Alexander v Amaca Pty Ltd & Ors
[2009] VSC 100
•26 March 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 6250 of 2008
| MARLENE ALEXANDER | Plaintiff |
| and | |
| AMACA PTY LIMITED (ACN: 000 035 512) (formerly JAMES HARDIE & COY PTY LIMITED) | First Defendant |
| SELTSAM PTY LIMITED (ACN: 000 003 734) (formerly WUNDERLICH LIMITED) | Second Defendant |
| AMABA PTY LTD (ACN: 000 387 342) | Third Defendant |
| FMP GROUP (AUSTRALIA) PTY LTD (ACN: 004 332 496) | Fourth Defendant |
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JUDGE: | KAYE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19 March 2009 | |
DATE OF JUDGMENT: | 26 March 2009 | |
CASE MAY BE CITED AS: | Alexander v Amaca Pty Limited & Ors | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 100 | |
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TORT – Contribution between defendants – Claim by plaintiff settled by defendants – Whether binding agreement between defendants as to respective contributions to settlement.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | None | |
| For the First Defendant | Mr R Stanley SC with Mr D Wallis | DLA Philips Fox |
| For the Second Defendant | Mr A J Uren QC with Mr J Carmody | Monahan + Rowell |
| For the Third Defendant | Mr R Stanley SC with Mr D Wallis | DLA Philips Fox |
| For the Fourth Defendant | Ms M A Hartley | Thomson Playford Cutlers |
HIS HONOUR:
In January 2008, the plaintiff, Ms Marlene Alexander, was diagnosed as suffering from mesothelioma. On 19 May 2008, she issued these proceedings against the four defendants, Amaca Pty Limited (“Amaca”), Seltsam Pty Limited (“Seltsam”), Amaba Pty Ltd (“Amaba”) and FMP Group (Australia) Pty Ltd (“FMP”). In her statement of claim, she alleged that she had contracted mesothelioma by inhaling asbestos dust fibres from asbestos products manufactured and supplied by one or more of the defendants between 1959 and 1976.
The trial was fixed for hearing on 16 February 2009. The plaintiff’s claim was settled on that date, when she accepted a “Calderbank” offer, made on behalf of all the defendants, in the sum of $650,000 plus costs. That offer had been conveyed to the plaintiff’s solicitors in an email from Ms Kim Bradey, the solicitor for the fourth defendant (FMP), on behalf of all the defendants, at about 4.26 pm on 13 February 2009.
The issue
Before the Calderbank offer was sent to the plaintiff’s solicitors, discussions had been held, on an ongoing basis, between the defendants’ representatives as to the contribution to be made by each defendant to the plaintiff’s claim. In the course of those discussions, it was agreed, at least between the first, third and fourth defendants, that they would jointly contribute ninety-six percent of any settlement reached with the plaintiff, with the first defendant contributing sixty-two percent, and the third and fourth defendants each contributing seventeen percent. In the part of the proceeding before me, the first, third and fourth defendants claim contribution, pursuant to s 24 of the Wrongs Act, from the second defendant in respect of four percent of the settlement sum and costs payable to the plaintiff. In response, the second defendant contends that, on the afternoon of 13 February 2009, the defendants reached a binding agreement, whereby the second defendant would contribute four percent of any settlement sum of the plaintiff up to $500,000, together with party/party costs, but no more. Mr Uren QC, who appeared with Mr Carmody for the second defendant, accepted, before me, that the settlement sum ultimately achieved with the plaintiff was not excessive, and that, if the defence of the agreement, relied on by the second defendant, should fail, it would be just and equitable, under s 24 of the Wrongs Act, for the second defendant to contribute four percent of the settlement sum. In other words, the sole issue is whether (as alleged by the first, second and fourth defendants) the second defendant should be liable to pay, by way of contribution, four percent of the settlement sum of $650,000, plus costs, or whether (as maintained by the second defendant) the second defendant should only be liable to pay four percent of the settlement sum, up to a ceiling of $500,000, plus party/party costs. Thus, it can be seen that the amount of $6,000 is in issue. However, I was informed that the resolution of this case may have some effect on the resolution of other cases.
