Brascal Investments Pty Ltd v Hamilton
[2022] VSC 677
•10 November 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2021 03803
| BETWEEN | |
| BRASCAL INVESTMENTS PTY LTD (ACN 613 197 685) | 1st plaintiff |
| ANDREA LOUISE PARKIN | 2nd plaintiff |
| v | |
| ROBERT PETER HAMILTON | 1st defendant |
| RWBL CONSULTING PTY LTD (ACN 147 908 861) | 2nd defendant |
---
JUDGE: | Elliott J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 October 2022 |
DATE OF JUDGMENT: | 10 November 2022 |
CASE MAY BE CITED AS: | Brascal Investments Pty Ltd v Hamilton |
MEDIUM NEUTRAL CITATION: | [2022] VSC 677 |
---
CONTRACT — Agreement subject to settlement deed being executed — Subsequent course of conduct — Draft settlement deed proffered by defendants — Execution and delivery by plaintiffs — Plaintiffs sought clarification as to meaning upon delivery — Plaintiffs’ preferred construction agreed to but defendants simultaneously sought further clarification on another clause — Whether binding agreement entered into — No binding agreement.
---
APPEARANCES: | Counsel | Solicitors |
| For the plaintiffs | Ms A Carruthers | Miltons Lawyers |
| For the defendants | Mr M Lanza (solicitor) | M P Lanza Lawyers |
HIS HONOUR:
IntroductionA.
The second plaintiff, Andrea Louise Parkin (“Parkin”), seeks orders enforcing an alleged settlement agreement between the parties. The defendants, Robert Peter Hamilton (“Hamilton”) and RWBL Consulting Pty Ltd (“RWBL Consulting”), contend that terms of settlement have not been agreed and that a deed signed by Parkin both as a director of the first plaintiff, Brascal Investments Pty Ltd (“Brascal Investments”), and in her own right is not binding.
Parkin and Hamilton are siblings. Presently, both Parkin and Hamilton are directors and equal shareholders of Brascal Investments.[1] Their mother, Sandra Isaacs (“Isaacs”), is a former director of the company. Brascal Investments is a property development company that undertook a 12 apartment development project in the south eastern suburbs of Melbourne at 1 St Georges Avenue, Bentleigh East (“the Development”). RWBL Consulting is a building company that was engaged by Brascal Investments to provide goods and services in respect of the Development. Hamilton is the sole director and a 50 percent shareholder of RWBL Consulting.
Procedural history and circumstances in which the current dispute arose B.
[1]Thus, the application was made by Parkin.
The proceeding was commenced by writ on 15 October 2021. Broadly, Brascal Investments and Parkin allege that Hamilton breached the duties he owed as a director of Brascal Investments and unlawfully appropriated or converted funds belonging to Brascal Investments for his own use or the use of RWBL Consulting. Brascal Investments and Parkin seek declarations concerning Hamilton’s alleged breach of duties, as well as orders for equitable compensation and the taking of accounts, amongst other orders.
No defence has been filed. Until more recently, the proceeding was under the management of another judge, who referred it to mediation before any pleadings had been filed.[2] The court file indicates that the mediation process became protracted.
[2]The writ was filed with a general indorsement of claim.
On 13 May 2022, the parties appeared for directions before me for the first time. At this point, there were competing lists of issues for determination that had been prepared pursuant to orders made previously. The plaintiffs’ position was that the lists of issues were premature and that the proceeding needed to be reconfigured to include claims based on oppressive conduct. It was also contended that it may be appropriate for a receiver to be appointed to Brascal Investments. However, the court was informed that the Development was now completed and that there was a real prospect that the contested matters could be resolved. The defendants informed the court they also had claims to make against the plaintiffs based on the existence of a joint venture, and building arrangements between Brascal Investments and RWBL Consulting. Further, the defendants contended that despite having already engaged in “exhaustive attempts at mediation”, the matter had not resolved and it was now necessary for pleadings to be ordered as the parties could not agree on a joint list of issues.
The plaintiffs then raised the issue of a clause in an agreement concerning Brascal Investments’ ongoing role as trustee, which they submitted might be triggered if the plaintiffs were to file a pleading seeking the winding up of Brascal Investments on just and equitable grounds. In these circumstances, all parties agreed that it was in their interests for further discussions to take place before any pleadings were ordered. Ultimately, this united position resulted in an order being made that the proceeding be adjourned for further directions on 29 July 2022.
