Burchell v Golden Wood Pty Ltd (No 2)

[2000] VSC 485

SUPREME COURT OF VICTORIA	Do not Send for Reporting
COMMERCIAL & EQUITY DIVISION	Not Restricted

COMMERCIAL LIST

No. 2009 of 2000

RICHARD JAMES BURCHELL	Plaintiff
v
GOLDEN WOOD PTY LTD (ACN 006 061 105), DATO MOHD HUSSAIN YUSUF-AL-HAJ, HAZREEK HUSSAIN YUSUF and HAZIZUL HUSSAIN YUSUF	Defendants

---

JUDGE:	Warren J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 November 2000
DATE OF JUDGMENT:	10 November 2000
CASE MAY BE CITED AS:	Burchell v Golden Wood Pty Ltd & Ors (No. 2)
MEDIUM NEUTRAL CITATION:	[2000] VSC 485

---

Order 23.01 – application for summary dismissal – inherent jurisdiction – terms of settlement – whether parties bound.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B. Gillies	Meerkin & Apel
For the First, Second and Third Defendants	Mr M. Shand QC with Ms M. Loughnann	Garland Hawthorn Brahe

HER HONOUR:

1. The background of the facts in this proceeding are contained in my earlier judgment: Burchell v Golden Wood Pty Ltd [2000] VSC 86.

1. The defendants bring an application by summons dated 6 October 2000 seeking orders that the proceeding be dismissed.  Orders were also sought that the plaintiff execute a deed of settlement, but that form of relief is now not pursued.

1. The defendants submit that the proceeding was settled between the plaintiff and the defendants at a mediation on 10 July 2000 as a result of an agreement in writing signed by the parties themselves at the conclusion of the mediation.  The particular agreement is contained in Exhibit GHR1 to the affidavit of Geoffrey Harold Ripper sworn 6 October 2000.

1. The defendants bring the application on two separate bases: first an application invoking the inherent jurisdiction of the court to enforce a settlement of a proceeding; second and alternatively, an application invoking the provisions of Rule 23.01 together with the inherent jurisdiction of the court to dismiss a proceeding without merit.

1. The jurisdiction to enforce a settlement was considered at length by the Full Court of this court in Roberts v Gippsland Agricultural and Earth Moving Contracting Co Pty Ltd (1956) VLR 555, and I refer in particular to the judgment of His Honour Mr Justice Smith commencing at pp.561 onwards. Having considered the observations of the learned Judge in Roberts, it appears to me that the agreement in the present case is appropriate to enforce in the manner proposed by summary application.  I am satisfied that there is jurisdiction to enforce the settlement on the basis that the agreement does not involve matters extraneous to the proceeding.  In Roberts v Gippsland Agricultural Co, His Honour Mr Justice Smith stated (at p.564) the principle that an agreement may be enforced notwithstanding that it involves matters extraneous to the action, and notwithstanding that there is a substantial question raised as to the terms or validity or enforcability of the agreement provided that the court is clearly satisfied that justice can be done under the summary procedure. 

1. I turn then to the matters I take into account in considering whether the procedure should be allowed.  The evidence on the application consisted of the affidavit of Mr Ripper already referred to and the exhibits thereto.  There was also an affidavit sworn by the plaintiff, Richard James Burchell on 25 October 2000.  There were objections made by the defendants to discrete aspects of the plaintiff's affidavit, and it is appropriate that I deal with those matters now.

1. The objections were made to the whole of paragraph 6, the first sentence of paragraph 11, and the whole of paragraph 16 of the plaintiff's affidavit.  It was submitted that the matters deposed to therein went to the plaintiff's "understanding" of the agreement between he and the defendants.  In considering those matters and having had the opportunity to consider the agreement signed at the end of the mediation on 10 July 2000 I am satisfied that there is no ambiguity or uncertainty as to the meaning of the terms contained in the 10 July agreement.  It follows then that the matters that are the subject of objection in the plaintiff's affidavit, are not admissible and they will not be considered.  In this respect I rely upon the observations of the Court of Appeal in FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, in particular the observations of His Honour Justice Brooking at pp.348 and 350, also the observations of Justice Mason in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348, and further the observations of Chief Justice Gleeson in ABC v Fourteenth Commonwealth Games Limited (1988) 18 NSWLR 540 at pp.550 to 551.

1. I turn then to consider the background matters that are relevant to this application.  The proceeding was filed on 10 February 2000 against the defendants seeking declaratory relief or alternatively damages for breach of an agreement said to have been entered into in April 1999.  Generally the latter agreement has been referred to as the "mandate agreement".  The plaintiff eventually filed and served a third amended statement of claim dated 8 May 2000.  In that pleading the plaintiff asserted that the mandate agreement entitled him to claim ten per cent of the equity in a joint venture development in respect of land owned by the first defendant, Golden Wood in the area of Torquay.  I hereafter refer to that area as "the land". 

1. It was alleged by the plaintiff in the pleading that pursuant to the mandate agreement, he introduced one Mr Handbury to the defendants that eventually resulted in a successful joint venture agreement being reached on 2 July 1999, thereby giving rise to his entitlement to equity in the joint venture.  It was further alleged, in particular in paragraph 9B of the pleading, that the defendants had procured the incorporation of an entity known as MHY Handbury JV Pty Ltd in the joint venture vehicle as the proposed developer of the land in lieu of Golden Wood.

