Aust Growth Solutions P/L v Santolo - [2013] SASC 52

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
AUST GROWTH SOLUTIONS P/L & ORS v SANTOLO
[2013] SASC 52
Judgment of The Honourable Justice Anderson
16 April 2013
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT - WHERE CONCLUDED CONTRACT
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - MATTERS NOT GIVING RISE TO BINDING CONTRACT - VAGUENESS AND UNCERTAINTY - AGREEMENT SUBJECT TO FURTHER AGREEMENT OR ARRANGEMENT
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - OTHER MATTERS ARISING BEFORE TRIAL
APPLICATION FOR DETERMINATION OF A PRELIMINARY ISSUE
The plaintiff companies are suing the defendant for injurious falsehood, breach of contract and a permanent injunction against the defendant. An interlocutory injunction was granted against the defendant. The plaintiff companies requested a preliminary point be decided prior to the matter being heard. This point was whether a settlement in relation to all matters in issue between the parties was reached after negotiations took place. The plaintiff companies alleged their counter offer made to the defendant was accepted by the defendant and an agreement was reached. The defendant disputed he agreed this.
Held: There was no consensus reached between the parties, the defendant did not intend to agree to forsake all his claimed entitlements. A concluded agreement was therefore not reached. The preliminary point is determined in favour of the defendant.

AUST GROWTH SOLUTIONS P/L & ORS v SANTOLO
[2013] SASC 52
ANDERSON J.
Introduction