On 29 July 2022, the parties informed the court that they had reached an in-principle settlement agreement concerning the proceeding. The agreement had purportedly been reached by written exchanges. The court was told that the parties simply sought a month to enable them to conclude and fulfil the obligations under the in-principle agreement with a view that “hopefully” the proceeding could be discontinued at the next return.[3] By consent the directions hearing was adjourned to 26 August 2022.
[3]In fact, the parties had provided consent minutes before the hearing which contemplated a sale process for a unit the subject of the Development. Those orders were made on the papers with the consent of the parties, but were subsequently vacated later that day by reason of the in-principle agreement said to have been reached.
On 26 August 2022, the directions hearing was adjourned to 9 September 2022, the parties again recording they had an in-principle agreement and requesting time “to finalise the resolution”.
At the directions hearing on 9 September 2022, the parties notified the court that terms of settlement had not yet been agreed upon. The plaintiffs sought orders to allow Parkin to file an interlocutory process in the event that the parties were unable to come to a resolution. The plaintiffs’ position was that there was an agreement in principle, but nothing had been signed to reflect that agreement. The defendants contended there was already a binding agreement. In response to the defendants’ position that there was a binding agreement, counsel for the plaintiffs stated that she was instructed that it was the first time that such a suggestion had been made to the plaintiffs. She informed the court her instructions were that the plaintiffs would consider their position in light of this development. However, she continued by stating that if the parties did not sign a settlement deed then the plaintiffs proposed to seek relief under the Corporations Act 2001 (Cth) for the just and equitable winding up of Brascal Investments and possibly making claims based on oppressive conduct. In making more detailed submissions, the defendants maintained there was a binding agreement, with “all fundamental matters” reduced to writing. The defendants’ solicitor stated that there was “enough there for an in-principle agreement but we’re not going to be bullish. We’ll try to engage on these other matters as best we can.”
The parties were encouraged to resolve their issues. Nonetheless, it was ordered that if they could not do so, then by 4.00pm on 30 September 2022 any interlocutory process was to be filed and served with supporting affidavits. The deadline passed without any interlocutory process being filed. Subsequently, Parkin attempted to file a summons out of time, proposing a hearing on 18 November 2022.[4] As a result, the parties were directed to attend a directions hearing on the following Friday morning.
[4]The draft summons sought orders that the plaintiffs do all such acts or things as reasonably necessary to transfer Brascal Investments’ interest in apartment 1, 1 St Georges Avenue, Bentleigh East to Hamilton and that each of Brascal Investments and Hamilton bear half of the costs of the transfer. Orders were also sought requiring Hamilton to transfer his shares in Brascal Investments to Isaacs and resign his directorship of Brascal Investments. In addition, orders were sought for the defendants to release the plaintiffs and Isaacs from all claims.
On 14 October 2022, the parties informed the court that they had still been unable to agree to the terms of a settlement deed. The plaintiffs noted that the defendants had previously informed the court that they would make an application by 30 September 2022 if no concluded agreement had been executed. In the absence of any executed agreement and any such application, the plaintiffs stated they intended to enforce “the agreement that the defendants say has been reached”. Reference was also made to a deed that had been proffered by the defendants, and executed and delivered by Brascal Investments, Parkin and Isaacs (“the Associated Persons”), but not countersigned by the defendants. It was contended this chain of events had resulted in a binding agreement.
In response, the defendants stated their position; namely, that an agreement was in place based on written exchanges in July 2022. They submitted that the plaintiffs were being disingenuous in relation to more recent correspondence as the draft the defendants had proffered was for comment only. The defendants contended that they had sought to clarify the meaning of certain clauses and that there had been no invitation whatsoever to sign the document. In reply, the plaintiffs contended that, while it was accepted clarification as to meaning had been sought by the plaintiffs, the deed provided by the defendants was “in a position to be accepted”.
Thus, it appeared at this point that all parties were in agreement that a settlement agreement had been reached, but were at odds as to its terms.
Accordingly, the proceeding was listed for hearing on the question of whether or not the deed as proffered by the defendants and executed by the Associated Persons constituted a binding agreement between the parties or whether some other document or documents gave rise to a binding agreement.
Before turning to the evidence relied upon, it should be noted that at the subsequent hearing of these questions 2 weeks later, the defendants’ position changed. Having reflected on the evidence, their position was that no binding settlement agreement had been reached at all.
