Englisch v Sully

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

S ECI 2020 01848

PAUL ENGLISCH T/A ALPINE PROPERTY (ABN 65 281 213 249)	Appellant
v
MELISSA SULLY	Respondent

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JUDGE:	Matthews AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	13 May 2021
DATE OF JUDGMENT:	23 July 2021
CASE MAY BE CITED AS:	Englisch v Sully
MEDIUM NEUTRAL CITATION:	[2021] VSC 434

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CONTRACT - Trial of preliminary question – Rule 47.04 Supreme Court (General Civil Procedure) Rules 2015 (Vic) - Binding agreement alleged to have been made at mediation - Parties agreed to execute deed of settlement and other documents following mediation - Whether parties agreed to terms as alleged - Whether parties intended to be immediately bound - Masters v Cameron (1954) 91 CLR 353 - Whether alleged uncertainty or incompleteness of terms indicates lack of intention to be bound - Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 – ‘In principle’ agreement - Conduct subsequent to alleged agreement probative of intention to be bound - Nurisvan Investment Ltd v Anyoption Holdings Ltd [2017] VSCA 141 - Parties agreed to terms as alleged - Insufficient evidence of intention to be bound - No binding contract between the parties.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr S Clement	DSA Lawyers
For the Respondent	Mr G Lubofsky	SGM Legal

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background.................................................................................................................................... 1
Trial on the preliminary question............................................................................................... 2

Evidence............................................................................................................................................... 3

Evidence relied upon by the parties........................................................................................... 3
Objections to evidence.................................................................................................................. 4
Relevance and direct evidence.......................................................................................... 4
Hearsay evidence................................................................................................................. 5
Opinion evidence and legal conclusion........................................................................... 7

Conclusion regarding objections to evidence........................................................................... 8

Applicable principles........................................................................................................................ 8

Submissions...................................................................................................................................... 11

Respondent’s submissions......................................................................................................... 11
Appellant’s submissions............................................................................................................ 14

Evidence regarding the Alleged Terms and the Alleged Binding Agreement.................... 17

Events at the Mediation.............................................................................................................. 18
The conduct of the Mediation.......................................................................................... 18
Notes of the Mediation..................................................................................................... 22

Correspondence/conduct following the Mediation.............................................................. 24

Discussion and analysis.................................................................................................................. 25

Findings regarding the Alleged Terms.................................................................................... 25
Clause (i)............................................................................................................................. 25
Clause (ii)............................................................................................................................ 25
Clause (iii)........................................................................................................................... 29

Findings regarding the Alleged Binding Agreement - intention to be immediately bound 30

Conclusion......................................................................................................................................... 36

HER HONOUR:

Introduction
Background

This proceeding concerns an appeal against orders made by the Victorian Civil and Administrative Tribunal (‘VCAT’) on 23 March 2020 in VCAT proceeding number C5845/2015 (‘VCAT Orders’).

In that proceeding, the Respondent had brought a claim against the Appellant for misleading or deceptive conduct. Following the hearing of that claim, the VCAT Orders required the Appellant to pay the Respondent the sum of $38,271.45 and reimburse the Respondent’s application fees.[1]As at 26 August 2020 the Appellant had paid to the Respondent the total sum of $36,246.85 and had entered into a payment plan with the Respondent for the balance of the sum required to be paid by the VCAT Orders (‘Payments To Date’).[2]
[1]Affidavit of Paul William Joseph Englisch, unsworn and dated 27 April 2020, [3]; Affidavit of Melissa Sully affirmed 26 August 2020, [28].
[2]Affidavit of Melissa Sully affirmed 26 August 2020, [29].

On 20 April 2020 the Appellant filed a Notice of Appeal in this Court pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) seeking that the VCAT Orders be set aside. An Amended Notice of Appeal was filed on 24 June 2020 (‘Appeal’).

On 4 June 2020 orders were made by consent between the parties referring the proceeding to mediation to be conducted by a judicial registrar (‘Mediation’). The Mediation was conducted by Judicial Registrar Keith (‘the Mediator’) on 3 September 2020 via the Zoom videoconferencing platform.

The Respondent alleges that at the Mediation, the parties entered into an agreement to settle their dispute on terms which were immediately binding. The Appellant denies that an agreement was reached at the mediation and denies that any agreement was intended to be binding between the parties.

At the directions hearing before me on 19 March 2021, the parties raised this issue for the Court’s consideration and agreed that it should be dealt with before any further steps were taken in respect of the Appeal, effectively as a trial of a preliminary question.

Trial on the preliminary question

At the hearing on 13 May 2021, I indicated that it was appropriate for the issue as to whether a binding agreement on terms of settlement had been reached at the Mediation to be dealt with as a preliminary question in the trial of the proceeding pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).

The parties conferred and agreed on a form of the preliminary question to be heard and determined as follows:

Did the Appellant and Respondent enter into a binding agreement at the Mediation on 3 September 2020 on terms that:
(i)The Appellant pay to the Respondent the sum of $6,250 within 90 days; (‘Clause (i)’)
(ii)The Respondent retain the $35,771.45 paid to her by the Appellant on 10 April 2020 pursuant to orders made by the Victorian Civil and Administrative Tribunal on 23 March 2020 in proceeding C5845/2015; (‘Clause (ii)’) and
(iii)The parties agree to allow the appeal in proceeding S ECI 2020 01848 setting aside the Orders. (‘Clause (iii)’)
(‘the Question’).

There are effectively two aspects to the Question:

(a) Whether the parties reached agreement on each of the three terms set out in the previous question as Clauses (i) to (iii) (each an ‘Alleged Term’, together the ‘Alleged Terms’); and

(b) If the parties did reach agreement on the Alleged Terms, was it intended that they be immediately legally binding (‘Alleged Binding Agreement’).

On the balance of probabilities, I find that the parties:

(a) Reached agreement on each of the Alleged Terms; and

(b) Did not agree to be immediately legally bound by the Alleged Terms, so that there was no Alleged Binding Agreement.

It follows, therefore, that the answer to the Question is ‘No’.

Evidence
Evidence relied upon by the parties

In relation to the Question, the following evidence and material was before me:

(a) Affidavit of Paul William Joseph Englisch, unsworn and dated 27 April 2020 (‘First Englisch Affidavit’) and exhibits thereto. Mr Englisch attended the Mediation;

(b) Affidavit of Melissa Sully affirmed 26 August 2020 (‘First Sully Affidavit’) and exhibits thereto. Ms Sully attended the Mediation;

(c) Affidavit of James Anthony Marks affirmed 17 March 2021 (‘First Marks Affidavit’) and exhibits thereto. Mr Marks is a solicitor employed by the Appellant’s solicitors, DSA Law;

(d) Affidavit of James Anthony Marks affirmed 18 March 2021 (‘Second Marks Affidavit’) and exhibits thereto;

(e) Affidavit of Simon Fuller sworn 9 April 2021 (‘Fuller Affidavit’) and exhibits thereto. Mr Fuller was counsel for the Respondent from June 2020 to 22 March 2021 and attended the Mediation;

(f) Affidavit of Giulio Marra affirmed 9 April 2021 (‘Marra Affidavit’) and exhibits thereto. Mr Marra is the principal solicitor at SGM Legal, solicitors for the Respondent, and attended the Mediation;

(g) Affidavit of Melissa Sully affirmed 9 April 2021 (‘Second Sully Affidavit’);

(h) Affidavit of Paul William Joseph Englisch sworn 5 May 2021 (‘Second Englisch Affidavit’);

(i) Affidavit of Joseph Alesci sworn 6 May 2021 (‘Alesci Affidavit’) and exhibits thereto. Mr Alesci is a partner at DSA Law and attended the Mediation;

(j) Evidence of Melissa Sully on cross-examination and re-examination given on 13 May 2021;

(k) Evidence of Giulio Marra on cross-examination and re-examination given on 13 May 2021;

(l) Respondent’s outline of submissions dated 6 May 2021 (‘Respondent’s Submissions’); and

(m) Appellant’s outline of submissions dated 11 May 2021 (‘Appellant’s Submissions’).

In addition, both parties made oral submissions at the hearing.

I have had regard to all of the evidence, and will summarise the evidence as to the key events later in these reasons.