The defence of the second defendant is essentially based on an email sent by Mr Justin Griffin, the solicitor acting for the second defendant, to Ms Bradey at 4.21 pm on 13 February 2009, and the subsequent service by Ms Bradey, on behalf of all the defendants, of the Calderbank offer to the plaintiff’s solicitors by email at 4.26 pm. Mr Uren submitted that the email sent by Mr Griffin at 4.21 pm constituted a proposal made on behalf of the second defendant, by which the second defendant’s contribution to any settlement sum would be capped at four percent of $500,000, with the second defendant not having any residual liability to contribute to any settlement achieved above that amount. Mr Uren submitted that the subsequent service by Ms Bradey, on behalf of all defendants, of the Calderbank offer on the plaintiff’s solicitors constituted an implied acceptance by her, on behalf of the first, third and fourth defendants, of the proposal made by Mr Griffin.
In response Mr Stanley QC, who appeared with Mr Wallis for the first and third defendants, submitted that the email sent by Mr Griffin at 4.21 pm did not constitute a proposal, on behalf of the second defendant, precluding any residual liability of the second defendant to make contribution to any settlement achieved with the plaintiff in excess of the sum of $500,000. In particular, Mr Stanley referred to the communications and discussions which had taken place between the parties, before Mr Griffin sent his email at 4.21 pm on 13 May, as setting the context in which that email should be understood and construed. He also relied on the terms of a conversation which had taken place between Ms Bradey and Mr Griffin, shortly before Mr Griffin sent the email to Ms Bradey of 4.21 pm. He submitted that, in that conversation, it was agreed that the second defendant should contribute four percent of any settlement concluded with the plaintiff up to $500,000, and that the first, second and fourth defendants reserved the right to proceed against the second defendant for contribution, under the Wrongs Act, in respect of the balance of any settlement achieved with the plaintiff. In addition, Mr Stanley relied on subsequent conduct of the parties, and subsequent discussions between them, as supporting Ms Bradey’s version of the conversation which took place between her and Mr Griffin.
The factual background
It is, thus, necessary for me to set out, in a little detail, the background to the communications between the parties on 13 February 2009. On 3 February 2009, a court ordered pre-trial conference took place, which was attended by representatives of the plaintiff and the defendants. At the conclusion of that conference, the defendants jointly agreed to make an offer of compromise to the plaintiff in the sum of $500,000. That offer was served on the plaintiff’s solicitors on 6 February 2009. Communications then took place between the solicitors for the defendants as to the contribution to be made by each defendant to the plaintiff’s claim. On 11 February 2009 at 9.00 am, Mr Griffin sent to Ms Bradey, and to Ms Janelle Barron, the solicitor for the first and third defendants, an email the material parts of which was as follows:
“… my instructions are that Seltsam will participate in the joint retention of counsel in the following circumstances.
•Seltsam will contribute 4% to any judgment obtained by the plaintiff at trial;
•Seltsam will contribute 4% to offers of settlement it considers reasonable;
•In the event the other defendants wish to make an offer of settlement which Seltsam does not consider reasonable, Seltsam’s contribution will be capped at 4% of the last offer made that it considered reasonable. In the event the matter is then settled, the co-defendants should pursue Seltsam by means of a private arbitration with respect to four percent of any residual amount.”
In response to that email, Ms Barron, on 11 February, sent to Mr Griffin an email stating that Amaca and Amaba were not willing to brief counsel jointly with Seltsam. She asked Mr Griffin whether the lack of such an agreement meant that “Seltsam’s contribution is no longer agreed?” In response, Mr Griffin sent an email at 11.27 am on the same day to Ms Barron and Ms Bradey, stating:
“No, contribution is agreed. Seltsam will contribute 4% to either a judgment or a settlement in the manner explained in my email of 9.00 am today.”
At about 2.00 pm on Friday 13 February, a meeting took place between the legal representatives of each of the defendants in the chambers of Mr David Brookes SC, who at that time was briefed to appear for the first and third defendants. Mr J Carmody of counsel attended at the conference on behalf of the second defendant, and Mr N Murdoch of counsel attended on behalf of the fourth defendant. In the course of the conference, discussions took place as to the question of what would constitute a reasonable settlement figure for the defendants. Different views were proffered by Mr Brookes and Mr Murdoch. Mr Carmody and Mr Griffin each declined to comment on the question of quantum, because the time prescribed by the rules within which the plaintiff might accept the offer of compromise had not yet expired. Mr Griffin stated that while the offer of compromise was open, Seltsam’s position was that it would not make any further offers. In her evidence before me, Ms Bradey stated that, by that time, it had become clear to her that the plaintiff would not accept the $500,000 offer of compromise, and she was aware that experienced senior counsel had been briefed to represent the plaintiff at the trial which was due to commence on the Monday.