The settlement communicationsC.
C.1 The July 2022 Correspondence
On 28 July 2022, the defendants’ solicitors, M P Lanza Lawyers (“Lanza”), sent a letter to the plaintiffs’ solicitors, Miltons Lawyers (“Miltons”), setting out a proposal for settlement. After rejecting offers that had apparently been made by the plaintiffs, the letter stated:
[O]ur client is prepared to canvass a settlement where his current unit is transferred to him and our client ceases all claims against Brascal [Investments], [Isaacs] and [Parkin].
Our client is prepared to bear one-half of the costs of transfer of the unit into his name and Brascal [Investments] is to bear the other half. Upon settlement our client will transfer his shares in Brascal [Investments] to either [Parkin] or [Isaacs], and resign his directorship.
(Emphasis added.)
Miltons responded on the same day by stating: “Our clients accept your client’s offer, subject to a settlement deed being executed by the parties” (emphasis added). (These 2 emails together, “the July 2022 Correspondence”.)
C.2 Proposed terms of settlement
Between August and October 2022, proposed terms of settlement were negotiated between the parties. A series of draft settlement deeds were sent by Miltons, on behalf of the Associated Persons, to Lanza for the defendants’ consideration.
On 22 August 2022, Miltons sent a first draft settlement deed to Lanza. This draft was sent under a covering email which noted that it was a draft still subject to Parkin’s final instructions. The draft was preceded by an email to Lanza earlier that day in which there was an apology for the delay, coupled with an assurance that it was not the fault of the plaintiffs, “who remain[ed] committed to the settlement agreed between the parties”.
The draft deed of settlement contained matters that were not referred to in the July 2022 Correspondence. These included an agreement to buy and sell shares for $300,000, an agreement for preconstruction costs of $600,000, an agreement that Hamilton resign as appointor of a trust known as the Isaacs Hamilton family trust, a reference to an alleged debt owed by the defendants to Brascal Investments in the sum of $990,000 (broken down into 2 amounts of $400,000 and $590,000) and an agreement to this amount being offset against various items and, as part of a suite of mutual releases and indemnities, a release from the defendants, together with an indemnity by them, for “all debts, claims, actions, suits, demands, complaints, costs and other liabilities of any nature whether in contract, tort or equity existing between them without limitation”. It was also stated that this release was enforceable with respect to any trust of which any of the Associated Persons was a trustee, together with any matter that existed at the date of the deed regardless of whether or not the Associated Persons or the defendants were aware of that matter. The draft deed also contained a further indemnity in the following terms:
[Hamilton] indemnifies the [Associated Persons] against all debts, actions, claims, proceedings, demands, liabilities, losses, damages, expenses and costs (including legal costs on a full indemnity basis) that may be brought against any [of the Associated Persons] by any third party which in any way arise[s] out of, or is directly or indirectly related or connected with or incidental to, any contracts entered into, undertakings and guarantees given, or acts or omissions, by [Hamilton] during the course of his engagement, relationship with or position as officer or representative of [Brascal Investments].
Self-evidently, the matters that were included by the Associated Persons in this first draft went far beyond the matters raised in the July 2022 Correspondence and the subject matter of this proceeding.[5] Also significantly, neither the recitals nor any other part of the first draft made any reference to the July 2022 Correspondence or suggested that the draft was in accordance with the terms of an agreement that had already been struck. On the contrary, the first draft unequivocally stated that “all outstanding matters [were to] be settled on the terms set out in this Deed”.
[5]Noting that the issues had not been clearly defined by pleadings, but the matters were concerned with rights and interests that went beyond those that arose from the Development.
On 26 August 2022, Lanza responded by providing comments on the draft and expressing a preference to “keep the settlement as simple in concept as possible”. The comments included a rejection of some of the proposed clauses, including the proposed releases which were said to be too wide.[6]
[6]For completeness, Lanza stated the defendants did “not oppose” a significant number of Miltons’ suggested clauses despite the fact that they were not referred to in the July 2022 Correspondence.
Following further discussions between the parties, on 5 September 2022 a second iteration of the draft settlement deed was emailed by Miltons to Lanza with proposed amendments marked up. The email stated that it was hoped the revisions were satisfactory and that the parties could progress to completion. Again, the draft stated that “all outstanding matters [were to] be settled on the terms set out in this Deed”. And again, the document covered matters beyond the July 2022 Correspondence and the issues in this proceeding. No response was provided by Lanza.