In this matter the plaintiff companies have sued a former employee and obtained an injunction against the employee. The injunction was granted by Judge Withers on 31 January 2013. At the start of the hearing Mr Santolo confirmed that the action had been brought against him under the name of Sawlwin. The pleadings have been amended to substitute his file name.
After a series of disputes with his employer the defendant was dismissed and began emailing draft press releases to his employer making allegations against the employer and threatening to release the information contained in the releases to the media unless his demands for compensation were met. His demands related to alleged entitlements from his employment, including payment in lieu of notice, payment for unpaid annual leave, payments for redundancy, a bonus entitlement and commissions he said were owing to him.
The plaintiff companies have sued the defendant for injurious falsehood as a result of the imputations made in the press releases, for breach of contract and, because it is suggested that damages would be an inadequate remedy, a permanent injunction restraining the defendant from making statements, giving interviews, passing information, disclosing, divulging, writing, printing, circulating or distributing, causing to be written, stated, printed, circulated or distributed or otherwise publishing any publication to any third party of and concerning, or in relation to the plaintiffs and/or their officers employees, servants, agents and related bodies corporate.
The preliminary point
This matter is being decided by me on a preliminary point. The point is very simply whether a settlement in relation to all matters in issue between the parties was reached after some negotiations took place. The plaintiffs’ claim through their solicitor Mr Short that an agreement was reached and the defendant claims that no such agreement was reached. The defendant argues that whilst he agreed in principle to cease any publication it was conditional upon various matters being put in writing and him confirming the alleged oral agreement by email. No confirming email was ever sent by the defendant to the plaintiffs. The defendant says he never intended to abandon his rights to have the terms of his dismissal tested in court.
Both Mr Short and the defendant filed two affidavits which attached the relevant email correspondence between them and included telephone records and some notes taken by Mr Short of his conversations with the defendant.
I was asked to decide the preliminary matter on these affidavits but decided that I could not do this as it was unclear to me from the affidavits whether any agreement had been reached.
After I indicated to the parties that I could not decide the matter on affidavits Mr Short then gave evidence and was cross-examined by the defendant who represented himself. Mr Douglas, counsel for the plaintiffs, then requested the opportunity to cross-examine the defendant on his affidavits and I gave him permission to do so.
The hearing then proceeded with oral evidence in expansion of the affidavits and cross-examination on the affidavits.
The negotiations
An offer was made by the defendant to compromise this matter on 9 February 2013.
Whilst I was provided with a copy of Mr Short’s email of 15 February 2013 I was not given the offer by Mr Santolo in his email of 9 February 2013. This is an important document. I do not know why it was not included in the affidavits. I asked for a copy of it at the conclusion of the argument.
The letter of offer from Mr Santolo shows how he was pressing for a settlement sum of $20,000 payable within 7 days. This was to settle his claims for payment in lieu of notice, payment for unpaid annual leave, a redundancy payment and unpaid bonuses. In addition he claimed an entitlement for commission as they became due. These amounted to an estimated $10,750.
That offer was responded to by letter in email form from Mr Short to the defendant dated 15 February 2013. In the letter the solicitors acting for the plaintiffs rejected the claims made by the defendant. This included rejection of his claim that he was owed four weeks payment of wages to cover the notice period required under his contract.
It also rejected the claim by the defendant for four weeks unpaid annual leave. It also rejected the claim for a bonus alleged to be due and owing to him.
The solicitors for the plaintiffs rejected the defendant’s claim for redundancy pay.
The solicitors for the plaintiffs rejected those first three items but conceded that in relation to the defendant’s claim for unpaid commission that he would be entitled to commission on completion of the settlements regarding several properties.
The solicitors then made a counter offer as follows:
1.The current Supreme Court order is to continue in place permanently, save that our clients would be agreeable to you being able to take legal advice.
2.Settlement would be in full settlement of any and all claims, actions and complaints you have or but for the settlement may have had against our client its servants, officers or agents arising out of or in relation to your employment or contractual relationships with any of them, to the fullest extent permitted by law (save in respect of any dispute about non-payment of the commission listed above).
3.Each party would bear their own costs of the Supreme Court litigation.
The dispute in this matter is as to whether there was a settlement or not in those terms. That issue is particularly relevant in relation to clause 2 set out above. The reason is that the defendant wants to pursue a claim with the Fair Work Ombudsman regarding the treatment he alleges he received whilst employed by the plaintiffs. The solicitors for the plaintiffs claim that a settlement was reached and that pursuant to clause 2 he is precluded from proceeding with any claim or complaint with the Fair Work Ombudsman. In other words, it is suggested that after his offer of 9 February Mr Santolo has abandoned all his claims and agreed not to take any legal action to pursue his alleged entitlements.
The events in question centre around 19 February 2013. There were two phone calls from the defendant to Mr Short on that day, one at 12.41 pm Adelaide time and the other at 1.10 pm Adelaide time. Mr Santolo rang Mr Short from Perth.
Mr Short deposes in his first affidavit that at 1.10 pm the defendant telephoned him and accepted the offer set out in the letter from Minter Ellison to which I have referred. Mr Short goes on to say that he accepted unconditionally the offer contained in the letter of 15 February 2013 and Mr Short requested that he email confirmation. This is confirmed in a file note made by Mr Short.
Mr Short, following that conversation, dictated an email to the in-house counsel of his client company. That email was sent at 1.13 pm. In that email Mr Short informed his client that the defendant had called and accepted the offer and that he had asked the defendant to confirm it in writing.
The defendant accepts that the first conversation took some minutes whereas the second conversation was very short, of approximately 45 seconds. The defendant deposes in his second affidavit to a conversation on that day and it is my view that the conversation deposed to by him and set out in paragraphs 18, 19 and 20 of his affidavit must have been the first conversation. In paragraph 20 the defendant deposes that he said in that conversation:
That unless they were willing to extend the deadline, then based on the threats of his client I would have no other choice but to accept their demands subject to agreeing on the final terms of agreement.
The defendant said that Mr Short responded with words to the effect:
Antonio, if you wish to accept the offer you will need to confirm that in an email.
This is really where the dispute is centred. It was following this exchange that Mr Short says he was telephoned by Mr Santolo and that he accepted the offer contained in the letter of 15 February 2013.
Mr Short made a file note on 22 February 2013 after a phone call from Mr Santolo. He said he told Mr Santolo that he hadn’t received written confirmation of his acceptance of the offer. Mr Santolo apparently said, “That is what we were going to talk about”. He then recorded the following in his note:
“I asked him whether that meant that he was suggesting he hadn’t accepted. He said that we were holding him to a deadline and indicated the offer was still available. I said that was a little strange bearing in mind he had already accepted it …”
Consideration
Having seen both Mr Short and the defendant give evidence I have no hesitation in accepting that Mr Short had made an accurate note of what occurred during the conversation. I think that the defendant to some extent has attempted to reconstruct what happened in his favour. I regard Mr Short as the better historian. The question is really whether both parties were ad idem
I formed a view of the defendant that he is not the sort of person who would lightly give up his claimed entitlements. After all, he had been engaged in negotiations in an attempt to obtain what he believed were his entitlements. He was quite emphatic in his email of 9 February 2013. I think it unlikely that he would have given up all of those claims without a fight by accepting the offer from the plaintiffs’ solicitors.
If the plaintiffs are correct he would be giving up all his claimed entitlements, the right to seek redress and would walk away from the action with a permanent injunction against him and all that in return for being not liable for any of the plaintiffs’ costs.
There is therefore a ring of truth in what Mr Santolo says about his understanding of the agreement being subject to a further agreement on the final terms. There is no dispute from Mr Short that he required confirmation of the suggested agreement by email. He says this in his affidavit and that is what he told his client. No such email confirmation was forthcoming from the defendant.
Mr Short could easily have followed up the conversation on 19 February confirming the terms of settlement by an email and asking for return confirmation. He failed to put anything in writing, other than his file note at the time, either immediately or soon after the conversation in which he said agreement was reached. In my view, Mr Short’s file note of 22 February 2013, which I have set out earlier, shows confusion as to the fact of any concluded settlement.
Conclusion
It is my view that no consensus was reached between Mr Short and the defendant because the defendant did not intend to agree to forsake all his claimed entitlements and including any action or enquiry which he contemplated involving the Fair Work Ombudsman.
For those reasons therefore I am not prepared to find that a concluded agreement was reached. I say this with no criticism whatsoever of Mr Short and his belief that the defendant had agreed to settle the matter on the basis suggested by Mr Short. It was very simply a matter of the parties’ minds not entirely meeting in my view. The fact that there was no confirmation by email as requested by Mr Short is significant.
Accordingly the preliminary point is determined in favour of the defendant which means that the defendant is free to pursue his action with the Fair Work Ombudsman. Should there be any doubt about this I would be prepared to vary the terms of the injunction to enable him to do this.
I will hear the parties on any further orders that are required.