Objections to evidence

The Appellant made a number of objections to the evidence sought to be adduced by the Respondent, which are outlined in Annexure A to the Appellant’s Submissions. At the hearing, the parties submitted and I accepted that the Appellant’s objections to evidence be determined in the course of this ruling and, where appropriate, exclude evidence from consideration in the ultimate determination of the Question. The objections are dealt with briefly below.

Relevance and direct evidence

The Appellant challenged much of the evidence put on by the Respondent[3] on the basis of ‘relevance’, though these objections were not explained further than this. The Appellant also challenged certain evidence on the basis that it was ‘not direct evidence’.[4]
[3]Second Sully Affidavit, [5]-[7]; Marra Affidavit, [9], [10], [15], [17], [20] and [28]; Fuller Affidavit [19], [20], [22]-[24] and [26].
[4]Second Sully Affidavit, [5]-[7]; Marra Affidavit, [10], [15], [17], [20] and [28]; Fuller Affidavit [20], [22] and [26].

Section 55(1) of the Evidence Act 2008 (Vic) (‘Evidence Act’) provides that:

The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.

None of the evidence objected to on the ground of relevance fails this standard, whether or not the probative value of the evidence is ultimately substantial. I am satisfied that the whole of each of the affidavits before me are relevant to the Question.

Section 55(1) also clearly permits ‘indirect’ evidence, and there is no clear substance to the Appellant’s objections on the ground that the evidence objected to is ‘not direct evidence’. To the extent that any objection on the basis that evidence is ‘not direct evidence’ is an objection on the grounds that it is, for example, not first-hand hearsay evidence or is not lay opinion evidence based on the deponent’s perception, this is dealt with below.

Hearsay evidence

Evidence of certain statements made by the Mediator in the course of the Mediation were sought to be adduced by the Respondent.[5] Statements said to be imputed to the Appellant in the affidavit evidence before me were also sought to be adduced, and were challenged on the basis that they are excluded by application of the hearsay rule.[6] The evidence of statements said to be imputed to the Appellant is in fact evidence of statements made by the Mediator in the course of passing communications between the Appellant and Respondent, and does not purport to be evidence of statements by the Appellant directly. For this reason this evidence may be dealt with collectively as evidence of statements by the Mediator.
[5]The evidence is contained in the Second Sully Affidavit, [4] and [6]; Marra Affidavit, [9], [13] and [14]; and Fuller Affidavit, [6], [7], [14], [16] and [18].
[6]Second Sully Affidavit, [6]; Marra Affidavit, [13] and [16]; Fuller Affidavit, [18].

Pursuant to s 59 of the Evidence Act, evidence of a previous representation made by a person is not admissible to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation. There are a number of exceptions to this rule.^[7]
[7]One such exception, being s 75 of the Evidence Act concerning evidence on interlocutory applications, was not raised and in my view does not apply as the disposition of a preliminary question under r 47.04 falls under Order 47 dealing with the mode of trial. On this basis, the hearing on the Question forms part of the trial of the proceeding notwithstanding that it has been separated and heard as a preliminary question.

The parties agreed at the Hearing that notice under s 67 of the Evidence Act of the Respondent’s intention to adduce hearsay evidence (‘Hearsay Notice’) could be given to the Appellant following the Hearing, and was given on the day of the Hearing. The reasons given in the Hearsay Notice for admission of the evidence of statements by the Mediator are that:

(a) The person who made the representations is ‘not available’ to give evidence because he is not compellable to give evidence by reason of s 68(2) of the Civil Procedure Act 2010 (Vic).[8] Representations made by the Mediator are therefore an exception to the hearsay rule under s 63 of the Evidence Act.

(b) The evidence is being admitted for a non-hearsay purpose.

[8]For this reason the Mediator is taken not to be available to give evidence: ‘Dictionary’, Schedule 2, Part 2, cl 4(1)(d) Evidence Act.

In the circumstances of the Appellant’s consent to the issue of the Hearsay Notice on the day of the Hearing, I accept that the Hearsay Notice provides reasonable notice of the Respondent’s intention pursuant to s 67(1) of the Evidence Act, and that s 63(2) therefore applies to exclude the hearsay rule in relation to the evidence referred to in that Notice.

I note that paragraph 16 of the Marra Affidavit was not included in the Hearsay Notice and therefore is not excluded from the hearsay rule under s 63(2) of the Evidence Act. However this may be of little import as paragraph 6 of the Sully Affidavit and paragraph 18 of the Fuller Affidavit, which contain substantially the same evidence as paragraph 16 of the Marra Affidavit, were referred to in the Hearsay Notice. In any event Mr Marra’s evidence may be admitted for a non-hearsay purpose, for which no notice is required. I also accept that once evidence is admitted, it may be used for a hearsay purpose.

Opinion evidence and legal conclusion

The Appellant objected to evidence put on by the Respondent concerning the views and conclusions of the deponents on the conduct and outcome of the Mediation on the basis that it was opinion evidence and mere conclusions stated as evidence.[9] This category of objection covers evidence that the Appellant and Respondent had, for example, ‘reached an agreed position’,[10] that negotiations were conducted ‘on an agreed basis’,[11] that there was an ‘agreement reached at Mediation’,[12] or that ‘the parties had reached a binding agreement and intended to be bound by it’.[13] I take the Appellant’s objections to evidence on the basis of ‘conclusion’ to be objections fundamentally on the basis that they express an opinion.
[9]Second Sully Affidavit, [5]–[7]; Marra Affidavit, [10], [15], [17], [20] and [28]; Fuller Affidavit, [19], [20], [22] and [26].
[10]Second Sully Affidavit, [5].
[11]Marra Affidavit, [10].
[12]Marra Affidavit, [20].
[13]Fuller Affidavit, [26].

Section 76 of the Evidence Act provides that evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed. Relevantly, s 77 excludes from the operation of s 76 any evidence of an opinion admitted because it is relevant for another purpose. One such purpose, which is salient to the present case, is the use of evidence of an opinion to establish that that opinion was held.

I am satisfied that all of the evidence objected to on this ground is opinion evidence but is admissible for another relevant purpose pursuant to s 77 of the Evidence Act. In the circumstances of the present case, the subjective opinion of a participant in the Mediation as to whether a concluded agreement was reached is relevant to establishing whether an agreement was, in fact, reached.[14]
[14]Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 330-2 (‘Air Great Lakes’).

Having reached this conclusion it is not necessary for me to consider whether the evidence of Ms Sully is admissible as lay opinion evidence under s 78 of the Evidence Act; or whether the evidence of Mr Marra and Mr Fuller is admissible as expert opinion evidence under s 79 of the Evidence Act.

Finally, the Appellant objected to a statement in the Marra Affidavit that Mr Marra ‘would have ensured that terms of settlement or heads of agreement were executed’ had there been an indication at the Mediation that the settlement was not binding immediately.[15] This statement was said to be ‘speculation’. While this is not a proper basis for a ruling of inadmissibility, I am content to treat this statement as rising no higher than Mr Marra’s opinion or estimate of his own actions in the hypothetical.
[15]Marra Affidavit, [20].

Conclusion regarding objections to evidence

For the reasons set out above, I am satisfied that all of the evidence objected to by the Appellant is admissible. In so stating I make no comment as to the ultimate probative weight of the evidence.

Applicable principles

As the Respondent described them, the principles as to whether parties have entered into a binding contract are well settled and uncontroversial but are, at least in circumstances such as these, of difficult application. There was no real dispute between the parties as to the principles to be applied in this case.

Whether an agreement is reached which is intended to be immediately binding falls to be determined objectively, having regard to the presumed or inferred intention of the parties. The parties’ objective intention is fact-based and to be determined having regard to all of the surrounding circumstances, including ‘by drawing inferences from [the parties’] words and their conduct’[16] and from the terms of the parties’ correspondence, such correspondence to be read in the light of the surrounding circumstances and having regard to the commercial context in which they were exchanged.[17] The ultimate question to be answered is what each party, by its words or conduct, would have led a reasonable person in the position of the other party to believe.[18]
[16]Sagacious Procurement Pty Ltd v Symbion Health Ltd (Formerly Mayne Group Ltd) [2008] NSWCA 149 at [99] (‘Sagacious’) citing Allen v Carbone (1975) 132 CLR 528 at 532 (Stephen, Mason and Murphy JJ); Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548 (Gleeson CJ, with whom Hope and Mahoney JJA agreed) (‘Commonwealth Games’).
[17]Queensland Phosphate Pty Ltd v Korda (as joint and several liquidators of Legend International Holdings Inc (in liq) [2017] VSCA 269, [37] (‘Queensland Phosphate’).
[18]Pavlovic v Universal Music Australia Pty Ltd ]2015] NSWCA 313 [65] (‘Pavlovic’) citing Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, [40].