On 8 September 2022, Miltons sent a third iteration of the draft settlement deed to Lanza which included further revisions. The covering email stated it had always been the plaintiffs’ instructions that they were agreeable to paying half of the stamp duty on the apartment transfer and that the draft deed had been updated to reflect this. The email was sent at 6.02pm and sought a response by 8.00am the following morning. Again, no written response was provided by Lanza to Miltons’ correspondence, however the matter was back before the court for directions on 9 September 2022.[7]
[7]See par 9 above.
On 19 September 2022, Miltons wrote to Lanza inviting the defendants to prepare and circulate a draft settlement deed reflecting their position. Miltons’ email relevantly stated:
We note your submissions in respect of your client’s position at the hearing of this matter on 9 September 2022, being that the parties have reached a binding agreement. Our clients reserve their rights in respect of whether or not a binding agreement has been reached. Nevertheless, our clients have no difficulty in reviewing a deed prepared by your office, reflecting your client’s position as submitted.
…
We reserve our clients’ rights specifically in respect of the position stated above, and generally in respect of this matter.
(Emphasis added.)
On 20 September 2022, Lanza wrote to Miltons attaching the terms of the “offer of compromise” and “your acceptance” set out in the July 2022 Correspondence. The email from Lanza continued:
The terms of the offer were quite simple:
1. [Hamilton’s] unit is transferred into his name;
2. Our client ceases all claims against Brascal [Investments], [Isaacs] and [Parkin];
3. Our client bears one half of the cost of transferring the unit into his name;
4. Brascal [Investments] bears one half of the cost of transferring the unit into his name;
5. Our client transfers his shares in Brascal [Investments] to [Parkin] or [Isaacs];
6. Our client resigns his directorship in Brascal [Investments].
Your (sic) have sought to introduce terms into a settlement deed that do not relate to the above but seek to achieve alternative matters that have not been agreed.
We invite you to provide a draft deed of settlement that is limited to the offer and acceptance terms.
Should you fail to do so we reserve our rights.
(Emphasis added.)
Following the email from Lanza, later the same day Miltons circulated a fourth draft settlement deed for the defendants’ consideration. Again, Miltons noted that the plaintiffs continued to reserve their rights in respect of whether or not a binding agreement had been reached, and more generally. Lanza did not respond to Miltons’ email.
The fourth draft did not include a number of clauses that were contained in previous drafts. However, the Associated Persons still sought to incorporate proposed terms dealing with the Isaacs Hamilton family trust, including that Hamilton give notice to Brascal Investments in its capacity as trustee “to irrevocably exclude him henceforth from being a beneficiary” of that trust. Again, nothing contained in the July 2022 Correspondence, the issues in the proceeding or the 6 matters identified in the email from Lanza earlier that day included this subject matter.[8] In a similar vein, as in previous drafts, the release contained in this draft sought to cover matters that went well beyond those the subject of this proceeding.
[8]The plaintiffs submitted that the proposed exclusion of Hamilton from the Isaacs Hamilton family trust reflected a “certain flow on effect” and an intent to sever commercial and financial ties. Although it is noted that on 26 August 2022 the defendants had indicated they did not oppose the inclusion of such a clause (see fn 6 above), and further that this clause was ultimately accepted by the defendants, I do not accept this submission. There was nothing in the July 2022 Correspondence or the 6 points set out in the email from Lanza which suggested that Hamilton would need to forgo his rights as a beneficiary under the trust.
On 29 September 2022, Miltons wrote to Lanza and, amongst other things, invited the defendants to provide a proposed settlement deed for the plaintiffs’ consideration. Miltons suggested the defendants had the option of either executing and returning 1 of the “multiple versions of the Deed of Settlement forwarded by our office to your office” or rejecting them and forwarding a proposed deed for the plaintiffs’ consideration.[9] If the latter option were to be adopted, Miltons invited the defendants to provide a document that the “defendants assert reflects the terms of the alleged agreement reached”. Miltons further stated:
The plaintiffs reserve all of their rights … including as to whether an agreement has been reached at all and as to the terms of any agreement. Self-evidently, if the Deed of Settlement sent to you on 20 September 2022 is not accepted, then your clients have rejected it, and it will no longer be open for acceptance. We reiterate that the plaintiffs do seek to resolve their disputes with the defendants and the Proceedings generally. However, the plaintiffs do not intend to incur further costs in progressing documents before the defendants provide them with a draft deed that they say reflects the agreement allegedly reached.