1. I turn then to the defence filed by the defendants.  In their defence dated 22 May 2000, the defendants denied that there was a joint venture agreement, and asserted two particular matters.  First, that any agreement with Handbury was totally outside the terms that Mr Burchell the plaintiff had been engaged to procure.  Second, that if there was a joint venture agreement it was subject to a condition precedent that an appropriate permit be granted by the municipal authority by 2 July 2000, and that as such a permit had not been granted, the contract was regarded by the defendants and Mr Handbury as null and void after that date.

1. It transpired that pursuant to orders made on 10 July 2000, the parties participated in a mediation.  The mediation it seems commenced at about 10.45 a.m. and ran the duration of the day, being completed at about 6.30 p.m.  It was conducted before a member of senior counsel, Mr Henry Jolson QC.  At the mediation the plaintiff was represented by senior and junior counsel and his then solicitor.  The mediation culminated in the heads of agreement document which forms Exhibit GHR1 to the affidavit of Mr Ripper.  Clause 5 of the heads of agreement provided that the heads of agreement document would form the basis of a deed of settlement to be executed by the parties.  It transpired that following the mediation, the defendants' solicitors submitted two draft deeds of agreement following discussions between those solicitors and the plaintiff's then solicitor, Mr Sergio Guerra.  In each case a draft was submitted subject to the approval of the defendants themselves.

1. It transpired that Mr Guerra ceased to be the plaintiff's solicitor in about September.  On 4 September Meerkin & Apel wrote to the defendant's solicitors advising that they then acted for the plaintiff Mr Burchell.  In addition, and significantly, the new solicitors asserted that the heads of agreement did not accurately reflect Mr Burchell's view of the settlement.  It is to be observed that in earlier correspondence, Mr Guerra, in a letter dated 9 August 2000, pressed the defendants' solicitors to finalise the draft heads of agreement and indicated therein, that his client would insist on payment of moneys agreed under the settlement.  This sum was $100,000. 

1. These matters basically set out the essential facts of the dispute post mediation between the parties that culminate in the defendants' application.  In my view the issues raised by the application and which I am to determine, are whether the heads of agreement, in particular Clause 6 therein, extinguished the plaintiff's claims in the proceedings, and secondly whether in that event, I am bound to dismiss the proceeding.

1. Clause 6 of the agreement provided as follows:

"The parties hereby release and forever discharge each other from all claims, suits, demands and costs arising directly or indirectly out of the proceeding."

1. In my view, Clause 6 of the agreement operated as an immediate release of the claims and rights which the plaintiff otherwise had against the defendants.  It took effect in return for the promises of the defendants contained in the agreement.  In my view, considering the terms of the agreement struck on 10 July 2000, I am satisfied that the language of the document, in particular Clause 6 is clear.  I am further satisfied that the agreement defined the intentions of the parties: See Fraser v Elgin Tavern Pty Ltd (1982) VR 398.

1. It follows, and I am satisfied, that the agreement plainly had legal effect, notwithstanding the fact that the parties contemplated a later more formal agreement.  In this respect I refer to the observations of the High Court in Masters v Cameron (1956) 91 CLR 353, especially at p.360, also the observations of Chief Justice Gleeson in ABC v Fourteenth Commonwealth Games Ltd supra, at p.548.

1. In the course of submissions, Mr Gillies who appeared for the plaintiff, urged a different approach on the basis of the principles expressed by the High Court in Masters v Cameron at p.360.  In particular, he relied upon the third principle expounded by the High Court, that the case may be one in which the intention of the parties is not to make a concluded bargain at all, and unless and until they execute a formal contract.

1. I consider that looking at and applying the principles expressed by the High Court in Masters v Cameron the proper approach is to search for words in the agreement of 10 July 2000 making it clear that that agreement was not executed.  I am satisfied that on the face of the agreement of 10 July 2000 there are no words that indicate such.  In my view the fact that the parties contemplated a subsequent deed of settlement did not impact on the binding nature of the agreement signed on 10 July 2000.

1. Insofar as the agreement was signed at the end of a long day of mediation, in this modern day and age of litigation, it is to be observed that prudent mediators require the parties, if at all possible, to sign the fundamental terms that they have agreed and struck upon at the end of the mediation before the parties depart their separate ways.  Sometimes, parties go away from settlement discussions and on reflection are dissatisfied with some or other aspect of what they have agreed to do.  It was submitted by Mr Gillies that the document signed by the parties on 10 July 2000 was no more than an indication of the broad framework that the parties intended to pursue.  I cannot accept as much and in particular I note that the plaintiff was represented as I have already observed, by senior and junior counsel, and his instructing solicitor.  If it transpired that subsequently he became satisfied with some term or other of the terms struck on 10 July2000, so be it.

1. For these reasons, I am satisfied that the plaintiff's claims in the proceeding, must in light of the settlement be regarded as without merit and I should dismiss the proceeding.  I am satisfied that the heads of agreement of 10 July 2000 stands as an independent legally binding agreement between the plaintiff and the defendants.  Insofar as there is any controversy or dissatisfaction with arrangements as to stamp duty, transfer fees or goods and services taxes arising from or consequential upon the terms of the agreement, in my view those matters do not affect the binding nature of the agreement that took effect arising from the release under Clause 6 of the agreement of 10 July 2000.  It is to be observed that any of the parties' ultimate liability for stamp duty under the Stamps Act 1958, or the Commonwealth legislation with respect to goods and services taxation fall where they lie and that is a matter to be determined on another occasion.

1. I am satisfied that the court should enforce the settlement reached, consistent with the principles expressed by Smith J in Roberts v Gippsland Agricultural Company.  I am satisfied that it is appropriate to dismiss the proceeding and that justice will be done by such an order.

---