The meeting concluded at 2.30 pm. Ms Bradey sought and obtained instructions from her client to make a “Calderbank” offer to the plaintiff in the sum of $650,000. At 4.02 pm Mr Brookes sent, by email, a memorandum to Mr Carmody in the following terms:
“Further to our joint conference with all defendants today, I confirm your client’s position as follows … -
1.Seltsam agrees to pay contribution at 4% of $500,000 plus costs on the basis that the offer of compromise is accepted, and otherwise pays its own costs.
2.If the Offer of Compromise is not accepted, Seltsam will pay 4% of the verdict sum inclusive of the plaintiff’s costs and otherwise will pay its own costs of the trial.
3.If the first, third and fourth defendants settle the whole action in excess of the offer of compromise, Seltsam will contribute 4%of $500,000 plus the plaintiff’s costs to the date of the Offer of Compromise and its own costs until acceptance and thereafter will defend the Notices of Contribution from the first and third defendants on the one part and the fourth defendant on the other part solely on the basis that the settlement sum was excessive, but that otherwise Seltsam will pay 4% of the sum fixed by the court. Further, consequential costs orders on the Notices of Contribution will be decided by the court.
4.Paragraph 3 above is subject to the right of Seltsam to elect to pay 4% of the settlement sum inclusive of the plaintiff’s costs, together with its own costs, before any further costs are incurred pursuant to paragraph 3.
I should further advise you that it is likely that a Calderbank letter will be forwarded to the plaintiff’s solicitor later this afternoon in accordance with paragraph 3 above.”
In cross-examination, Mr Griffin agreed that he had received a copy of Mr Brookes’ memorandum from Mr Carmody. Mr Griffin further agreed that Mr Brookes’ memorandum accurately reflected the position taken by Mr Griffin on behalf of Seltsam at the conference, save that he took issue with the inclusion of the word “solely” in paragraph 3 of the memorandum.
After Ms Bradey had obtained instructions from her clients to serve a Calderbank offer in the sum of $650,000, she made a telephone call to Mr Griffin, to discuss with him whether Seltsam was agreeable to such an offer being made, with the first, third and fourth defendants preserving their residual rights of contribution against Seltsam, should the plaintiff accept that offer. Mr Griffin was not available to take the call, and Ms Bradey left a message for him to telephone her back. She then sent an email to Mr Griffin at 4.12 pm, stating:
“I have been asked to serve a Calderbank offer in the sum of $650,000 plus costs on the plaintiff, with the offer expressed to be on behalf of the defendants. Could you please let me know as a matter of urgency if you have any difficulty with this.”
Following that email, Mr Griffin telephoned Ms Bradey. Although Ms Bradey was not able to recall, verbatim, what was said in that conversation, she did have an independent recollection of it. She stated that she said to Mr Griffin that the three defendants wished to serve a Calderbank offer for $650,000, on the basis that Seltsam would contribute four percent of $500,000, with the remaining defendants preserving their rights to pursue Seltsam for the balance of four percent of $150,000 pursuant to the Notices of Contribution which had been served by them. Ms Bradey stated that she did not precisely recall Mr Griffin’s response, but he voiced no objection to the proposal outlined by Ms Brady. In her evidence, Ms Bradey explained that she had made the telephone call to Mr Griffin, because she wanted to ensure that Seltsam would be contributing four percent of $500,000, and that any dispute between the defendants would be confined to the obligation of Seltsam to contribute to any settlement over and above that amount.
Ms Bradey made a file note of that conversation, which was tendered in evidence. She stated that she wrote the note while she was talking to Mr Griffin. She confirmed the accuracy of it, but stated that the file note did not record verbatim what was said in the conversation. The file note is in the following terms:
“I ? whether any objection to serving calderbank for $650,000 + costs on understanding that, if accepted, Seltsam would contribute 4% of $500,000 + costs, with remaining Ds reserving rights to proceed against Seltsam for this shortfall..
No objection.”
Following that conversation, Mr Griffin sent an email to Ms Bradey at 4.21 pm. That email is the basis of the alleged agreement on which the second defendant relies to resist the claim for contribution. The email stated:
“Dear Kim
Thanks for your email.
The Calderbank offer may be conveyed to the plaintiff, as long as it is understood that my client’s contribution to such an offer will be capped at 4% of $500,000 plus party/party costs.”
Ms Bradey stated in her evidence that, at the time at which that email was apparently sent to her, she was then preparing, on her computer, the Calderbank offer to the plaintiff’s solicitors, which she despatched by email at 4.26 pm. Subsequently, she read Mr Griffin’s email of 4.21 pm. When she read it, she understood it to confirm the conversation which she had just had with Mr Griffin. She said that the word “capped” had been used throughout the negotiations to refer to an “interim” capping of Seltsam’s contribution, with the question of Seltsam’s contribution to the balance (over $500,000) of any settlement with the plaintiff being resolved subsequently. Ms Bradey stated that if she had understood the email of 4.21 pm to mean that Seltsam would contribute $20,000 to a settlement with the plaintiff, and no more, she would not have sent the Calderbank offer to the plaintiff’s solicitors.
