David John Venaglia v Brenden John Bidas
[2011] NSWDC 179
•04 August 2011
District Court
New South Wales
Medium Neutral Citation: David John Venaglia v Brenden John Bidas [2011] NSWDC 179 Hearing dates: 2 August 2011 Decision date: 04 August 2011 Jurisdiction: Civil Before: Judge M. Sidis Decision: 1. The motion is dismissed.
2. The defendant is to pay the plaintiff's costs of the motion on an ordinary basis.
3. The affidavit evidence is returned.
4. l return the bundle of authorities.
Catchwords: PERSONAL INJURY/CONTRACT: verbal agreement for in principle settlement-whether binding in light of conditions precedent to execution of deed of release Legislation Cited: Civil Procedure Act 2005 Cases Cited: Masters v Cameron (1954) 91 CLR 353
Niesmann v Collingridge (1921) 29 CLR 177
Howe and Anor v Connell (1997) NSWSC 432
Baulkham Hills Private Hospital Pty Limited v GR Securities Pty Limited (1986) 40 NSWLR 622 at 628
Air Great Lakes Pty Limited v Easter Holdings Pty Limited (1985) 2NSWLR
Calderbank v Calderbank (1975) 3 All ER 333Category: Principal judgment Parties: David John Vengelia (Plaintiff/Applicant)
Brenden John Bidas (Defendant/Respondent)Representation: Mr A Justice (For Plaintiff/Respondent)
Mr P Davies(For Defendant/Applicant)
Thomas Mitchell Solicitors (For Plaintiff/Applicant)
McDonald Johnson Lawyers (For Defendant/Respondent)
File Number(s): 2009/00332763
Judgment
The plaintiff claimed damages against the defendant as the occupier of a property on which he allegedly suffered injury after a fall. He claimed serious injuries involving multiple fractures, including a fractured skull. He claimed serious ongoing disabilities, including brain damage.
The claim was commenced on 21 April 2009.
The defendant denied liability and, in the alternative, claimed contributory negligence.
On 23 March 2010, a settlement conference took place attended by the plaintiff, his counsel and solicitor, the defendant, defendant's aunt and his solicitor. The defendant claimed that the parties on that date reached a binding agreement to settle the action.
Terms of settlement were not drawn that day but events thereafter proceeded as follows.
On 31 March 2010, the defendant's solicitor appeared on behalf of both parties at a status conference and informed the registrar that the matter was settled in principle . The proceedings were adjourned for four weeks to allow for documentation of the terms.
On 1 April 2010, a draft deed was forwarded by the defendant to the plaintiff.
On 27 April 2010, a further draft deed was submitted and on that date the defendant paid $20,000 into his solicitor's trust account
On 28 April 2010, a further status conference took place at which further time was allowed to provide for finalisation of the documents. The proceedings were adjourned to 21 May 2010.
Further status conferences and directions hearings were held pending resolution of the documentation.
On 15 July 2010, the plaintiff's former solicitors filed notice of ceasing to act and the plaintiff retained his current solicitors.
On 8 March 2011, the defendant filed a motion seeking a determination under section 73 of the Civil Procedure Act 2005 that the proceedings were compromised or settled on 29 March 2010 on the terms set out in paragraph 2 of that application.
In summary, the terms contended for by the defendant were that an agreement for settlement for the payment of a sum by the defendant by instalments was immediately binding on both parties, as was the agreement by the parties to enter into a deed of settlement and release that would contain terms providing for:
(1) The instalments to be paid;
(2) The payment of an initial sum of $20,000 on 28 April 2010 or the date of execution of the deed, whichever was later;
(3) The proceedings to be dismissed with no order for costs;
(4) Mutual releases;
(5) Lodgement of a caveat against the defendant's property until the settlement sum was paid; and
(6) Other standard provisions normally contained in a deed of release.
The defendant claimed as conditions subsequent to the agreement:
(1 ) That the defendant would raise the upfront payment of $20,000 within four weeks of 31 March 2010 and that the parties would jointly apply to the Court on 31 March 2010 for an adjournment to allow the defendant to raise that sum; and
(2 ) That the defendant would enter into a deed of settlement and release.