(Emphasis added.)
[9]Draft minutes of consent orders were also provided for the defendants’ consideration.
C.3 The Defendants’ Draft Deed
On 11 October 2022, Lanza sent Miltons a proposed settlement deed prepared on behalf of the defendants (“the Defendants’ Draft Deed”). The covering email stated as follows:
ORIGINAL OFFER OF COMPROMISE
We attach a marked up Deed of Settlement with our client’s proposed amendments.
Our client is prepared to sign that document upon your agreement with the same.
…
We note the release is to apply to all issues raised by affidavits of the Plaintiff (sic) and Defendant’s (sic) as no formal pleadings have been ordered subsequent to the derivative action.[10]
Similarly, we have sought to expressly state that any taxes imposed in consequence of the transfer are to be shared between the parties.
(Emphasis added.)
An alternate offer was also contained in this email. It is unnecessary to set out the detail.
[10]Thus, notwithstanding the very broad terms of the release on its face, by this email the defendants indicated they were generally content with its terms, subject to some amendments that were suggested.
The attached draft deed was a marked up version of the Associated Persons’ fourth draft, which either tracked the changes or noted amendments by way of comments made adjacent to a number of the amended clauses. A new clause 2.5 was inserted, which read:
[Brascal Investments] and [Hamilton] shall each be liable for one-half of all transfer and discharge fees imposed by Land Use Victoria and any state and federal taxes therein as a consequence of the transfer (including stamp duty and GST).[11]
[11]That is, goods and services tax.
In addition, a new clause 7.2.3 was inserted, which possibly broadened the release set out in the previous drafts by expressly encompassing any existing or future matter relating to the building agreement between RWBL Consulting and Brascal Investments.
On the morning of 13 October 2022, Lanza emailed Miltons referring to a directions hearing scheduled the following day and enquiring whether Miltons had draft consent orders for Lanza to consider.
At 1.52pm on 13 October 2022, Miltons returned a clean version and a marked up version of the Defendants’ Draft Deed to Lanza, together with proposed minutes of consent providing for the proceeding to be dismissed without adjudication on the merits. The clean copy of the deed was signed by Parkin (both as a natural person and as a director of Brascal Investments) and by Isaacs. The covering email (which made no reference to the email sent by Lanza earlier that day) stated:
Thank you for the draft Settlement Deed.
We understand that the new clause 7.2.3 is not purporting to relieve your clients from their various statutory and other obligations and warranties regarding defects or the like. On that understanding, we have accepted the proposed changes and added a minor point of clarification to clause 2.5.
In the interest of finalising the matter and subject to agreement on the above, please find attached a clean copy of the Settlement Deed signed by our clients. Please arrange for your client to execute the same and return to us this afternoon.
(Original emphasis in bold, added emphasis in italics.)
The “minor point of clarification to clause 2.5” referred to in Miltons’ covering email was the addition of the words “of Apartment 1” after the reference to the transfer (consistent with the wording of the clauses 2.4, 2.6, 3 and 4.7 which already expressly referred to “Apartment 1”).
Upon receipt of Miltons’ email, Lanza sought instructions from the defendants. Lanza was instructed to agree to the plaintiffs’ interpretation of clause 7.2.3 and to request clarification in relation to “taxation matters”.
In light of the instructions received, at 2.31pm on 13 October 2022, Lanza sent the following response to Miltons:
1. We accept that the deed cannot and does not seek to limit the warranties covered by the Ministerial Order which are the insurance certificates provided ad (sic) those warranties we assume run with the land to prospective purchasers…
2. In regard to GST [Hamilton] has stated that if he is required to remit GST on the unit then he would need to sell the unit to cover those costs. While [Hamilton] anticipates that he will need to remit the value of the unit as taxable income to Brascal [Investments] he expects that if he is required to also remit GST on the unit and stamp duty on the unit then he expects Brascal [Investments] to pay one half of those amounts.
For clarity (sic) sake if Brascal [Investments] also has to pay GST [Hamilton] will not contribute to that liability as that is considered due to the sale. ie. if Brascal [Investments] sell[s] the unit [it] would pay the same GST and the transfer does not increase the liability. It is that extra liability caused by the transfer (in lieu of a traditional sale) that we have asked Brascal [Investments] to bear one-half of the cost.