The relevant intention or belief which is the subject of the Court’s assessment is that which obtained at the time an alleged agreement was made. The subjective intention or belief of a party is not determinative though it may be relevant.[19]
[19]Air Great Lakes, 331.

In certain circumstances, regard may be had to the subsequent conduct of the parties.[20] In Nurisvan Investment Ltd v Anyoption Holdings Ltd (‘Nurisvan’),[21] the Victorian Court of Appeal distinguished between ‘cases involving contracts that are said to have come into existence as a result of an exchange of correspondence of other communication between the parties’, and cases involving an agreement purported to be contained in a single document, and noted that regard may be had to conduct subsequent to an alleged agreement made in the former kind of case.[22] In Queensland Phosphate Pty Ltd, a case involving an exchange of emails said to evidence a binding contract, the Victorian Court of Appeal held that regard may be had to subsequent communications between the parties: ‘(1) in order to see what was important or essential to the transaction; (2) as admissions; and (3) as probative of the parties’ contractual intention’.[23] The parties agreed that this case was one in which the Court could properly have regard to subsequent conduct of the parties for these purposes.
[20]Pavlovic, [15] (Bathurst CJ), [72] (Beazley P) and [118] (Meagher JA); see also Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd (2015) 47 WAR 547 at [110]-[111]; Sagacious, [99]-[105].
[21][2017] VSCA 141.
[22]Nurisvan, [109] (citations omitted).
[23]Queensland Phosphate, [37].

In circumstances such as the present, where the parties agreed that they would prepare a written document setting out terms of agreement, the Court may consider the three categories of contract set out by the High Court in Masters v Cameron.[24] These categories describe circumstances in which:
[24](1954) 91 CLR 353, 360 (‘Masters v Cameron’).

(a) the parties intend to be bound immediately, though expressing a desire to draw up their agreement in a more formal document at a later stage;

(b) the parties intend to be bound immediately, but may wish the operation of a particular clause or term to be delayed pending the drawing up of a more formal document; or

(c) the parties intend to postpone the creation of contractual relations until a formal contract is drawn up and executed.

Since Masters v Cameron was decided, Courts have recognised a fourth category – that being where the parties intend to be bound immediately by terms which they have agreed upon, whilst expecting to make a further contract in substitution for the first contract containing, by consent, additional terms.[25]
[25]Baulkham Hills Private Hospital Pty Ltd G R Securities Pty Ltd (1986) 40 NSWLR 622, 628. See also Graham Evans Pty Ltd v Stencraft Pty Ltd [1999] FCA 1670.

Negotiations between parties falling within the first, second and fourth categories set out above indicate an immediately binding agreement notwithstanding a commitment to a further, more formal contract. By contrast, negotiations falling within the third category do not reflect an intention to be immediately bound and therefore no contract will be formed until the execution of the further and more formal written agreement.

The categories in Masters v Cameron – and the further fourth category – are taxonomic and should not distract from the fundamental inquiry with which the Court is engaged. That inquiry remains whether, in all the circumstances, the parties objectively intended to reach a binding agreement.[26]
[26]See Tasman Capital Pty Ltd v Sinclair [2008] NSWCA 248 at [25] and the authorities cited therein.

For an agreement to be made with immediate binding force, notwithstanding that a written instrument may be executed at a later time, the original oral agreement must be complete, certain and enforceable on its own terms.[27] Relative completeness and certainty of contractual terms may be taken as indicators of the parties’ intention to be bound, in addition to fundamental aspects of an agreement without which the Court cannot enforce the agreement.[28] However, and as is recognised in Masters v Cameron, parties may in their negotiations leave aspects of an agreement to be decided at a later date while agreeing to be immediately bound in respect of other, concluded terms. In distinguishing the issue of whether the parties intended to reach a concluded agreement and the issue of whether the parties’ agreement is enforceable assuming such an intention, the Victorian Court of Appeal in Nurisvan adopted the following passage from Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd:[29]

It is to be noted that the question in a case such as the present is expressed in terms of the intention of the parties to make a concluded bargain: see, eg, Masters v Cameron (at 360). That is not the same as, although in a given case it may be closely related to, the question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract. To say that the parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.
[27]Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600, 604 (Gibbs CJ, Murphy and Wilson JJ) (‘Booker’).
[28]See ANZ v Frost Holdings Pty Ltd [1989] VR 695, 700 (Kaye J).
[29]Commonwealth Games, 548, quoted in Nurisvan, [108].

Submissions
Respondent’s submissions

The Respondent’s position is that a binding agreement was made at the Mediation on the terms set out in the Question. In other words, that the Alleged Terms were each agreed as was the Alleged Binding Agreement.

In support of this position, the Respondent submitted that the evidence of the practitioners of both parties who attended the Mediation, being Mr Marra, Mr Fuller and Mr Alesci, were substantially to the same effect in respect of the following:

(a) both parties accepted that any settlement would be on the basis that the VCAT Orders would be set aside, that the Respondent would retain the Payments To Date, and that the Appellant would pay to the Respondent an amount on account of her legal costs of the Appeal;

(b) on the above premises, the parties exchanged a number of offers with respect to the amount that the Appellant would pay to the Respondent, and ultimately agreed that the Appellant would pay to the Respondent $6,250 within 90 days of the date of the Mediation; and

(c) the parties agreed that their solicitors would prepare documentation in respect of the settlement, including a formal settlement deed, a joint memorandum for the purposes of Practice Note SC CL 9 (‘Joint Memorandum’), a further amended notice of appeal (‘Further Amended Notice of Appeal’), and consent orders in respect of the Appeal and Further Amended Notice of Appeal (‘Consent Orders’).

The Respondent submitted that the Alleged Terms constituted a complete agreement in the sense that they were capable of being enforced on their own terms. The Respondent submitted that these terms represented the primary or only commercial motivators of the parties, and were in this respect the only terms which ought to be considered so fundamental that their absence would vitiate the contract for incompleteness.

The Respondent submitted that the agreement to set down the terms in a written deed of settlement is consistent with the principles in Masters v Cameron. The Respondent submitted that terms additional to the Alleged Terms setting out the mechanics of how any settlement would take place were not fundamental to the Alleged Binding Agreement, and were said to include:

(a) the parties would co-operate in the preparation of, and in fact prepare, the Joint Memorandum;

(b) the parties would negotiate and execute a settlement deed containing, amongst others, full releases;

(c) the parties would execute the Consent Orders and Mr Englisch file a Further Amended Notice of Appeal; and

(d) the parties agreed not to disparage one another.

These provisions of the agreement were said to be matters to be discussed by the parties’ legal representatives to implement the commercial terms sought to be achieved by the parties, and were not contentious. The Respondent admitted that there was a dispute in the correspondence between the parties concerning the order of performance of the parties’ obligations, and in particular whether a settlement deed would be signed and the Consent Orders would be held in escrow until the payment of the $6,250 was made. However, the Respondent submitted that this was similarly mechanical and ancillary and is consistent with an oral binding agreement to be followed by documentation prepared by the parties’ solicitors.

The Respondent relied on the evidence of Mr Marra, Mr Fuller and Ms Sully in respect of her position that an agreement had been concluded at the Mediation. The Respondent also pointed to evidence of Mr Alesci of offers made and accepted between the parties. This is said to have been reinforced by statements of the Mediator to the effect that that Mr Englisch was glad to have the matter resolved. It was also submitted that at no point during the Mediation did any person, including the Mediator or anyone on the Appellant’s side, say that the agreement reached on those terms was not immediately binding. It was submitted that it is common for commercial mediators to do so and the absence of such a suggestion is indicative of an intention to be bound.

In this respect the Respondent referred in some detail to the decision of Kirby P in Geebung InvestmentsPty Ltd v Varga Group Investments No 8 Pty Ltd[30] (‘Geebung’) for the view that Courts ought generally to uphold agreements made by parties on the vital terms as between them, and ought not to insist that ‘there was no binding agreement until the lawyers had settled every term and drawn up all documents’ required to give effect to an agreement.[31]
[30](1995) 7 BPR 14,551 (‘Geebung’).
[31]Geebung, 14,571; See also Howe v Connell (unreported; Supreme Court of NSW, Young J, 25 September 1997); Jennings v Jennings [2015] NSWSC 1826; Petronaitis v Petronaitis [2016] NSWSC 765.

