to sign the document. The lack of signature to the document said to evidence the oral agreement (when provision for signature was made on it) is a powerful factor against the parties intending to be immediately bound. 77 There is also and I will discuss this further below, the factor that Ms Chew herself in the circumstances was not prepared to sign the Agreed Outline until 'selling it' to her clients. I accept her evidence that she was strongly of the belief that a 'great deal' had been done for her clients and she believed she could persuade them to that effect but that it did constitute a compromise of their expectations. That being so, she believed she would have to sell it to them. On the other hand, she had a binding and comprehensive authority and was able to conclude the agreement at least from her clients' perspective on that day. But it seems that no one wanted to sign the agreement other than the Mediator. 78 One can only be left with the impression that at that stage no one was prepared to bind themselves, commit or lock into the arrangements that had been reached such as they were. 79 However, all this aside, I think that there are further difficulties in relying on the agreement in which specific performance is sought. 80 It is to be recalled that each of the mediation franchisees was and remains subject to a binding franchise agreement called the Old Agreement. For the purpose of the mediation, what was being negotiated was the terms of a proposed new franchise agreement that was sought by Allphones as a condition of any settlement. The Agreed Outline reflects amendments contemplated to the proposed agreement rather than variations to the Old Agreement to which the mediation franchisees are currently a party. In other words the proposal from the mediation was that Allphones be permitted to rely upon its New Agreement circulated to all franchisees subject to modifications which would be reflected in an agreement reached in the mediation with these particular franchisees in the Weimann proceeding. 81 To give effect to any settlement, it was necessary that each of the franchisees agree with Allphones to terminate their existing franchise agreement, that is, the Old Agreement and to execute a new franchise agreement in substitution for it to incorporate modifications to the existing proposed agreement as negotiated during the mediation together with revised clauses yet to be prepared by Ms Chew for insertion to cl 7.10 and cl 16.3. Additionally, Allphones and each franchisee would have to enter into a 'side agreement' which was also subsequently to be prepared by Ms Chew. Then, each franchisee had also to execute an appropriate release. The terms of that document were subsequently to be prepared by Ms Steffensen. One can imagine that some of these agreements may not entail much complexity or disputation but given the history of unhappy relationships between these parties, that prospect would be slim. 82 It also followed then that prior to execution of the New Agreement the Code would also impose obligations. The obligations under the Code would be imposed on Allphones as franchisor to provide each franchisee a copy of the Code, a disclosure statement and a copy of the New Agreement in the form in which it is to be executed, at least 14 days before the franchisee entered into the New Agreement (the Code, cl 10). It appears that Allphones made some reference to this in the course of the mediation and whether it was alive to the point or not, the obligations were imposed by force of statute. At least one factor relevant therefore to take into account on the argument as to whether the parties intended to be immediately bound was the fact that a variety of documentation required completion and in particular, the New Agreement required a 14 day cooling off period before execution could be required.

SUBJECTIVE INTENTION 83 Each party expressed views on the evidence as to their subjective belief or intention in relation to completion of an agreed bargain. That evidence is not of assistance in the circumstances of this case. 84 On the issue of subjective intention, Barrett J in St George Football Association Inc v Soccer NSW Ltd [2005] NSWSC 1196 said (at [5]-[9]: 5 The defendant, in contending for the relevance and admissibility of the passage in question, points to a passage in the judgment of Santow J in Forbes v Australian Yachting Federation Inc (1996) 131 FLR 241 at p.285 referring to subjective intention to enter into contractual relations as a matter relevant to the question of contract formation before him. His Honour referred in that connection to the decision of the Court of Appeal in Air Great Lakes Pty Ltd and KS Easter (Holdings) Pty Ltd [1985] 2 NSWLR 309. It is relevant to quote a portion of the judgment of Mahoney JA in that case appearing at pp.330-331: "But this does not mean that actual subjective intention qua contract may not be relevant. Thus, if A, notwithstanding what he said, had the actual subjective intention that no contract should result, a binding contract may not be held to exist. If the terms of A's promise were such that B, as a reasonable man, would take it to involve a legal commitment and B did not know that A did not intend that there be a binding contract, then a binding contract would result. A would not be permitted to set up, against such a meaning of what he had said, a contrary subjective intention. But the result would not, I think, be the same if B knew of A's actual subjective intention. The law would not, I think, impose the relationship of contract where, eg, A though he was play-acting and B knew of that fact. A's actual subjective intention would be effective to prevent the contract arising. A fortiori, if both A and B had the intention that no contract should result, and each knew of it, then none would be