…
We wish to proceed with a transparency of our expectations so there is closure of this matter.
Finally, we suggest the directions [hearing] be adjourned so that we can finalise this matter and we attach proposed signed minutes to achieve that adjournment.
If satisfactory to yourselves we ask that you sign and lodge those minutes forthwith.
At 10.08pm on 13 October 2022, Miltons sent Lanza an email in reply, which included:
Our clients have already signed and returned [the Defendants’ Draft Deed] put forward by your clients. It has been accepted. The only amendment was the inclusion of the words, “of Apartment 1” at clause 2.5 which patently is not a substantive change.
We expect to receive your clients’ counterpart of the [Defendants’ Draft] Deed and minutes of consent by return.
Your clients will be expected to meet their obligations, specifically that, “[Brascal Investments] and [Hamilton] shall each be liable for one-half of all transfer and discharge fees imposed by Land Use Victoria and any state and federal taxes therein as a consequence of the transfer (including stamp duty and GST).” This is the precise wording inserted by your clients into the [Defendants’ Draft] Deed which has been accepted and returned by our clients.
Our clients do not agree to any further adjournment. If the matter is not resolved by consent prior to Court tomorrow morning, we are instructed to press for final orders in the form set out in our clients’ Summons.
If your clients do not sign and return the [Defendants’ Draft] Deed and minutes as agreed, we expect that we will be instructed to file and serve a further Affidavit in support of their application, setting out the steps taken between the parties in relation to the settlement which your clients have stated is a concluded agreement.
As of the date of the hearing, the Defendants’ Draft Deed remained unsigned by both Hamilton and RWBL Consulting.
Analysis D.
Essentially, Parkin seeks to establish a binding agreement by 2 separate means: (1) primarily, by reason of the execution and delivery by the Associated Persons of the Defendants’ Draft Deed; or alternatively (2) as a result of the July 2022 Correspondence.[12] As the July 2022 Correspondence occurred earlier in time, it is convenient to deal with it first.
[12]In written submissions, Parkin relied primarily on the July 2022 Correspondence and alternatively the execution and delivery of the Defendants’ Draft Deed, but as I understood the oral submissions the principal position was that the parties should be bound in accordance with the terms of the Defendants’ Draft Deed. In any event, for the reasons set out, nothing turns on this.
D.1 The July 2022 Correspondence
It is uncontroversial that parties negotiating with an intention to reach an agreement may, amongst other things, do so in a manner which culminates in a mutual intention that the agreement is binding even though no final written agreement has been executed; or they may reach an agreement on the basis that they are not bound unless and until a formal contract is executed.[13] Whether or not a binding agreement has been entered into is to be decided based upon the parties’ intentions as discerned from an objective consideration of the terms of the relevant communications, the context and the surrounding circumstances.[14]
[13]Masters v Cameron (1954) 91 CLR 353, 360.5 (Dixon CJ, McTiernan and Kitto JJ).
[14]Birdsey v Vincent [2017] VSCA 323, [18] (Santamaria and Beach JJA, with whom Ashley JA agreed), and the cases there cited.
The relevant communications comprising the July 2022 Correspondence consisted of 2 documents, neither of which suggested that any party intended to be bound by what was exchanged. Dealing with what was sent on behalf of the defendants,[15] the use of the words “prepared to canvass” did not indicate an intention to be immediately bound. Equally, the plaintiffs’ acceptance of the “offer” was expressly subject to a settlement deed being executed by the parties, indicating an intention not to be bound until a formal document had been prepared and duly executed.[16]
[15]See par 16 above.
[16]Ibid.
Nothing in the context or the surrounding circumstances altered the plain meaning of the words used.
Contrary to Parkin’s submissions, it did not matter that the settlement deed foreshadowed by the July 2022 Correspondence was not stated to be subject to approval by the lawyers.[17] Obviously, all parties were represented in the proceeding. Regardless of this, the absence of a stipulation that lawyers be involved before execution of a settlement deed did not detract from the underlying intention clearly conveyed by the words used.
[17]This submission was made in seeking to distinguish the facts of this case from those in Masters v Cameron (1954) 91 CLR 353.