Appellant’s submissions

The Appellant’s position is that there was no agreement between the parties on the Alleged Terms and, even if there was agreement on the Alleged Terms, there was no mutual intention to be bound by them. Accordingly, the Appellant says that there was no Alleged Binding Agreement.

The Appellant submitted an agreement to the Alleged Terms is incomplete, uncertain and therefore unenforceable, and relied on Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd for the proposition that the Court will not enforce an incomplete contract ‘being no more than an agreement of the parties to agree at some time in the future’.[32]This submission was not primarily put on the basis that the agreement as alleged was void for incompleteness, but rather that the incompleteness or failure to conclude certain terms was indicative of a lack of intention to be immediately bound by the Alleged Terms.
[32]Booker, [604] (Gibbs CJ, Murphy and Wilson JJ).

The Appellant conceded that Clause (i) of the Alleged Terms was agreed but disputed that there was agreement on Clauses (ii) and (iii). The Appellant pointed to inconsistencies in the evidence relied upon by the Respondent for the Alleged Terms, which it said indicated that the Respondent was not able to clearly identify those terms. Notwithstanding the Appellant’s agreement on the terms of the Question, the Appellant maintained that the evidence relied upon by the Respondent, including the affidavit evidence of the conduct of the Mediation and the evidence of subsequent correspondence, discloses inconsistencies in the Alleged Terms said to have been agreed.

The Appellant also submitted that there were a number of additional terms which remained to be agreed between the parties. The Appellant submitted that none of these terms are merely ‘mechanical’ or ‘ancillary’, though as mentioned above this was put primarily as a basis for a finding of a lack of mutual intention to be bound by the Alleged Terms. The Appellant submitted that these additional terms included:

(a) Whether the Appellant was entitled to file and serve a Further Amended Notice of Appeal;

(b) The content and disposition of the Further Amended Notice of Appeal;

(c) The content of the Joint Memorandum;

(d) The date on which the Alleged Binding Agreement was to take effect and the date on which any settlement and mutual release would be effective;

(e) Any consequences for non-payment by the Appellant pursuant to Clause (i); and

(f) The position of the Appellant’s insurer regarding money paid to the Respondent pursuant to the VCAT Orders.

It was said that there could be no settlement until the Further Amended Notice of Appeal and Joint Memorandum were agreed, and that their contents were not trivial. It was submitted that the contemplation of documents to be agreed and executed between the parties, while not inconsistent with an earlier oral agreement, made it more unlikely that the parties intended to be bound until the execution of those documents.

The Appellant submitted that the date of effect of the Alleged Binding Agreement and any default mechanisms in the agreement were essential terms of the agreement or terms which were more than mechanical. The Appellant submitted that the Respondent had refused to execute a settlement deed or the Consent Orders until she was paid, whereas the Alleged Binding Agreement did not make execution of either document conditional on payment.

The Appellant submitted that the insurer’s position was raised and left unresolved in the Mediation, and that Mr Marra’s assertion by email of 24 February 2021 that there was an ‘implied term’ in the Alleged Binding Agreement that there would be no attempt to recover the money paid by the Appellant to the Respondent underscores the lack of certainty as to this term. To the extent that the insurer’s position touches the subject matter of Clause (ii) it was submitted that this was indicative of a lack of agreement on that clause. Otherwise, it was said that the insurer’s position was an essential matter, or at least a matter which was more than mechanical or ancillary, which remained to be agreed and that this was indicative of a lack of intention to be bound.

The Appellant further submitted that any agreement reached at the Mediation was not intended to be immediately binding.

The Appellant referred me to authorities in which the Court expressed a view that if parties are represented by solicitors the ‘general practice and ordinary expectation’ is that they would not be bound by an agreement until a deed of settlement is entered into,[33] and that if the parties intended to be bound by an oral agreement one or both solicitors would have said so.[34] The Appellant submitted that the parties’ legal representatives were aware of and shared such practices and expectations and, against this background,[35] the lack of clear statements at the mediation to the effect that the parties intended to be immediately bound by the Alleged Binding Agreement was significant.
[33]MX v FSS Trustee Corporation (as Trustee of the First State Superannuation Scheme) [2020] NSWSC 961, [109].
[34]Pavlovic, [83] (Beazley P).
[35]Fuller affidavit, [25]–[26], Marra affidavit, [19].

The Appellant also submitted that the fact that the Mediation was left ‘open’ at the conclusion of the session on 3 September 2021 indicates that there was not a concluded agreement.

The Appellant submitted that the subsequent conduct and correspondence of the parties was inconsistent with the Alleged Binding Agreement having binding force. In particular the Appellant said that both parties described the Alleged Binding Agreement in correspondence as an ‘in principle’ agreement, and that the expression ‘in principle’ carries an ‘accepted imputation that there was not yet a final agreement’.[36] The Appellant also pointed to the following correspondence from Mr Marra to Mr Marks on 24 September 2020 which it said shows the Respondent was aware that the Alleged Binding Agreement was not yet binding:[37]

Your client now seeks the consent of my client to amend his case before the Court without having to commit to the parties’ settlement agreement. I do not expect our client to consent to the amendment of your client’s case until he enters into the settlement agreement.

[36]Respondent Submissions, 12.

[37]Marra Affidavit, Exhibit GM-2, p18.

The Appellant submitted that, taken together, the evidence does not support the existence of a mutual intention to be bound by the Alleged Binding Agreement said to have been formed at the Mediation. The Appellant acknowledged that the Court should seek to give effect to commercial agreements between the parties, especially since the introduction of the Civil Procedure Act 2010 (Vic), but that such considerations do not ‘upgrade’ the effect of the parties’ dealings or rectify the inconsistent conduct of the Respondent’s representatives.

Evidence regarding the Alleged Terms and the Alleged Binding Agreement

As the party alleging the existence of a binding agreement, the Respondent bears the onus of establishing a positive answer to the Question on the balance of probabilities. Accordingly, the Respondent must show that each of the Alleged Terms were agreed, as it was acknowledged that these were the ‘fundamental’ terms of the agreement, and that the parties reached the Alleged Binding Agreement.

Events at the Mediation
The conduct of the Mediation

In order to identify what, precisely, was agreed at the Mediation, it is necessary to have careful regard to the evidence of what occurred there.

It was common ground that the Mediator had indicated prior to and at the opening of the Mediation that, due to other business of the Court, the Mediation session would need to conclude by 12:30pm.

It was also not contested that in the early stages of the Mediation, the Appellant indicated by way of the Mediator that he would not settle the proceeding on any basis where the VCAT Orders and the findings underpinning them remained on the record.[38]
[38]Second Englisch Affidavit, [6]–[7]; Second Sully Affidavit, [4]; Alesci Affidavit, [7]–[9]; Fuller Affidavit, [6]–[7]; Marra Affidavit, [9].

According to Mr Fuller, the Appellant included in his initial offer a proposal that the Respondent ‘retain the monies paid to her to date’ and that the Respondent pay the sum of $4,500.00 to the Appellant for the costs of the Appeal.[39] Mr Alesci’s evidence substantially agrees with Mr Fuller’s save that he says the offer was put on the basis that the Appellant ‘would not make any claim in respect of the moneys paid to [the Respondent] to date’.[40] Mr Marra and the Appellant suggest that the initial offer was put on a ‘walk away’ basis whereby no transfer of money would occur between either side,[41] which on the evidence of Mr Fuller and Mr Alesci was the second offer put by the Appellant.[42] I do not consider this discrepancy particularly important, as the offer or offers were rejected by the Respondent in any event.[43]
[39]Fuller Affidavit, [10]–[11].
[40]Alesci Affidavit, [9].
[41]Marra Affidavit, [8]; Second Englisch Affidavit, [7].
[42]Fuller Affidavit, [12]; Alesci Affidavit, [11].
[43]Second Englisch Affidavit, [7]; Alesci Affidavit, [10]–[12]; Fuller Affidavit, [11]–[13]; Marra Affidavit, [10].