imposed. And, I think, this notwithstanding that a reasonable bystander would take from what they said and did that there was an exchange of congruent promises and a mutual purpose to contract. I put aside for this purpose special cases, of estoppel, third party rights, and the like. The result is therefore that intention to contract, in the subjective sense, is relevant to but not determinative of the existence of a binding contract. It acts, in a sense, as a limiting factor, that is, as a reason for not giving to what on the face of it is an exchange of congruent promises, the legal consequences which would otherwise be given to it. And on this basis, it is, in principle, relevant to know what was the actual subjective intention of each party, in the example that I have given, in order to determine whether the legal relationship of contract is to be held to exist. More correctly, it is relevant to know the intention of the one party where it is the intention of or known to the other." 6 It is, in my opinion, clear that Mahoney JA attached significance to the subjectively held intention of one party only to the extent that it was an intention of which the other party was aware. I would emphasise parts of the extract quoted: "... if B knew of A's actual subjective intention"; "... and each knew of it"; and, in particular, the concluding words, "... it is relevant to know the intention of the one party where it is the intention of or known to the other" [emphasis added]. 7 Mahoney JA also observed that the existence of a contract is: "a consequence which the law imposes upon, or sees as the result of, what the parties have said and done." That, of course, is a statement of the objective theory of contract formation. Something that a party has neither said nor done but has kept locked up in the party's head cannot be one of the things by reference to which the law imposes a contract in the way to which his Honour referred. 8 My assessment is that, while matters of subjective intention may play some part in determining the question of contract formation, they cannot do so where the particular intention is uncommunicated and remains the privately held and unexpressed frame of mind of the party holding it. Such an assessment seems to me to be warranted by the approach taken by Mahoney JA in Air Great Lakes; and I do not consider it to be inconsistent with anything said by Santow J in the Australian Yachting Federation case.

A CONCLUDED BARGAIN? 85 It would be entirely artificial to say that at every mediation or negotiation, before a binding agreement is reached, the parties would be expected to dot every I and to cross every T. Nor does that expectation accord with the law. The question is one of weight to be given to the outstanding factors, especially in a complex commercial matter. Did the parties intend to make a concluded bargain? (Lezabar Pty Ltd v Hogan (1989) 4 BPR 9498 at [18] per Gleeson CJ and Masters v Cameron (1954) 91 CLR 353). In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 the New South Wales Court of Appeal discussed the issue of whether parties to negotiations have agreed upon sufficient matters to produce the consequence that perhaps by reference to implied terms or by resort to considerations of reasonableness a Court will treat their consensus as sufficiently comprehensive to be legally binding. That concept, the Court of Appeal said, was not the same thing as deciding they intended to make a completed bargain. The Court said: Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention. 86 Clearly there was no formal contract in the present situation but that is not conclusive. The various alternative possibilities are recognised in the famous High Court decision of Masters 91 CLR 353 in which the Court held (at 360) that where parties who have been in negotiation reach agreement upon terms of a contractual nature but agree that the subject matter of the negotiation is to be dealt with by a formal contract, the case may belong to one of three categories. The first is 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. The second may be a case in which the parties are 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. Third is the case where it is the intention of the parties not to make a concluded bargain at all unless and until they execute a formal contract. It has also been suggested that there is a fourth category by way of variation to the first, namely, where the parties intend to be bound immediately by the terms upon which they have agreed while expecting to make a further contract in substitution for the first containing by consent additional terms (Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628 per McLelland J). 87 Whether the parties reached final agreement or intended to postpone contractual relations or the operation of a particular term is ultimately a question of intention to be objectively ascertained from the language the parties have used or which may be inferred from their conduct. Subjective intention has a very limited role, if any, to play on this topic unless expressed as part of the exchange said to form or contribute to the oral agreement. But, in any event, the issue is primarily one of the construction of the language of the parties, whether it has been expressed orally or in writing (Lezabar 4 BPR 9498 per Gleeson CJ). As his Honour went on to observe in that case, where the parties make an 'informal agreement' which amounts to a 'limited consensus', it is then necessary for the Court to make a decision concerning their intention to enter into a concluded contract. To make that decision, the Court will need to construe their language and characterise their conduct by reference to any surrounding circumstances which are properly to be regarded as throwing light upon their intention. 