The intention of the plaintiffs not to be bound as at 28 July 2022 was corroborated by the numerous communications that took place after that time. Each of the 4 drafts that were subsequently sent to the defendants went far beyond what might reasonably have been considered to have been contemplated in the July 2022 Correspondence.[18] Further, each of those drafts made it plain on its face that the plaintiffs were only willing to bind themselves to terms as set out in the draft deeds rather than being confined to the matters raised in the July 2022 Correspondence.[19]
[18]See pars 19, 22, 23, 27 above.
[19]See, for example, pars 20, 22 above. Although subsequent communications are not relevant to the construction of the terms of an agreement, they are relevant to the question of whether or not the parties consider themselves to have entered into a binding agreement: Australian Communications Corporation Pty Ltd v Coles Group Ltd [2011] VSC 490, [35] (Cavanough J); Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, 163-164 [25]-[26] (Heydon JA) and the cases there cited; Australian and New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695, 700.6 (Kaye J, with whom Marks and Teague JJ agreed).
Parkin also submitted that both sets of parties clearly believed that a concluded agreement had been reached by the July 2022 Correspondence. If any evidence had been sought to be led as to subjective belief, then it is unlikely that it would have been relevant.[20] In any event, this submission was not borne out by the evidence that was before the court. The principal affidavit, affirmed by the solicitor directly involved in the July 2022 Correspondence on behalf of the plaintiffs,[21] suggested that the July 2022 Correspondence gave rise to an in-principle agreement.[22] For the reasons already explained, there was no evidence that objectively reflected a belief on the part of both sets of parties that a binding agreement was entered into upon the July 2022 Correspondence being exchanged.
[20]See, for example, Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352.2 (Mason J).
[21]Parkin was not a deponent to any affidavit relied upon on this application.
[22]This evidence amounted to no more than a conclusion, but was not the subject of objection and reflected what the court had been told at directions hearings on a number of occasions.
The fact that for a not insignificant period of time the defendants asserted that a binding agreement had been entered into by the July 2022 Correspondence does not alter what had occurred. Whatever might have been the motive for making such an assertion, it was ultimately (advisedly) withdrawn.
Further, although not determinative in light of the above conclusions, it seems highly unlikely that the plaintiffs ought to be able to approbate and reprobate about whether or not a binding agreement had been entered into.[23] In short, having stated unequivocally and unreservedly that their acceptance was subject to a settlement deed being executed and having acted accordingly, it was not open to the plaintiffs unilaterally to change their minds upon the defendants later failing to execute a settlement deed.[24]
[23]Express Newspapers Plc v News (UK) Ltd [1990] 1 WLR 1320, 1329F (Browne-Wilkinson VC). As to different contexts in which the general principle (that once a person has adopted a stance they cannot thereafter be permitted to go back and take a different stance) has been applied, see, for example: Slea Pty Ltd v Connective Services Pty Ltd [2018] VSC 542, [23] (Almond J); Sydney Attractions Group Pty Ltd v Frederick Schulman (No 2) [2013] NSWSC 1153, [33]-[43] (Sackar J); Fried v National Australia Bank Ltd [2000] FCA 910, [27]-[33] (Weinberg J) and the cases there cited.
[24]Although the same general principle might be said to apply to the defendants, they withdrew their assertion that a binding agreement had been entered into at a time when the plaintiffs’ position was that the finalisation of any agreement had been struck by the later exchange of other documents about which there was a dispute: see pars 11-15, 36-37 above. In other words, at no time did all parties adopt an agreed position that the July 2022 Correspondence and the documents that followed it (as was expressly contemplated by the July 2022 Correspondence) gave rise to a binding agreement. Further, and in any event, notwithstanding contrary assertions that were made from time to time, an objective review of the actual communications between the parties after the July 2022 Correspondence demonstrates that no party considered that the July 2022 Correspondence encapsulated all the essential terms of a binding agreement or that there was no ongoing entitlement to insist on terms that were viewed by 1 side or the other as satisfactory before considering themselves bound.
In any event, on this alternative argument, Parkin did not advance a submission as to what precisely the plaintiffs contended were the terms of any agreement which might have been said to have been entered into by the July 2022 Correspondence. Neither the summons that Parkin attempted to file,[25] nor the material in support contained the actual terms of any alleged agreement. For example, the summons referred to seeking an order that the defendants release the Associated Persons without any attempt to identify the terms of any such release. In short, the submissions on this point appeared to be little more than an attempt to reconstruct what had occurred to belatedly assert an agreement the plaintiffs had previously and consistently made clear had not been struck.[26]
The Defendants’ Draft DeedD.2
[25]See fn 4 above.