However, it was not contested that the Respondent indicated that she would consent to the Appeal and setting aside of the VCAT Orders, if she was allowed to keep the money paid pursuant to the VCAT Order and subject to an agreement as to costs.[44] It was also substantially common ground that the Appellant’s offer to ‘walk away’, and subsequent offers for a payment of money by the Appellant to the Respondent on account of her costs, were made on that premise.[45] For example, Mr Fuller deposes that the ‘walk away’ offer was put on the basis that ‘no further money would change hands’, which Mr Fuller took to mean that the Respondent would retain the moneys paid to her pursuant to the VCAT Order and that there would be no payment by either party on account of costs.[46] Mr Marra deposes that, following the initial exchange of offers, further offers were made between the parties ‘on the agreed basis’ that the Respondent would retain the money already paid pursuant to the VCAT Orders.[47] Mr Alesci similarly deposes that the ‘walk away’ offer was put ‘on the terms [the Appellant] had made previously, but with there being no payment of costs by either party.’[48]
[44]Second Englisch Affidavit, [7]; Second Sully Affidavit, [4].
[45]Fuller Affidavit, [12]; Marra Affidavit, [9]; Alesci Affidavit, [11].
[46]Fuller Affidavit, [12].
[47]Marra Affidavit, [10(b)].
[48]Alesci Affidavit, [11].

There is also substantial common ground that the parties exchanged a number of offers for payment of a sum of money by the Appellant to the Respondent.[49]
[49]The Appellant and Respondent refer generally to an exchange of offers, see Second Englisch Affidavit [8]; Second Sully Affidavit, [5].

Mr Fuller and Mr Alesci both depose that, following the initial offers and on the basis outlined above, the Respondent indicated that she would accept a payment of $11,500.00, to which the Appellant counteroffered payment of $5,000.00.[50] Mr Fuller’s evidence is that the offer of $11,500.00 comprised a payment for costs of $9,000.00 and a further payment representing the balance of what was owed to her pursuant to the VCAT Orders of $2,500.00.[51]
[50]Alesci Affidavit, [12]; Fuller Affidavit, [13]–[14].
[51]Fuller Affidavit, [12].

Mr Fuller also deposes that a further counteroffer was made by the Respondent for $7,500.00 being a payment of $5,000.00 for costs and the further payment of $2,500.00 pursuant to the VCAT Orders.[52] Mr Alesci deposes that these offers were ‘solely in relation to a costs figure’ and does not mention a further payment on account of the VCAT Orders.[53]
[52]Fuller Affidavit, [13].
[53]Alesci Affidavit, [12].

Mr Fuller, Mr Alesci and Mr Marra all say that, following these negotiations, the Respondent proposed that the Appellant would pay her $6,250.00, and that the Appellant accepted on condition that payment would be made within 90 days.[54]
[54]Fuller Affidavit, [17]–[18]; Alesci Affidavit, [12]; Marra Affidavit, [13].

Mr Fuller deposes that, in conveying the Appellant’s acceptance of this offer, the Mediator indicated that the Appellant wished to communicate to the Respondent that he ‘was willing to put matters behind him and that he was pleased that the dispute had resolved.’[55] The Appellant similarly deposes that in asking the Mediator to convey his acceptance of this offer, he also requested that the Mediator indicate that the offer was accepted ‘to put the matter to bed’.[56] Mr Marra and the Respondent each depose to similar comments made by the Mediator in a joint session though Mr Marra was uncertain whether the Mediator or Mr Alesci had made the comment.[57]
[55]Fuller Affidavit, [18.3].
[56]Second Englisch Affidavit, [9].
[57]Marra Affidavit, [16]; Second Sully Affidavit, [6].

Following the negotiation as to the $6,250.00 payment, the Mediator brought the parties from their respective rooms into a joint session and indicated that the Mediation would need to conclude shortly due to other business of the Court.

In the joint session, Mr Alesci deposes that Mr Fuller proposed that the Appellant indemnify the Respondent in the event of the insurer attempting to clawback the money already paid to the Respondent under the VCAT Orders, in addition to mutual releases. Mr Alesci says that the Appellant did not object to mutual releases but refused to provide the indemnity, and that this issue was not resolved.[58]
[58]Alesci Affidavit, [12]–[13].

Mr Fuller says that he raised mutual releases in the joint session, and does not refer to an indemnity.[59] Mr Fuller also deposes that, in light of the discussions in the Mediation between the parties and between himself and the Respondent, that the parties had reached agreement on terms including that ‘the Parties released each other from all claims.’[60] Mr Fuller does not mention the Respondent’s entitlement to the money paid to her by the Appellant under the VCAT Orders. Mr Fuller also suggested that mutual releases would be ‘conditional on the payment being made by Mr Englisch.’[61]
[59]Fuller Affidavit, [19]–[20].
[60]Fuller Affidavit, [22].
[61]Fuller Affidavit, [19].

Mr Marra mentions in his affidavit only that in the joint session there was a discussion about ‘how the agreed terms would be implemented’ and does not mention a discussion of mutual releases or an indemnity, although on cross-examination Mr Marra agreed that an indemnity was discussed at the Mediation and was refused by the Appellant.[62] In this respect and in the context of a potential clawback by an insurer or some other party, Mr Marra accepted that whether the Respondent kept the money was a ‘fundamental component of that agreement’ and there was no agreement in respect of an indemnity at the Mediation.[63]
[62]Transcript, 31 [14]–[15].
[63]Transcript, 31 [13]–[30].

Nonetheless, the Respondent and Mr Marra gave evidence that it was their opinion that an agreement was reached at the Mediation on terms including a payment of an amount for costs, the setting aside of the VCAT orders, and that the Respondent would retain the money paid by the Appellant pursuant to the VCAT Orders;[64] that is, in loose terms, the Alleged Terms. The evidence of Mr Fuller and Mr Alesci is that the parties reached agreement on the payment of costs and setting aside orders and on mutual releases.[65]
[64]Marra Affidavit, [15]; Second Sully Affidavit, [5]. See also Fuller Affidavit, [24].
[65]Alesci Affidavit, [13]; Fuller Affidavit, [22].

There is substantial agreement that, in the joint session at the end of the Mediation, the Mediator indicated that a number of documents were required to be drawn up by the parties in respect of the agreement, including the Joint Memorandum, Consent Orders in respect of the Appeal, the Further Amended Notice of Appeal, and a deed of settlement. It was agreed that the Appellant’s solicitors would prepare a first draft of these documents.[66] The Appellant and Mr Alesci depose to statements made at the Mediation that preparation of these documents were necessary steps before the settlement could be ‘finalised and documented’,[67] or ‘resolved’.[68] The Respondent, Mr Fuller and Mr Marra each depose that at no point in the course of the Mediation was it said that the alleged agreement was not binding, or was not binding until the completion of these documents.[69]
[66]Marra Affidavit, [17]; Alesci Affidavit, [14]; Fuller Affidavit, [22].
[67]Alesci Affidavit, [15].
[68]Second Englisch Affidavit, [10].
[69]Second Sully Affidavit, [6]; Marra Affidavit, [19]; Fuller Affidavit, [25].

Mr Alesci and Mr Fuller each depose that the Mediation was left ‘open’ at the end of this session, at the Mediator’s suggestion.[70] Mr Alesci deposes to the Mediator suggesting that the Mediation be left open following a discussion between Mr Alesci and the Mediator in the joint session concerning the documentation discussed above, and that the matter was adjourned to a directions hearing on 30 September 2020.[71] Mr Fuller deposes that he does not recall why the Mediation was left open, but confirms the adjournment to the directions hearing.^[72]
[70]Fuller Affidavit, [23]; Alesci Affidavit, [15].
[71]Alesci Affidavit, [15].
[72]Fuller Affidavit, [23].

Notes of the Mediation

Each party’s solicitors made notes during the Mediation which were produced in evidence.

Mr Marra’s handwritten notes from the Mediation were helpfully deciphered by Mr Marra in his affidavit, and are as follows:[73]
[73]Marra Affidavit, Exhibit GM-1 (emphasis in original, square brackets added for clarity).