After Ms Bradey dispatched the Calderbank offer at 4.26 pm, she then sent a further email to Mr Griffin at 4.27 pm. That email stated:
“Dear Justin
The attached Calderbank offer has been sent to the plaintiff’s solicitors by facsimile and email.
In the event that the offer is accepted, the first, third and fourth defendants intend to proceed against Seltsam to obtain a contribution from Seltsam in relation to the $150,000 over and above the $500,000 to which Seltsam was prepared to contribute, with those proceedings being heard on Monday [16 February].”
Ms Bradey did not receive any response to that communication on that day. At 5.20 pm Ms Barron (the solicitor for the first and third defendants) sent to Mr Griffin a “Calderbank” letter by email in the following terms:
“I confirm that a Calderbank offer has been served on the plaintiff for the amount of $650,000 plus the plaintiff’s costs. I write on behalf of the first, third and fourth defendants. We jointly seek contribution from the second defendant of 4% to the Calderbank offer as claimed.
In the event that the second defendant refuses to contribute as sought and contribution proceedings between the parties proceed then the first, third and fourth defendant will seek their solicitor/client costs of those contribution proceedings in accordance with the principles set out by the court in … (cases quoted).”
Ms Barron did not receive any response to that letter on that date.
On Sunday 15 February, Mr Griffin was working at his office. At 3.08 pm, he sent an email to (inter alia) Ms Bradey and Ms Barron to the following effect:
“In the event that the action brought by the plaintiff is settled before it proceeds to trial, Seltsam will submit to the court that the appropriate course is for any claim to be made by Amaca, Amaba and FMP against Seltsam be articulated by way of a properly pleaded statement of claim disclosing all causes of action those parties wish to pursue.
In turn, Seltsam should be given the opportunity to place before the court a properly pleaded defence to that claim(s).
Discovery may also be required, or at least an agreed book of documents, for use at the hearing.
No doubt any interlocutory timetable can be worked out between the parties to address those and other relevant matter.”
On the same day, at 4.25 pm, Mr Griffin sent separate letters to Ms Barron and Ms Bradey, each by email, which were in identical terms, as follows:
“The issue between the defendants is the quantum of what is a reasonable settlement.
This issue cannot in our opinion be litigated by reason that contribution has been resolved in the agreed proportions to:-
(a)any settlement to which all defendants agree; or
(b)any judgment consequent upon a verdict of the court.
Thus the impasse that exists can only be resolved by some alternative dispute resolution method.
We are instructed to suggest that arbitration, or expert determination similar to that which existed under the ‘agreed principles’ be utilised.”
On Monday 16 February, at 9.29 am, Ms Barron responded to that letter by sending an email to Mr Griffin as follows:
“I refer to your letter received at 4.25 pm on Sunday 15 February 2009. We agree as per your first paragraph that ‘the issue between the defendants is the quantum of what is a reasonable settlement’.
You will also recall that it is agreed that you will contribute 4% of that quantum once it is ascertained by the court or alternative dispute resolution.
As advised, our instructions are to litigate contribution on the Notices of Contribution before the Supreme Court, unless agreement can be reached between us … .”
On the Monday morning, the plaintiff accepted the Calderbank offer. The matter came before the court. Minutes of consent orders were signed between the four defendants as follows:
“1. The First, Second, Third and Fourth defendants pay the Plaintiff’s costs, including any reserved costs, of this proceeding, such costs to be taxed in default of agreement.
2. With the exception of the claim for contribution:
(a)Commenced by the First and Third defendants against the Second defendant by Notice of Contribution filed on 15 July 2008; and
(b)Commenced by the Fourth defendant against the Second Defendant by Notice of Contribution filed on 21 July 2008.
The plaintiff’s proceeding be dismissed.