The defendant alternatively claimed that the condition relating to the raising of the upfront payment was a condition precedent and that the claim was settled or compromised on about 28 April 2010 when th e condition precedent was satisfied by the defendant's payment of this sum into his solicitor's trust account.
The plaintiff has declined to sign the deed of release or to proceed with the settlement. He seeks a date for hearing of his claim.
I have already noted that the plaintiff claimed that he has suffered brain damage. A tutor was appointed to act on his behalf on 30 November 2010. It has not been claimed in response to this motion that the plaintiff was not capable of entering into the agreement to settle on 29 March 2010.
The plaintiff's response to the application was that the agreement reached was in principle and non-binding.
Both parties relied on the decision of Masters v Cameron (1954) 91 CLR 353, in which the High Court referred to three categories for matters that have been negotiated on the basis that there should be a subsequent formal contract:
1. The parties have reached finality on all the terms of the bargain and in tend to be bound immediately to the performance of those terms but at the same time propose to have the terms restated in a form that is fuller and more precise but not different in effect.
2. The parties agreed completely on all terms and intended no departure from or addition to those agreed, express or implied terms, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal deed; and
3. The intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
The defendant argued that the settlement agreement in this case came within the second category.
The High Court provided as an example of this category the case of Niesmann v Collingridge (1921) 29 CLR 177, a case in which they said:
All essential terms of a contract had been agreed upon and the only reference to the execution of a further document was in terms as to price, which stipulated that payment should be made 'on signing of the contract'.
Rich and Stark JJ observed at 185 that this did not make the signing of a contract a condition of agreement, but made it a condition of the obligation to pay and carried a necessary implication that each party would sign a contract in accordance with the terms agreement.
The plaintiff argued that the negotiations conducted on 29 March 2010 put the parties into the third category. This category was explained by the High Court in Masters v Cameron in the following terms:
Cases of the third class are fundamentally different. They are cases in which the terms of the agreement are not intended to have, and therefore do not have, binding effect on their own. The parties may have so provided, either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document, or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed. (Authorities excluded).
Further assistance in the determination of this issue was found in the decision of his Honour Justice Young in Howe and Anor v Connell (1997) NSWSC 432. In that case his Honour took the view that, generally speaking, settlements in litigation are intended to be final as soon as the barristers shake hands. He said:
The reasonable litigator on the Bondi bus would think that as soon as the legal representatives have reached an agreement as to the principle on which the matter is to be settled, then the cause of action has been converted into the new contractual right. Accordingly, the situation is one where the first category of Masters v Cameron applies, that is, there has been final mutual assent, but the people who are to draw up the formal agreement have power to set it down, but not alter its terms.
It was not contended for the defendant that this was a case that came within the first of the categories set out in Masters v Cameron.
Justice Young went on to refer to a fourth category identified by McClelland CJ in Equity in Baulkham Hills Private Hospital Pty Limited v GR Securities Pty Limited (1986) 40 NSWLR 622 at 628, namely that the parties are immediately bound by the terms on which they have agreed, whilst they expect that a further contract will be made in substitution for the first contract.
It appeared to me that this was in fact the position adopted by the defendant, so th at he argued alternatively that: (1) on 29 March 2010 the parties were immediately bound by their agreement, or (2) the parties became bound by their agreement when, on 28 April 2010, the defendant established his capacity to pay the initial instalment of $20,000.
Justice Mahoney in Air Great Lakes Pty Limited v Easter Holdings Pty Limited (1985) 2NSWLR posed the following questions to assist in determining whether the parties reached a binding agreement. He said:
In considering this question in a context such as the present, it is of assistance to distinguish between three questions. Did the parties arrive at a consensus? (If they did) was it such a consensus as was capable of forming a binding contract? And (if it was) did the parties intend that the consensus at which they arrived should constitute a binding contract?