88 For Allphones, matters which are stressed are that the Agreed Outline is not expressed in terms of binding rights or obligations. For example, there are no words of compulsion that require the franchisees to enter into new franchise agreements. 89 Secondly, it is argued that it would have been a contravention of the Code to compel the mediation franchisees to enter into new agreements other than on 14 days' notice and it can be inferred that the solicitors for all parties were aware of this legal requirement. 90 Thirdly, the Agreed Outline was not signed by any of the parties and, indeed, Ms Chew expressly refused to sign it on behalf of her clients. 91 Fourthly, it is argued by Allphones that chew+matthews did not have instructions to bind their clients to a settlement (a submission I cannot accept). 92 Fifthly, it is argued that Mr Birch leaving the mediation prior to the finalisation of the document is inconsistent with an intention on his part to be committed. 93 Sixthly, it is argued that it would be incongruous if the parties were intending that some un-stated culmination of terms from the Agreed Outline together with the draft New Agreement circulated over 12 months earlier would together operate as a binding agreement to govern the parties' relationship for years to come. 94 Seventh, Allphones argue that both Ms Steffensen and the Mediator kept the mediation open to enable negotiations to continue. 95 Next, it was argued that the key aspects of the proposed settlement had not been resolved such as the scope of the releases. Ninthly, there were a large number of additional issues specific to each of Ms Chew's clients that would need to be resolved. Finally, it is argued that the conduct of both Ms Chew and Mr Birch subsequent to the mediation was inconsistent with the intention that the Agreed Outline was to have binding effect. 96 In my view, some of these matters carry little weight (for example, the first matter, the fifth matter (which I think is neutral), the seventh matter and the tenth matter carry little weight). 97 The others, however, taken together strongly support a conclusion that, while the parties, at best, hoped that they had achieved an immediately binding agreement at completion of the mediation, there were significant matters outstanding. None was prepared to or did sign the Agreed Outline. Ms Chew was not prepared to sign it until she had 'sold' it to her clients. 98 The scope of the matters to be resolved together with the potential for disputation in relation to them was so significant that the completion of the Agreed Outline, unsigned by the parties, was no more than a step towards reaching agreement.

AUTHORITY 99 Having concluded there was an absence of intention to create legal relations which would be immediately binding, it is unnecessary to consider the arguments raised by Allphones in relation to absence of authority. However, if I were to do so, I would not do so in favour of Allphones. The argument for Allphones is that the allegedly binding agreement was struck in the absence of the mediation franchisees and that there was no suggestion from Ms Chew that she contacted any, much less all of the mediation franchisees to obtain their authority prior to the finalisation of the Agreed Outline but rather that she needed to go back to take instructions from them. Equally, it is said, there is no evidence from Mr Birch as to his authority to bind the remainder of the franchisees to any terms of settlement and, indeed, he had left before finalisation of the document. 100 I consider that there was authority, either expressed or implied, by the document executed by all the parties in relation to the mediation. In those circumstances, perhaps at a technical level, the refusal of Ms Chew to sign until she had sold the agreement to her clients was an unnecessary precaution but not an unsurprisingly careful step given the struggle the parties have experienced in the completion of this litigation.

UNCERTAINTY 101 There is a further but related problem. In my view, the oral agreement evidenced by the Agreed Outline would be void for uncertainty. The Agreed Outline expressly contemplates that the following matters were still to be negotiated and agreed: 1. The terms of the release to be granted to Allphones and whether or not they were to be mutual releases; 2. The territory applicable to franchisees in a strip mall which was to be negotiated on a case by case basis; 3. The content of the relocation clause for franchisees who are licensees of AllVentures; 4. The change of control provisions; and 5. Above all, the additional issues specified on page 7 of the Agreed Outline. 102 In relation to the latter issue, the Agreed Outline nowhere clearly indicates (absent the most tenuous construction and inference) what the position of the franchisees referred to on page 7 under 'Additional Issues' was to be. It is unclear whether their position had been resolved as part of the Agreed Outline on the one hand, or on the other whether they were excluded from the agreement. While one would lean to the latter position as is the oral evidence for Mr Weimann, the agreement is silent on what was to be done in relation to the 'Additional Issues'. 103 This is particularly significant because the evidence was that those included under the heading of Additional Issues included franchisees who were part of the group included in the representative proceedings in the Weimann proceeding. 104 As the evidence of Ms Chew, which I accept, was that the driving force behind Mr Mitchell's express desire to reach agreement at the mediation was to settle the Weimann proceeding, leaving these franchisees on the Additional Issues page of the Agreed Outline was going to defeat that purpose. Nothing in the agreement throws light on what was to happen with those franchisees. This is a 'loose end' of considerable magnitude. 