3. The hearing of the claim for contribution proceed as directed by the court.”
Finally, at 2.13 pm on 16 February, Ms Barron sent, by email, a letter to Mr Griffin, confirming settlement of the case, and stating that the first, third and fourth defendants sought the outstanding amount of $6,000, which represented four percent of the difference between the settlement sum and the offer of compromise. The letter stated: “This sum is sought either by agreement or otherwise by court order”. Mr Griffin responded to that email at 2.41 pm. The gravamen of that message was a complaint by Mr Griffin that the first, third and fourth defendants had increased the offer contained in the offer of compromise by $150,000, without “any change in the evidence available”. Mr Griffin noted that the first, third and fourth defendants’ decision to make the further offer “has prevented the offer of compromise from running its full duration of fourteen days”, and that it would never be known whether the plaintiff would have accepted the offer before it expired. He then stated: “Please explain the basis for your clients asserting that our client should be contributing an additional $6,000, given the matter set out above”.
Ms Barron responded to that message by sending an email at 9.17 am on 17 February, reciting the history of the matter, and stating:
“You may recall you agreed that it was open to the other defendants to settle the whole action subject to contribution being decided on the issue of whether the amount was excessive.”
Mr Griffin did not respond to that communication. In due course, statements of claim on the Notices of Contribution were served on the second defendant on behalf of the first, third and fourth defendants. A defence was delivered on behalf of the second defendant, pleading (inter alia) that the second defendant had agreed to the first, third and fourth defendants making the offer of $650,000 to the plaintiff, on the basis that the amount of contribution, which the second defendant would make to the plaintiff’s claim against all defendants, was capped at four percent of $500,000 plus party/party costs (and no more). The defence pleaded, as particulars of such an agreement: the email of Ms Bradey to Mr Griffin at 4.12 pm on 13 February; the email of Mr Griffin to Ms Bradey at 4.21 pm on 13 February; and the service of the Calderbank offer on the plaintiff’s solicitors on 13 February.
Submissions
Mr Uren commenced his submissions on behalf of the second defendant by contending that paragraph 3 of the memorandum of Mr Brookes of 13 February was not a reflection of the circumstances which, ultimately, came to pass. He submitted that paragraph 3 of Mr Brookes’ memorandum addressed a situation in which the first, third and fourth defendants might settle the claim by the plaintiff, without the claim of the plaintiff being settled against Seltsam. He submitted that, accordingly, that part of Mr Brookes’ email is not relevant to what occurred later that afternoon, because it addressed a different situation than that which occurred, namely, the settlement of the plaintiff’s claim against all four defendants. Mr Uren further submitted that the first occasion, on which a “Calderbank” offer was referred to in discussions between the defendants, was when Ms Bradey sent an email to Mr Griffin at 4.12 pm. It was that proposition which was addressed by Mr Griffin in his email of 4.21 pm. Mr Uren submitted that that email, in plain terms, was a proposal by the second defendant that it contribute four percent of $500,000 of any settlement with the plaintiff, and no more. He further submitted that the proposal, contained in that email, was impliedly accepted by Ms Bradey sending the Calderbank offer to the plaintiff’s solicitors five minutes later, at 4.26 pm.
Mr Uren then referred to cross-examination of Mr Griffin as to his understanding of events which preceded, and took place on, 13 February. Mr Uren submitted that the question whether an agreement was made between the defendants on 13 February, and the issue as to the terms of any such agreement, is to be resolved by an objective assessment of the parties’ intentions, to be derived from their contemporaneous statements and documents. Further, he submitted that any reference to subsequent events is irrelevant for the purposes of construing the terms of the email of Mr Griffin of 4.21 pm, which, Mr Uren submitted, was the basis of the agreement between the parties.
Mr Griffin was cross-examined in some detail as to the events which occurred subsequent to the sending by him of his email at 4.21 pm on 13 February. The thrust of the cross-examination was that the conduct of Mr Griffin, in the subsequent events, was inconsistent with the proposition that the parties had agreed that the second defendant would contribute four percent of $500,000 of any settlement achieved with the plaintiff, and no more. Mr Uren submitted that, insofar as that conduct by Mr Griffin might be relevant, the answer to the submissions made on behalf of the other defendants about his inconsistent conduct is to be found in the letter which he emailed to the solicitors for the first, third and fourth defendants at 4.25 pm on Sunday 15 February.[1] He submitted that the middle paragraph of that letter applied, so that Mr Griffin was then taking the position that there was no longer a litigable issue as to contribution, because that matter had been the subject of agreement between the parties. He submitted that in the ensuing correspondence from the solicitors for the other defendants, that point had been missed, and that those solicitors had focussed solely on the first sentence in the letter of 15 February, to the effect that “the issue between the defendants is the quantum of what is a reasonable settlement”.
[1]Para [20] above.
Finally, Mr Uren submitted that, objectively, it is most unlikely that the second defendant, on 13 February, would have entered into an agreement by which it left open, for further litigation, the question whether it should be required to contribute four percent of that part of the offer made to the plaintiff in excess of $500,000. He submitted that it was contrary to common sense for the second defendant to leave itself open to litigation over such a small sum of money.