In this case, the agreement allegedly reached at the meeting of 29 March 2010, according to the defendant, was that the matter would be settled upon payment of the sum of $70,000 in instalments of $20,000 within one month and $1,000 per month for fifty months.
The agreement was conditional upon confirmation of the defendant's capacity to pay the first instalment within one month.
If the defendant defaulted in the payment of any instalment, the amount payable under the settlement was increased to $135,000 and was payable forthwith, subject to the deduction of any instalments already paid.
The plaintiff was to have the right to place a caveat on the title to the defendant's property as a means of securing payment. A deed of release was to be prepared and, once the deed was signed, the proceedings were to be dismissed.
The defendant took the position that the parties had arrived at formal agreement on the terms as stated above and that the execution of a deed of release was required by way of confirmation only of those terms.
It was apparent, however, that the terms of the deed were to be finalised and signed before any payment was required to be made and before the Court was to be requested to dismiss the proceedings.
The defendant's position overlooked, in my view, two matters fundamental to final settlement. The first was confirmation that the defendant was able to make the initial payment of $20,000.
The defendant's solicitor confirmed in cross-examination that it was his intention to protect his client's interests and therefore that he did not intend that the defendant should be committed to settlement until it was confirmed that he could make the initial $20,000 payment. He also said that the settlement would not proceed if the defendant was unable to make that payment.
The second fundamental issue to settlement was that the defendant wanted the plaintiff to sign a deed that not only recorded the payment terms but also released him from further liability.
It was apparent from the material before the Court that preparation of this deed was not simply a matter of confirmation of terms agreed at the settlement conference but that negotiation of its terms was an ongoing process. Thus, on no objective basis could it be said that on 29 March 2010 the parties entered into a binding agreement for the final settlement of the plaintiff's claim.
The question then was whether the parties were bound when, on 28 April 2010, one of those conditions was fulfilled, namely, confirmation that the defendant had funds to pay the initial instalment.
The analysis of the basis for the agreement that I have already set out made it more than apparent that the conditions referred to in the defendant's notice of motion as conditions subsequent were in fact conditions precedent.
Fulfilment of only one of those conditions was not, in my view, sufficient to constitute a concluded and binding settlement agreement.
I have already noted that the deed envisaged on 29 March 2010 involved ongoing negotiations. In such circumstances, I took the view that either party was entitled to withdraw from negotiations prior to the final execution of the deed. This was an option that was available to the plaintiff and, unfortunately for the defendant, this was an option that the plaintiff exercised.
In the circumstances, the motion is dismissed.
The plaintiff asked for costs of the motion on an ordinary basis up to and including 29 July 2011 and on an indemnity basis thereafter. His application is based upon a letter of 29 July 2011 relying on the principles of Calderbank v Calderbank (1975) 3 All ER 333 and was stated to be open for acceptance until 4pm on 1 Au gust 2011. 30 and 31 July 2011 were a Saturday and Sunday.
This effectively allowed the defendant one day within which to determine to accept the offer, and in my view, it could not be said that it was unreasonable of the defendant in such circumstances not to have accepted the offer.
The defendant argued that each party should pay their own costs of the motion on the basis that negotiations in an attempt to settle the matter and to bring the parties back to a settlement situation continued until the motion was filed in March 2011.
I did not accept that argument, having regard to the fact that in August last year a hearing date was set for November 2010. The plaintiff was unable to proceed on that date and a further hearing date was set for March 2011, and it was at that stage that the hearing date was again vacated following the filing of the motion on behalf of the defendant.
I considered whether it was appropriate to make an order for costs at all, having regard to the evidence that indicated to me that the defendant negotiated in good faith in this matter. However, the matter has involved the plaintiff in costs and expense and it has gone against the defendant, and therefore I see no reason to depart from the general rule that the losing party pay the successful party's costs.
ORDERS
1. The motion is dismissed.
2. The defendant is to pay the plaintiff's costs of the motion on an ordinary basis.
3. The affidavit evidence is returned.
4. l return the bundle of authorities.
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Decision last updated: 22 November 2011
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