Important for OS [the other side] to have VCAT Decision gone
OC [our client] ok – but keeps money
Not happy

$15k? - worried about not paying
- walk away. $9k?
$4500?
Final 6250/90 days
MS [Melissa Sully] – how to ensure pays on time?
More costs if not pay? – No
MS keeps money
Accepted

PE Happy deal was made / Apologised
Wants to move on

Mr Alesci’s notes are as follows:[74]
[74]Alesci Affidavit, [5]; Exhibit JA-1 (square brackets added for clarity in Alesci Affidavit, [5]).

Englisch Mediation
(10am – 1230) 2.5hr
A [Applicant] will only settle if Vcat [sic] decision’s set aside
A offered R [Respondent] pay $4,500.00
R offered $11,500;
A offered $5000 in 90 days
R firm $6,250;
A accepted

(a) amended grounds to inc (Burns)
(b) Joint Memo to court
Consent to orders being sought
R won’t sign until paid
T.O.S [Terms of settlement] to be finalised by 30/9 and advise Court
30/9 next directions
Mediation left open

Correspondence/conduct following the Mediation

By email of 8 September 2020, Mr Marks of the Appellant’s solicitors stated to Mr Marra that the matter had settled ‘in principle on terms including that’:

1. Our client is to pay your client the sum of $6,250 in 90 days;
2.Your client is to consent to our client filing an amended Notice of Appeal in the form foreshadowed;
3.Your client is to consent to orders being made including that leave to appeal be granted and the appeal be allowed, as well as cooperating in the preparation and submission to the Court of a joint memorandum […];
4.The parties provide full mutual releases;
5.No order as to costs.

On 22 September 2020 Mr Marks provided to Mr Marra a written draft of a settlement deed (‘Draft Settlement Deed’), in response to which Mr Marra provided comments on 24 September 2020.[75]
[75]Marra Affidavit, Exhibit GM-2, p6.

The Appellant’s solicitors then fell silent and did not respond to Mr Marra’s repeated requests for an update on the documents.

By email of 15 December 2020, Mr Marks advised Mr Marra that the Appellant’s professional indemnity insurer had indicated that, in circumstances where the VCAT Orders are set aside, it would seek to recover from the Respondent the money paid to her by the Appellant pursuant to the VCAT Orders.[76]
[76]Marra Affidavit, Exhibit GM-2 p66.

Following some correspondence in relation to the insurer’s position, by email of 24 February 2021 to Mr Marks, Mr Marra stated that the matter had been settled at Mediation on certain terms.[77] By letter of 16 March 2021 in response, Mr Marks denied the existence of an oral agreement and stated that Mr Marra’s email of 24 February 2021 was ‘the first time that [Mr Marra had] suggested that there is a binding agreement between the parties’.[78]
[77]Marra Affidavit, Exhibit GM-2, p66. Those terms were effectively the same as those set out in paragraph [80] above, plus the Respondent retaining the monies already paid to her in compliance with the VCAT Orders.
[78]Marra Affidavit, Exhibit GM-2, p69 (emphasis in original).

Discussion and analysis

For the reasons that follow, I am satisfied that each of the Alleged Terms were in fact agreed. However, I am not satisfied that the parties mutually intended to be immediately bound, such that I am not satisfied that the Respondent has established that the parties agreed to the Alleged Binding Agreement.

Findings regarding the Alleged Terms
Clause (i)

There is no real dispute that the Appellant agreed to pay the Respondent the sum of $6,250.00 within 90 days. All of the affidavit evidence, and the evidence of the notes of Mr Alesci and Mr Marra, indicates that this clause was agreed to be final and accepted, and there was no further negotiation on this point. The evidence is not entirely clear as to whether the sum is referable to the Respondent’s costs only or contains some component in respect of money owing under the VCAT Orders, but resolution of this is not necessary for the determination of whether a payment of $6,250.00 within 90 days was agreed and nor is it unusual in the context of a mediation.

Accordingly, I find that the parties agreed to the Alleged Term set out in Clause (i) of the Question.

Clause (ii)

I also accept that the Alleged Term (being that in Clause (ii)), concerning the Respondent’s entitlement to retain the money paid to her by the Appellant pursuant to the VCAT Orders, was agreed between the parties.

The evidence shows that the Respondent’s entitlement to keep the money already paid to her was raised by her early in the Mediation as an important component of any settlement to be reached. This was accepted as a premise for the negotiation of payment of money between the parties. Mr Marra’s notes are particularly emphatic in recording the Respondent’s entitlement to keep that money as an element of the agreement.

Mr Fuller suggests that the negotiations as to payment of money between the parties included negotiations as to the payment by the Appellant to the Respondent of the balance of the money owing pursuant to the VCAT Orders. As I have indicated in paragraph [86] above, I do not regard as relevant that the sum ultimately agreed to be paid was not made specifically referable to money owing pursuant to the VCAT Orders. It is far more relevant that there was no discussion of repayment of money already paid to the Respondent in the course of these negotiations.

The Appellant made much of a lack of agreement between the parties as to whether the Appellant would grant the Respondent an indemnity instead of or in addition to a mutual release, and pointed to a failure to deal with possible claims by the Appellant’s insurer as indicative of a lack of agreement on the Respondent’s entitlement to keep the monies already paid to her. As I understand it, this argument depends on characterising the Respondent’s entitlement to ‘keep’ or ‘retain’ the money as an entitlement against all persons, including the Appellant’s insurer, and that this entitlement could be given effect in the form of an indemnity. A mutual release between the parties would fall short of achieving this objective.

It is true that while the Respondent and Mr Marra depose to their understanding in the course of the Mediation that it was a premise of the agreement ultimately reached that the Respondent could ‘keep’ or ‘retain’ the money, and the Appellant deposed to an early offer from the Respondent that she be allowed to ‘keep’ the money, Mr Alesci deposes to an offer from the Appellant that he would not ‘make any claim in respect of’ the money.[79] Mr Fuller does not mention the issue directly but does record agreement on mutual releases between the parties.[80]
[79]Alesci Affidavit, [9].
[80]Fuller Affidavit, [22].

The issue of the Respondent’s entitlement to keep the money paid to her by the Appellant was also not raised specifically as a term of the ‘in principle’ agreement in the email of 8 September 2020, or in the Draft Settlement Deed.[81] However, mutual releases are raised in each document. In particular, the Draft Settlement Deed includes the following at clause 5:[82]

With effect from and subject to the payment of the Settlement Sum,[83] the parties shall mutually release and forever discharge one another from any and all claims, actions, suits, demands of every description whatsoever, which the parties have or at any time hereafter may have, or which but for the execution of these terms could have, may have or might have had (of whatever nature, and whether or not involving legal proceedings, claims or causes of action whether or not currently contemplated) in respect of all matters between them, including without limitation:
a.The Contract of Sale of 1 September 2015 the subject of the VCAT Proceeding;
b.The VCAT Proceeding; and
c.The Appeal Proceeding.

[81]Marra Affidavit, Exhibit GM-2, p1, pp7-13.

[82]Marra Affidavit, Exhibit GM-2, p10.

[83]Defined in the Draft Settlement Deed as $6,250: Marra Affidavit, Exhibit GM-2, p9.

By email of 24 September 2020 in response to the draft deed, Mr Marra proposed ‘the following after paragraph 5(c): ‘any monies paid by Englisch (or on his behalf) to Sully as a result of the decision made in the VCAT proceeding on 23 March 2020.’[84] On cross‑examination Mr Marra stated that this was proposed in order to ‘shore up’ the Respondent’s entitlement to keep the money already paid to her by the Appellant.[85]
[84]Marra Affidavit, Exhibit GM-2, p16.
[85]Transcript, 31 [23]–[26].

Mr Marra’s email of 24 February 2021 sets out terms of the agreement which are identical to those set out in the email of Mr Marks of 8 September 2020, but also includes a sixth term that the Respondent ‘would retain the monies already paid to her in compliance with the final orders of VCAT’.[86] This was in addition to mutual releases between the parties.
[86]Marra Affidavit, Exhibit GM-2, p66.

It is tolerably clear that the parties’ agreement that the Respondent keep the money already paid to her pursuant to the VCAT Orders was later characterised as a mutual release between the parties from all claims. Mr Fuller’s evidence of his views in the Mediation and the evidence of the subsequent conduct of the parties, including the negotiation of the deed of settlement, confirms this. This is not to say that the parties agreed to mutual releases per se, only that mutual releases were the lawyers’ chosen mechanism for giving effect to what had in fact been agreed; namely, that the Respondent keep the money paid to her by the Appellant.