In response, Mr Stanley commenced by submitting that, in order to construe Mr Griffin’s email of 4.21 pm on 13 February, it is important to bear in mind the negotiations which immediately preceded it. He submitted that the email from Mr Griffin to Ms Barron and Ms Bradey dated 11 February 2009[2] is significant, in that it referred to the concept of Seltsam’s contribution being “capped at four percent” of the last offer made which Seltsam considered to be reasonable, so that in the event that the matter was settled, the “co-defendant should pursue Seltsam by means of a private arbitration with respect to four percent of any residual amount”. Mr Stanley submitted that that email, in effect, defined how the parties, and in particular Mr Griffin and Ms Bradey, had understood later references in the emails between them to Seltsam’s contribution being “capped at four percent”.
[2]Para [6] above.
Mr Stanley rejected the construction of paragraph 3 of Mr Brookes’ message of 13 February 2009[3], for which Mr Uren contended. He submitted that it is wholly unrealistic, in practical terms, for three out of four defendants to settle an asbestos claim with a plaintiff, leaving outstanding the plaintiff’s rights against a fourth defendant, and that fourth defendant’s rights against the other defendants. Thus, he submitted that Mr Brookes’ memorandum, summarising what had occurred at the conference of 13 February, reinforced the understanding between the parties, that if the first, third and fourth defendants settled the whole of the action (including the action against the second defendant) in excess of $500,000, Seltsam would contribute four percent of $500,000, and the defendants would litigate the issue of any further contribution by the second defendant to such settlement achieved by the first, third and fourth defendants in excess of $500,000.
[3]Para [9] above.
Mr Stanley then referred to the conversation between Ms Bradey and Mr Griffin, in which Ms Bradey expressly reserved the right of the first, third and fourth defendants to proceed against Seltsam for contribution to a settlement achieved in excess of $500,000. He submitted that, in that context, Mr Griffin’s email of 4.21 pm did no more than confirm the contents of the conversation, which he had just had with Ms Bradey, albeit in shorthand terms. Mr Stanley also referred to the conduct of Mr Griffin after that correspondence, which, he submitted, was only consistent with an understanding by Mr Griffin that the other three defendants had preserved their rights to claim contribution against Seltsam in respect of the sum of $150,000 over and above the formal offer of compromise, should the plaintiff accept the Calderbank offer of $650,000.
Conclusion
The second defendant bears the onus of establishing the agreement for which it contends, namely, a binding agreement between itself and the other three defendants, by which it was agreed that, if the plaintiff accepted the proposed Calderbank offer of $650,000, the second defendant’s contribution to any such settlement would be capped at four percent of $500,000 (plus costs), and no more.
The second defendant relies, almost entirely, on the terms of the email sent by Mr Griffin to Ms Bradey at 4.21 pm on 13 February, on the basis of that agreement. It is important to bear in mind that that email was sent by Mr Griffin to Ms Bradey shortly after the telephone conversation between Ms Bradey and Mr Griffin, which I have already described.[4] Mr Griffin was uncertain whether the email was sent by him before or after the telephone conversation, but he thought that it was more likely that he sent it before the telephone conversation took place. On the other hand, Ms Bradey had a clear recollection that the email was sent to her by Mr Griffin after the telephone conversation between them. It was clear that Ms Bradey had a better recollection of the conversation, and, in particular, of the sequence of the events which occurred. She was confident that immediately after that conversation, she prepared and sent the Calderbank offer. It was only after she had sent the Calderbank offer to the plaintiff, that the email of 4.21 pm came to her attention. On the balance of probabilities, I therefore accept that the conversation took place between Mr Griffin and Ms Bradey before Mr Griffin sent the email at 4.21 pm.
[4]Para [12]-[13] above.
Further, I accept Ms Bradey’s evidence as to the substance of the conversation between herself and Mr Griffin. Indeed Mr Griffin, in cross-examination, accepted that the file note made by Ms Bradey of that telephone conversation was, in substance, accurate. It is clear that Ms Bradey, in that conversation, expressly reserved the rights of the first, third and fourth defendants to proceed against Seltsam for contribution of the amount of any settlement with the plaintiff over and above $500,000. In that conversation Mr Griffin, in substance, agreed to that reservation of rights on behalf of the first, third and fourth defendants.