[26]Reference in later correspondence to the plaintiffs reserving their rights does not detract from this conclusion.
On Parkin’s submissions relying on the Defendants’ Draft Deed, counsel accepted, correctly, that there was no binding agreement at the time Miltons sent the email at 1.52pm on 13 October 2022 attaching the Defendants’ Draft Deed as executed by the Associated Persons.[27] So much was clear from the clarification the plaintiffs expressly sought, coupled with their expressed interest in “finalising the matter and subject to agreement” from the defendants to the plaintiffs’ preferred construction of clause 7.2.3.
[27]See par 33 above.
Further, it is relevant that the July 2022 Correspondence emanating from the plaintiffs imposed the express stipulation that any agreement was “subject to a settlement deed being executed by the parties” (emphasis added). Thus as the defendants submitted, regardless of the defendants’ position concerning the July 2022 Correspondence, viewed objectively, it was evident that on 13 October 2022 the defendants reasonably contemplated that there would not be a binding agreement based on the Defendants’ Draft Deed until it had been executed by all parties concerned. This conclusion concerning the proper characterisation of defendants’ communication is supported by the fact that the draft provided by Lanza was not in a form to be executed.[28]
[28]See par 30 above.
In any event, on the terms of the email sent by Miltons, there could be no binding agreement until the defendants had conveyed their position in relation to the clarification sought. This was conveyed and agreed but only simultaneously and in conjunction with the defendants making it clear they were not accepting the offer made by the plaintiffs unless the defendants’ position concerning goods and services tax was also acceptable.[29] Thus, it did not amount to an unconditional acceptance of the plaintiffs’ position; that is, the position reflected in the Defendants’ Draft Deed as executed by the Associated Persons coupled with the covering email from Miltons. Accordingly, at no point in time was there a meeting of the minds of the relevant parties.
Other mattersE.
[29]The position as stated by Lanza in relation to goods and services tax seems to be entirely consistent with points 3 and 4 of the 6 points enumerated on 20 September 2022: see par 25 above. In short, there was no suggestion in the 6 points that purported to summarise the key elements of any agreement between the parties that Hamilton would be bearing any of Brascal Investments’ costs related to the proposed transfer.
In light of this conclusion, it is unnecessary to decide whether the insertion of the words “of Apartment 1” in clause 2.5 by the plaintiffs amounted to a counter offer or was merely reflecting the position that had been put by the defendants.[30] Further, it is also unnecessary to determine whether the form of relief sought by Parkin would have been appropriate in any event given the broad terms of the proposed orders, and in particular that “the [d]efendants release the [p]laintiffs and Isaacs from all claims”.[31] It is likely that the making of such an order would have been problematic where there are no pleadings and the claims that ought to or may be the subject of this proceeding are far from settled. These difficulties would have been compounded by the fact that there was plainly a divergence of views in the various drafts and responses as to what ought to have been included in any releases.
ConclusionF.
[30]See, for example, Birdsey v Vincent [2017] VSCA 323, [18]-[20] (Santamaria and Beach JJA, with whom Ashley JA agreed); Air Studios (Lyndhurst) Ltd v Lombard North Central Plc [2013] 1 Lloyd’s Rep 63, 72 [48], 75 [70] (Males J); Bastard v McCallum [1924] VLR 9, 22.6 (Schutt and McArthur JJ and Weigall AJ). See also, JW Carter, LexisNexis, Carter on Contract (online at 8 November 2022) [03-220], [03-250].
[31]In relation to the possible issues with the construction of a release in general terms, see Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112, 123.3, 131.2-132.2 (Dixon CJ, Fullagar, Kitto and Taylor JJ). See also Burness v Hill [2019] VSCA 94, [71]-[74] (Kaye, McLeish and Hargrave JJA); Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251, 264-265 [23] (Lord Nicholls).
For the reasons set out above, the parties have not entered into a binding agreement to settle this proceeding. Accordingly, Parkin’s application seeking relief on the basis that a binding agreement was entered into will be dismissed.
On any view of the facts as set out above, they demonstrate that the parties were very close to a settlement. Subject to hearing further from the parties, I propose to adjourn the next directions hearing for 2 weeks so that the parties can attempt to finalise the issues in dispute in light of the above matters.
---
0