105 It may be accepted that in an appropriate circumstance, the fact that certain matters are to be negotiated may not mean the parties are starting with a blank piece of paper. A helpful analysis of this issue appears in the judgment of Allsop J in the Court of Appeal of New South Wales (Allsop P, Ipp and Macfarlan JJA) in United Group Rail Services Ltd v Rail Corporation (NSW) [2009] NSWCA 177, where Allsop P with whom Ipp and MacFarlane JJA agreed said (at [74]-[98]): 74 With respect to those who assert to the contrary, a promise to negotiate (that is to treat and discuss) genuinely and in good faith with a view to resolving claims to entitlement by reference to a known body of rights and obligations, in a manner that respects the respective contractual rights of the parties, giving due allowance for honest and genuinely held views about those pre-existing rights is not vague, illusory or uncertain. It may be comprised of wide notions difficult to falsify. However, a business person, an arbitrator or a judge may well be able to identify some conduct (if it exists) which departs from the contractual norm that the parties have agreed, even if doubt may attend other conduct. If business people are prepared in the exercise of their commercial judgement to constrain themselves by reference to express words that are broad and general, but which have sensible and ascribable meaning, the task of the Court is to give effect to, and not to impede, such solemn express contractual provisions. It may well be that it will be difficult, in any given case, to conclude that a party has not undertaken an honest and genuine attempt to settle a dispute exhibiting a fidelity to the existing bargain. In other cases, however, such a conclusion might be blindingly obvious. Uncertainty of proof, however, does not mean that this is not a real obligation with real content. … 81 The business people here chose words to describe the kind of negotiations they wanted to undertake, "genuine and good faith negotiations", meaning here honest and genuine with a fidelity to the bargain. That should be enforced. In my view, subcl 35.11(c) was not uncertain and had identifiable content. 82 Nothing in these reasons goes beyond, in my view, the proper role of an intermediate appellate court. The reasons are an explication of the views of Kirby P and Waddell AJA in Coal Cliff delivered in 1992 and reflected in related contexts in later Court of Appeal judgments.

SEVERANCE 106 Finally, Mr Weimann submitted in reply, that if some of these remaining issues were uncertain, they could be severed from the main agreement. No primary case was run on that basis and no evidence adduced to establish that there could be acceptable severance. 107 Again in United Group Rail Services Ltd the Court of Appeal dealt with the relevant principles - 83 Before examining the text of cl 35.12, it is necessary to make some comments about subcl 35.11(d). The reference to mediation is short and lacking detail. No detailed procedure was set down. If the relevant organisation had existed, it may well have had its own procedures. Nevertheless, the reference of a dispute to an organisation for mediation does not guarantee that a mediation will take place. This lack of specificity may be seen to be important when one comes to construing cl 35.12. … 90 The principles to decide whether or not a contract or part of a contract is severable or not from some provision void for uncertainty are not, relevantly, in doubt. It is a question depending upon the intention of the parties to be gathered from the instrument as a whole: Whitlock v Brew [1968] HCA 71; 118 CLR 445 at 453; 457 and 461; Life Insurance Company of Australia Limited v Phillips [1925] HCA 18; 36 CLR 60 at 72; Brooks v Burns Philp Trustee Co Ltd [1969] HCA 4; 121 CLR 432 at 442; Amoco Australia Pty Limited v Rocca Bros Motor Engineering Co Pty Ltd (No 2) [1975] UKPCHCA 1; 133 CLR 331 at 342. … 93 In McFarlane v Daniell (1938) 38 SR (NSW) 337 at 345 Jordan CJ said: "When valid promises supported by legal consideration are associated with, but separate in form from, invalid promises, the test of whether they are severable is whether they are in substance so connected with the others as to form an indivisible whole which cannot be taken to pieces without altering its nature: Harwood v Millar's Timber & Trading Co Ltd [1917] 1 KB 305, at p 315. If the elimination of the invalid promises changes the extent only but not the kind of the contract, the valid promises are severable: Putsman v Taylor [1927] 1 KB 637, at pp 640-1." (emphasis added) 108 The position being considered by the Court of Appeal was quite different from the present. In United Group Rail Services Ltd the negotiations had not advanced to that level. 109 There was at least an executed contract with a specific negotiation clause under consideration. One could in most instances determine whether or not there had been compliance with it. This oral agreement contains no such clause. 110 As with some other arguments, the need to resort to such a concept within the framework of what is in effect, a summary judgment application for specific performance, suggests that the 'agreement' is far from being obvious.

CONCLUSION 111 For all those reasons, specifically lack of intention to create legal relationships and uncertainty of the alleged agreement, I am unable to conclude that the parties reached an enforceable agreement at the mediation meeting held on 12 October 2009 in Adelaide or at any other time and accordingly the motion must be dismissed. The applicant is to pay the respondent's costs, to be taxed if not agreed. I certify that the preceding one hundred-eleven (111) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Associate: Dated: 30 October 2009 Counsel for the Applicant: GD Cobby