Mr Uren submitted that, nonetheless, the email sent by Mr Griffin at 4.21 pm countermanded any such agreement, and was in itself a counter proposal, whereby the second defendant would only accept liability of contribution at four percent of $500,000 and no more. In my view, that submission ignores the realities of the situation. If Mr Griffin, minutes after his conversation with Ms Bradey, had intended to depart so radically from the agreement he had just reached with Ms Bradey in the telephone conversation, it is clear that he would have done so by explicitly countermanding his prior agreement, and by expressly identifying the “proposal” made in his email as being of a different nature. Both Mr Griffin and Ms Bradey gave evidence that they have enjoyed an amicable relationship, both professionally and socially. The volume of asbestos related litigation is such that they deal with each other on a regular basis. In those circumstances, if Mr Griffin had intended to depart from an agreement or understanding he had just made with Ms Bradey, it would be expected that he would have articulated that departure in express terms. In my view, construed objectively, Mr Griffin’s email of 4.21 pm confirmed, in shorthand, the terms of the file note of Ms Bradey of the conversation between them.
Further, I agree with Mr Stanley’s submission that such a construction of Mr Griffin’s email of 4.21 pm is supported, and indeed reinforced, by the terms in which discussions and negotiations had taken place between the parties preceding that email. In particular, the email sent by Mr Griffin to Ms Barron at 9.00 am on 11 February[5] demonstrates the manner in which the defendants regarded the reference by Seltsam to “capping” its contribution to any settlement achieved with the plaintiff. At that time, the offer of compromise, previously made to the plaintiff, was still on foot. Mr Griffin, on behalf of Seltsam, confirmed the stance taken by Seltsam, that it would only contribute four percent of an offer which it considered reasonable, and that, in the event of a settlement achieved with the plaintiff over and above such an amount, the co-defendants “should pursue Seltsam by way of a private arbitration with respect to 4% of any residual amount”. In other words, the concept of a capping, discussed by Mr Griffin, included a component that the co-defendants would retain the right to pursue Seltsam for contribution to any amount over and above Seltsam’s “cap”.
[5]Para [6] above.
Further, I consider that the terms of Mr Brookes’ memorandum of 13 February[6] fortifies the conclusion that the defendants were continuing to negotiate between themselves on the same basis. I do not accept the construction of paragraph 3 of that email, for which Mr Uren contends. It is unrealistic, if not inconceivable, for three of four defendants, in asbestos litigation, to settle a plaintiff’s claim against them, leaving alive the plaintiff’s claim against the fourth defendant, and that fourth defendant’s claim for contribution against them. In my view, the third paragraph of Mr Brookes’ memorandum meant, and was understood by the parties to mean, that if the first, third and fourth defendants settled the whole of the action (that is, the action against all four defendants) in excess of the offer of compromise, the second defendant would contribute four percent of $500,000 (plus costs), and the balance of the settlement over $500,000 would be subject to the claims for contribution then on foot between the defendants. Mr Griffin agreed that Mr Brookes’ note accurately reflected what was discussed at the conference (apart from the use of the word “solely” in paragraph 3). In other words, in the early afternoon of 13 February, the defendants were still ad idem on the reservation, by the first, third and fourth defendants, of their right to pursue the second defendant for contribution (on behalf of all the defendants) to the plaintiff’s claim for a figure in excess of $500,000.
[6]Para [9] above.
Mr Uren submitted that the subsequent conduct of the parties is irrelevant in construing Mr Griffin’s email of 4.21 pm. However, that conduct is relevant in determining whether the parties had struck any agreement as asserted by the second defendant. Further, it is relevant as reflecting on the precise terms of the telephone conversation, which took place between Ms Bradey and Mr Griffin, before Mr Griffin sent the email to Ms Bradey at 4.21 pm. In my view, the conduct of the parties, after Mr Griffin sent his email at 4.21 pm, reinforces the conclusion that there was no binding agreement between the parties whereby, if the plaintiff accepted the Calderbank offer of $650,000 plus costs, the obligation of the second defendant to contribute to that settlement was fixed at four percent of $500,000 (plus costs), and no more.