I make no comment as to whether a clawback by the Appellant’s insurer of funds held by the Respondent could be effective in the face of such an agreement or a mutual release between the parties, but note that it is not necessarily a barrier to the formation of an agreement that its terms do not ultimately fulfil all or part of their intended purpose. What matters is the parties’ intention to conclude an agreement on terms, not the parties’ intention to achieve a particular objective by doing so.

In this case, the agreement that the Respondent keep the money already paid to her may or may not have achieved one or both parties’ objective to protect that money from the Appellant’s insurer. However, the Court is not asked to find the meaning of that agreement on its proper construction and then apply that to a claim by the insurer against the Respondent. That question of construction raises quite separate issues which do not arise for determination here.[87] Instead, the Court is asked whether the Alleged Term that the Respondent retain the money already paid to her by the Appellant pursuant to the VCAT Orders was agreed between the parties. I consider that the parties did agree to that Alleged Term.
[87]One such issue is the existence of an implied term as alleged in Mr Marra’s email to Mr Marks of 24 February 2021.

To the extent that the mutual releases or indemnity provisions as negotiated between the parties’ lawyers following the Mediation differ in some way from the agreement that the Respondent keep the money, the agreement can be said to fall within the ‘fourth category’ of contracts identified at paragraph [36]. If there is no effective difference, the agreement can be said to fall within the first category. In any event, a subsequent characterisation of a clause of an agreement is not fatal to a conclusion that the clause was in fact agreed. However, as will be discussed, the subsequent characterisation does raise questions as to whether the parties intended to be bound by the Alleged Term as it was framed at the Mediation. It is also possible to see such matters as being ‘machinery’ to give effect to the agreement that the Respondent could keep the money already paid to her by the Appellant.

Clause (iii)

Clause (iii) is that the parties agree to allow the Appeal setting aside the VCAT Orders. Similarly to Clause (ii), this Alleged Term was agreed quite early in the Mediation as a premise of the ongoing negotiations as to payment of money between the parties.

I do not accept that, as the Appellant submitted, there is an ‘impossible uncertainty as to how the parties were to dispose of’ the VCAT Orders evidenced by a lack of agreement as to the contents of the Appellant’s Further Amended Notice of Appeal and the Joint Memorandum. Clause (iii) is sufficiently clear and certain on its face and does not depend on an agreement, at the time the agreement is alleged to have been made, on a particular mechanism such as the Appellant’s reliance on Burns v Corbett.[88] Such a mechanism is purely ancillary to the agreement that the VCAT Orders would be set aside, and the contents of the Joint Memorandum and Consent Orders are purely ancillary or relevant to the mechanism selected by the parties to have the VCAT Orders set aside. In this respect, I accept the Respondent’s submissions that the disposal of the VCAT Orders was the Appellant’s primary motivator, was consented to by the Respondent, and that the parties themselves were largely unconcerned with the contents of the Joint Memorandum, Consent Orders or Further Amended Notice of Appeal except insofar as they gave effect to that. I also accept the Respondent’s submission that in such a context, and following the admonishment of Kirby P in Geebung, it would be a ‘serious wrong’ to insist that there can be no agreement on this point until the parties’ lawyers have settled the content of documents such as the Further Amended Notice of Appeal, Consent Orders or the Joint Memorandum.[89]
[88][2018] HCA 15.
[89]Geebung, 14,571.

Findings regarding the Alleged Binding Agreement - intention to be immediately bound

Having found that the parties did in fact reach agreement at the Mediation on the Alleged Terms of the Question, it remains to be determined whether this agreement was intended to be immediately legally binding on the parties. As will be discussed below, I consider that there is insufficient evidence to indicate that the Alleged Terms were intended to be immediately legally binding. It is the Respondent’s burden and that burden has not been discharged.

Therefore, I find that the parties did not reach agreement on the Alleged Binding Agreement.

Most critically, there is insufficient evidence of the parties’ conduct and intention at the Mediation, being the time at which the Binding Alleged Agreement is alleged to have been made, to conclude that they intended to be bound. To the extent that the subsequent correspondence of the parties is probative of their intention at the Mediation, the evidence of that correspondence is ambivalent but generally tends against the conclusion that the parties mutually intended to be immediately bound by the Alleged Terms. Moreover, the evidence in favour is conflicted, and is insufficient to satisfy me that the parties did intend to be bound.

The Respondent relied on statements made by the Mediator and Mr Alesci, imputed to the Appellant, that offers had been ‘accepted’ and that the matter was ‘put to bed’ or ‘put behind’ the parties. The Respondent submitted that these statements clearly corroborate the affidavit evidence of the Respondent, Mr Marra and Mr Fuller that the parties mutually believed that an agreement had been concluded at the mediation and that the dispute was thus resolved. This, it was said, strongly indicates that the parties mutually intended to be bound by the agreement.

I accept that those statements were made in the course of the Mediation and I also accept that they may be fairly imputed to the Appellant as an expression of his belief at the time. These statements are relevant as they speak not only to the Appellant’s subjective view but to the communication of that view to the Respondent in circumstances which suggest a consensus of opinion that an agreement had been reached. However, it does not necessarily follow that the parties intended to be bound by that agreement. As is recognised in the third category of Masters v Cameron, parties may conclude an agreement and yet remain of the view that they are not bound by the agreement until they have signed the foreshadowed written deed. Statements that an ‘offer’ had been ‘accepted’, while framed in the classic terms of contractual formation, do not necessarily indicate a contractual intention. Similarly, I do not consider that a statement that the Appellant was happy to have ‘put the matter to bed’ is sufficient by itself to establish an intention to be bound, even if it reflects a view that an agreement had been concluded. Such statements must be considered in all of the circumstances. It is indicative that the Appellant himself saw the key commercial terms as having been resolved, which is the position repeatedly expressed during the Respondent’s oral submissions that these key commercial terms were the sole concern of the parties at the Mediation. It is consistent with an intention to be immediately bound, but is not determinative.

I do not accept the Respondent’s submission that, because there was no statement that the parties would not be immediately bound by the agreement, the parties did so intend to be bound. This submission seeks to reverse the onus of proof and, in any event, says very little about what the intention of the parties was. It is much more significant, in my view, that the parties did not say that they did intend to be immediately bound. While I agree with the Appellant’s view that it is much more typical to expect written terms or a clear indication that an oral agreement is binding, I do not consider the authorities cited by the Appellant to express a statement of law in that regard. Whether the parties mutually intended to be bound is a question of fact which does not always depend on express statements. However, the fact remains that it is common practice for parties to clearly indicate that an oral agreement is binding, or otherwise assume that the agreement is not binding until a written agreement is signed. That was recognised by Mr Fuller in his affidavit and forms an important contextual feature of the current case.

The Appellant submitted that the agreement was incomplete as it did not include a number of ancillary provisions which were contemplated to be concluded in the course of settling documentation of the agreement. The Respondent submitted that these were purely mechanical and that the parties intended them to be finalised at a later date while remaining bound by the Alleged Terms.

As stated at paragraph [101] above, the contents of the Further Amended Notice of Appeal, Consent Orders and Joint Memorandum are properly characterised as mechanical steps in respect of Clause (iii). These were steps required to be taken in order to give effect to the agreement. Leaving such matters to be finalised by the lawyers following conclusion of the agreement is consistent with an intention to be bound by the agreement immediately, as is recognised in Masters v Cameron and subsequent cases. However, it is only consistent with such an intention; it is not, by itself, evidence of an intention.

As discussed at paragraphs [96-99] above, the position of the Appellant’s insurer and whether the Appellant indemnified the Respondent against the insurer’s claims were contemplated by the parties and not expressly dealt with by the Alleged Terms. It is not quite correct to say that these issues remained ‘on foot’ following the Mediation, as I am satisfied that the parties reached agreement on the term at Clause (ii) which was an agreement broadly on the same subject matter. However, it is also not quite correct to say that these issues were raised, rejected, and not pressed further at the Mediation. The apparently brisk manner in which these issues were raised by the parties and dismissed at the end of the Mediation, in circumstances where the parties were compelled to end the Mediation by a fixed time, suggests that there remained a lack of consensus as to how this part of the agreement might be characterised and the allocation of risk in respect of the insurer. The subsequent correspondence supports this suggestion – in particular, the lack of reference to a term of the agreement on the terms of Clause (ii) in the correspondence immediately following the Mediation and, instead, references to forms of mutual releases, is relevant to the parties’ intention to be bound by the terms of Clause (ii). While the parties may have agreed to this Alleged Term, the parties were also alive to the different mechanisms to give effect to it at least by the time the parties convened in a joint session. It is also the case that neither party expressly referred to it in their correspondence subsequent to the Mediation until 24 February 2021. This tends towards a conclusion that the parties did not intend to be immediately bound by Clause (ii), but it is not determinative, given my finding that the question of releases and/or an indemnity is a mechanism to give effect to this Alleged Term in this context.