In particular, the email sent by Ms Bradey to Mr Griffin at 4.27 pm on 13 February[7], attaching the Calderbank offer, expressly notified Mr Griffin that if the plaintiff accepted that offer, the first, third and fourth defendants would proceed against Seltsam to obtain contribution in relation to the sum of $150,000 over and above the $500,000, to which Seltsam was prepared to contribute, “with those proceedings being heard on Monday”. While Mr Griffin was uncertain whether he saw that email, in my view, it is highly unlikely that it would not have come to his attention that afternoon. In particular, I note that at 4.41 pm he sent an email to Mr Carmody. He told me that later he was in conference with Mr Carmody until 6.00 pm. If the email sent by Ms Bradey at 4.27 pm was contrary to the understanding reached between the parties, then it would, in my view, be most unlikely that Mr Griffin would have done nothing about it on the Friday evening, given the notification contained in Ms Bradey’s email that, if the plaintiff accepted the Calderbank offer, the rights of contribution between the parties would be litigated on the following Monday. If an agreement had been struck between the parties foregoing any further rights by the first, third and fourth defendants against Seltsam for contribution (over and above $500,000), it is highly probable that Mr Griffin would have responded to Ms Bradey by asserting an agreement to that effect. Further, and more importantly, if the parties had reached an agreement, at about 4.21 pm, foregoing any rights of the first, third and fourth defendants to contribution from the second defendant over and above a settlement of $500,000, Ms Bradey’s email revealed a fundamental misunderstanding by her of that agreement. In light of the professional relationship which existed between Ms Bradey and Mr Griffin, I would have expected that Mr Griffin would have made haste to contact Ms Bradey, to discuss with her any misunderstanding which might have existed between them as to the contribution to be made by the second defendant, in the event that the plaintiff should accept the Calderbank offer which had just been sent to her solicitors.
[7]Para [16] above.
In my view, the email sent by Mr Griffin to (inter alia) Ms Bradey and Ms Barron, at 3.08 pm on 15 February[8], is significant. That email specified the procedures which Mr Griffin contemplated taking place to resolve the outstanding claims of contribution, if the plaintiff’s claim were settled before trial. That email would have been otiose, if there already existed between the parties a binding agreement, whereby the second defendant’s contribution was fixed at four percent of $500,000 (plus costs), and no more.
[8]Para [19] above.
Further, I consider that the letter sent by Mr Griffin to Ms Barron and to Ms Bradey at 4.25 pm on Sunday 15 February[9], makes it plain that there was an outstanding issue between the parties as to the “quantum of what is a reasonable settlement”. The third paragraph of the letter referred to an “impasse” in relation to that issue, which should be resolved by alternative dispute resolution. The fourth paragraph suggested either arbitration or expert determination. Those processes would have been palpably unsuitable, if the outstanding issue between the defendants was whether there was an agreement of the type now contended for by the second defendant. Rather, the fact that Mr Griffin was then suggesting those processes reinforces the construction of the letter of 15 February, namely, that Mr Griffin was proposing a procedure whereby there might be a convenient resolution of the issue whether the settlement was reasonable. I agree with Mr Stanley that the middle paragraph of the letter is difficult to understand. However, I do not consider, on its proper construction, that it was, or was understood to be, an assertion that there was any binding agreement between the parties at the time, which is now asserted on behalf of the second defendant.
[9]Para [20] above.
In my view, the conduct of the parties on Monday 16 February is only consistent with the position contended for by the first, second and fourth defendants, namely, that the issue between the defendants was whether the settlement achieved with the plaintiff was a reasonable settlement. That issue was clearly articulated by Ms Barron in her email to Mr Griffin at 9.29 am[10]. Mr Griffin did not respond to that email, contradicting it or rectifying any misapprehension by Ms Barron of the issue which was then between the parties. Further, and most significantly, when the matter came on before Court, the second defendant’s solicitors signed minutes of consent orders[11], which expressly stated that the hearing of the claims for contribution between the defendants should proceed as directed by the Court.
[10]Para [21] above.
[11]Para [22] above.
Thus, the totality of the conduct of the parties, subsequent to Mr Griffin’s email of 4.21 pm on Friday 13 February, weighs heavily against the agreement now contended for by the second defendant, and lends weight to the conclusion, at which I had otherwise arrived, namely, that there was no binding agreement between the parties that the second defendant’s contribution to any settlement with the plaintiff would be fixed at four percent of $500,000 (plus costs), and no more.
Accordingly, for the reasons which I have set out above, I am not satisfied that the second defendant has established the defence pleaded by it in response to the claims for contribution made on it by the first, third and fourth defendants. Mr Uren agreed that if I do not accept that such an agreement was concluded between the parties, then it is fair and reasonable, under s 24 of the Wrongs Act, that I should make orders, on the Notices of Contribution, to the effect that the first, third and fourth defendants be entitled to contribution from the second defendant to the extent of four percent of the amount of the settlement sum of $650,000 and costs payable by the defendants to the plaintiff.
I shall hear counsel on the precise terms of the appropriate orders to be made on each Notice of Contribution, and on any issues as to costs.
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