The Appellant also submitted that the lack of an expressly agreed mechanism for the Appellant’s default in payment suggests that the parties did not intend to be bound until a written agreement, including such a mechanism, was concluded. I do not accept that this is so. Rather, I accept the Respondent’s position that the consequences of default are generally ‘mechanical’ and capable of resolution by the parties’ lawyers following a conclusion of an agreement, or implication in law. There is evidence that the Respondent considered and expressly declined to attempt to include a more bespoke default mechanism such as a penalty for non-payment. However, and as I have already stated, a matter may be capable of resolution by the parties’ lawyers following a concluded agreement without it being evidence that the agreement was not intended to be binding.

I accept the evidence that the prior commitments of the Mediator caused the Mediation to be concluded at a fixed time, and that this did not give the parties an opportunity to reduce the agreement to writing in the course of the Mediation. However I do not accept the Respondent’s submission that this supports the view that the parties intended to be bound by any oral agreement reached in the Mediation. It is trite that parties do not have to reduce their agreement to writing, but it is equally true that the circumstances may only have caused the parties to defer the conclusion of their agreement. These, again, are circumstances which are potentially consistent with a binding agreement but which do not in any real way support the existence of a binding agreement.

I also do not make much of the Mediation being ‘left open’ at the end of the session on 3 September 2020, though it tends against a conclusion that there was a mutual intention to be bound by the Alleged Terms, primarily as it is not clear what was meant by this.

The Respondent pointed to a term in the Draft Settlement Deed which provided for a final date for payment of this sum of 3 December 2020, being 90 days from the date of the Mediation, as evidence that the parties intended that the contractual obligation to pay commenced on the date of the Mediation. Mr Fuller also deposes to an offer of a specific date for payment of the sum falling in December in the course of the Mediation.[90] There is some force in this submission, though it is also not uncommon for parties to fix a date for the performance of a contractual obligation while continuing to negotiate terms and to remain unbound until the conclusion of the agreement. For this reason I consider that the fixed date for payment is of limited weight.
[90]Fuller Affidavit, [18.1].

There are other issues arising out of the documentation of the agreement by the parties’ lawyers which are significant, though they may be of less weight because they arose subsequently to the alleged agreement. I do not accept the Respondent’s submission that a deed of settlement was not ultimately executed solely for the ‘mechanical or procedural’ reasons that it wished to conclude and annex the other documents to be prepared, and that this is indicative of the parties’ acceptance of a concluded agreement. There is evidence of a dispute between the parties as to the timing for execution of the various documents and payment of the $6,250. In particular, it was disputed that the Consent Orders in respect of the Further Amended Notice of Appeal and disposition of the Appeal would be executed and entered before payment was actually made. This dispute is also remarked on in Mr Alesci’s notes from the Mediation that the Respondent ‘won’t sign until paid’, which in their context appear to mean that the Respondent would not sign the Consent Orders and Joint Memorandum until she was paid. In the context of this dispute, by email of 24 September 2020, Mr Marra told Mr Marks:

Your client now seeks the consent of my client to amend his case before the Court without having to commit to the parties’ settlement agreement. I do not expect our client to consent to the amendment of your client’s case until he enters into the settlement agreement.

The Respondent submitted that it would be ‘remarkable’ for her to sign the proposed Consent Orders without a binding agreement. However the fact remains that the Respondent did not sign the Consent Orders, which hardly supports the view that a binding agreement was in place. A more reasonable view of Mr Marra’s email of 24 September 2020 is as an indication that the Respondent would not sign the Consent Orders until she considered that the Appellant was obliged to pay, which evidently in Mr Marra’s mind he was not yet bound to do.

In the course of the correspondence, parties from either side repeatedly refer to the Alleged Binding Agreement as an ‘in principle’ agreement. The expression ‘in principle’ is not a term of art, but the parties agreed, and I accept, that the expression ‘in principle’ is conventionally used to refer to an agreement which is something less than a legally binding agreement. The Respondent referred me to the case of Sayed v National Australia Bank (‘Sayed’), which it said was a decision in which the parties entered into an agreement using the words ‘in principle agreement’ which was nonetheless upheld as binding by the Court.[91] The Respondent also suggested that the expression ‘in principle’, like other stock expressions used by lawyers such as ‘rights reserved’ or ‘without prejudice’, may be used loosely and, in the circumstances, may not bear the conventional meaning. However, in Sayed the agreement described as ‘in principle’ originally contained a clause stating that it was ‘non-binding’ which the Court accepted had been amended to provide that the agreement was binding.[92] There is no such evidence in this case that the expression ‘in principle’ was used by mistake or did not bear its conventional meaning. Importantly, both parties used this expression freely and without objection until 24 February 2021 when Mr Marra suggested that the agreement between the parties was binding, to which Mr Marks objected.
[91][2013] NSWCA 304.
[92]Sayed, [56].

The case also raises difficult questions of legal policy. I accept that the Court ought not to stand in the way of agreements made orally between parties on the terms that are important to them, in cases where it is clear that an agreement on the essential terms has been concluded and they were intended to be immediately legally binding. However, I also consider that it is inappropriate for the Court to find that parties have entered into contractual relations without clear evidence that they intended to do so. Parties would be exposed to the consequences of contractual relations without necessarily having done so voluntarily. Further, parties would be exposed to collateral litigation such as the present case, and the Court placed in the unenviable position of construing an intention to be bound from fairly scant evidence. The Civil Procedure Act 2010 (Vic) clearly does not compel such an outcome.

For the reasons given above, I am not satisfied that the parties mutually intended to be immediately bound by the Alleged Terms. There is simply no clear evidence that they did so intend. The strongest evidence for a finding that the parties did intend to be bound are the statements imputed to the Appellant that he was glad to have resolved the matter which, as I have said, must be considered in the circumstances. Once properly analysed, the circumstances of the negotiations and agreement at the Mediation, as elucidated by the subsequent conduct of the parties, tends against a mutual intention that the Alleged Terms were to be immediately binding. To the extent that these circumstances including the intention to settle documentation and further terms in relation to the agreement are consistent with a binding agreement formed at the Mediation, they are only consistent. They are not compelling evidence that there was a mutual intention between the parties at the Mediation to be immediately bound by the Alleged Terms, and therefore I find that the parties did not reach agreement as to the Alleged Binding Agreement.

Conclusion

As set out above, although I have found that the parties did agree to the Alleged Terms, I am not satisfied that they intended to be immediately bound by them, such that I have found that the parties did not enter into the Alleged Binding Agreement.

It follows that the answer to the Question is ‘No’.

At the time the parties formulated the Question, they also agreed as to what orders ought be made depending on the answer to the Question. These were:

(a) If the Question is answered by her Honour in the Respondent’s favour, the parties propose that the Court make the following ancillary orders:

(i) The Court declares that the answer to the Question is “yes”.

(ii) As soon as reasonably practicable, the parties do all things reasonably necessary, and sign any documents required, to give effect to the agreement.

(iii) Liberty to apply in the event either party considers there has been non‑compliance with paragraph 3.

(iv) The Appellant pay the Respondent’s costs of and incidental to the determination of the Question.

(v) The matter be listed for directions at 10:30am on a date to be advised in the event that the parties have not yet filed orders giving effect to the agreement.

(b) If the Question is answered by her Honour in the Appellant’s favour, the parties propose that the Court make the following ancillary orders:

(i) The Court declares that the answer to the Question is “no”.

(ii) The Respondent pay the Appellant’s costs of and incidental to the determination of the Question.

(iii) The matter be listed for directions at 10:30am on a date to be advised.

Accordingly, orders will be made in the form set out in sub-paragraph (b) of the preceding paragraph.

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Englisch v Sully [2021] VSC 434

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23 July 2021