Fruit Connect Aktiebolaget v A.C.N. 620 988 936
[2019] FCCA 2839
•4 October 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FRUIT CONNECT AKTIEBOLAGET v A.C.N. 620 988 936 & ANOR | [2019] FCCA 2839 |
| Catchwords: PRACTICE AND PROCEDURE – Whether there has been a binding and enforceable agreement between the parties – no offer available or open for acceptance – no substance in the contention that there was a settlement agreement – application in a case dismissed. |
| Legislation: Admiralty Act 1988 (Cth), ss.4, 9 |
| Cases cited: R v Bevan (1942) 66 CLR 452 |
| Applicant: | FRUIT CONNECT AKTIEBOLAGET |
| First Respondent: | A.C.N. 620 988 936 |
| Second Respondent: | KOTOB |
| File Number: | SYG 675 of 2019 |
| Judgment of: | Judge Street |
| Hearing date: | 4 October 2019 |
| Date of Last Submission: | 4 October 2019 |
| Delivered at: | Sydney |
| Delivered on: | 4 October 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms B Nolan |
| Solicitors for the Applicant: | JHK Legal |
| Solicitors for the Respondents: | Mr J Boyle Boyle Associates Solicitors & Barristers |
ORDERS
The application in a case filed on 14 August 2019 is dismissed.
The second defendant, Fatme El Kotob, is removed as being a party to the proceedings.
The plaintiff pay the defendant’s and the removed party’s costs of the application in a case filed on 14 August 2019 on an indemnity basis in an amount to be fixed in due course.
Direct the defendant to file and serve within 30 days an affidavit identifying the costs sought to be recovered on the indemnity costs order which the Court will fix at a convenient time to the Court after hearing further from the plaintiff.
Direct the plaintiff to file and serve any affidavit in answer on the indemnity costs within 30 days of service of the defendant’s affidavit.
The matter is fixed for final hearing at 10:00am on 31 March 2020.
Direct the plaintiff to file and serve a further amended statement of claim within 30 days.
Direct the defendant to file and serve a defence to the further amended statement of claim within 30 days of service of the further amended statement of claim.
Direct the plaintiff to file and serve any affidavit evidence on which they wish to rely on or before 31 January 2020.
Direct the defendant to file and serve any affidavit evidence on which they wish to rely on or before 29 February 2020
Direct the plaintiff to file and serve any affidavit evidence in reply on or before 21 March 2020.
Direct the plaintiff to file and serve an outline of submissions, chronology and list of objections on or before 14 March 2020.
Direct the defendant to file and serve an outline of submissions, chronology and list of objections on or before 21 March 2020.
Liberty to apply on 2 days notice.
Direct that any application for security costs must be filed and served within 14 days and if any such application is filed the parties are expected to comply with the Courts above orders. The plaintiff has liberty to file and serve any affidavit in answer on the issue of security costs if such an application arises. The Court will hear any such application for security costs at 9:30am on 13 December 2019.
NOTES
Cross examination will be limited to half an hour without further leave.
Oral submissions will be limited to half an hour without further leave.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 675 of 2019
| FRUIT CONNECT AKTIEBOLAGET |
Applicant
And
| A.C.N. 620 988 936 |
First Respondent
| KOTOB |
Second Respondent
REASONS FOR JUDGMENT
These are proceedings that were commenced on 19 March 2019, purportedly within this Court’s in personam Admiralty jurisdiction pursuant to s.4(3)(f) and s.9 of the Admiralty Act 1988 (Cth) (“the Admiralty Act”). The proceedings concern the shipment to Sydney of lemons and an alleged outstanding debt in respect of the contract for sale of goods. The pleading also referred to the supply of containers and referred to a number of shipments and alleged an entitlement to relief based on unconscionability.
The proceedings, on their face, identify a reported Federal issue arising under the Admiralty Act whether or not that action has merit consistent with R v Bevan (1942) 66 CLR 452. This Court has jurisdiction in respect of the subject matter, given the Federal issue and taking into account this Court’s associated jurisdiction.
The parties engaged in negotiations consistent with the expectation of practitioners in this Court and, in particular, in the Admiralty list to see if the matter could be resolved.
The current application in a case that the Court involves determining whether there has been a binding agreement that resolves the subject matter of the proceedings. This Court has ample power in respect of the invoked jurisdiction, including, in particular, ss.14 and 15 of the Federal Circuit Court of Australia Act 1999 (Cth).
An argument was advanced that this Court could rely upon s.79 of the Judiciary Act 1903 (Cth) to pick up a provision of the Civil Procedure Act 2005 (NSW), which in s.73, identified a statutory power to determine questions in respect of whether a dispute has been settled. There is no gap in this Court’s jurisdiction in relation to dealing with the issue that has arisen and accordingly, the Court does not accept that the Civil Procedure Act 2005 is picked up in the circumstances of the present case.
The substantive issue between the parties is whether particular communications have given rise to a binding and enforceable agreement. Ms Nolan, counsel for the plaintiff has emphasised the principles relating to a Court seeking to give effect to a bargain reached between the parties and it is the case that whether there has been an agreement reached there is an objective test that does not necessarily resolve into issues of offer and acceptance.
Be that as it may, in the circumstance of the present case, the communications relied upon by the plaintiff in the present case are said to have given rise to a binding agreement reached on 24 June 2019. The Court has been taken to the negotiations that commenced on 29 May 2019. The critical communications in relation to the case advanced by the plaintiff is a communication from the defendant sent on 19 June 2019 that included a first offer and a second offer. The second offer was in the following terms:
Alternatively, our client offers to make two payments: the first of $16,000 within 14 days of acceptance, and a further $16,000 on or before 1 January 2020. As above. (Secured by personal guarantee). Mutual releases given upon second payment being made. Proceedings finalised. Verdict for the defendant/respondent. No order as to costs. (Or as per your letter of 29-5-19).
The next relevant communication followed between the parties was a communication sent by the plaintiff to the defendant through their lawyers on 24 June 2019 at 8.22 am. That communication identified that:
On a commercial basis, our client is prepared to accept the “2nd Offer”, noting the terms of acceptance are as follows:
1. Your client pays the sum of $32,000 ("settlement sum"), in cleared funds, to our client by way of the following instalments:
a. $16,000 on or before 8 July 2019 ("first instalment"); and
b. $16,000 on or before 1 January 2020 ("second instalment").
2. The settlement sum be paid into our trust account, details attached- noting reference 20180101.
3. Upon payment of the first Instalment, in cleared funds, the parties file consent orders discontinuing the Proceedings, with no order as to costs;
4. In the event your client defaults in payment of the settlement sum, our client be at liberty to apply for default judgment against your client for the settlement sum less payments made.
5. Fatme El Kotob provide a personal guarantee and indemnity to our client as security for payment of the settlement sum.
6. The parties enter into a deed of settlement and release reflecting paragraphs 1-5 above.
It is patent that what is accepted is not the second offer and that is what is being put is a counter-offer. The terms are different.
Counsel for the plaintiff sought to characterise the settlement being one which was reached in nuances: first an agreement on settlement sum and then, in substance, sought to dissect the communications to identify either agreement or insignificance in respect of the differing terms. That is not a fair reading of the documents, nor is it an objective reading. An objective reading of the communications sent on 24 June 2019 clearly identifies there has been no agreement at 8:22am as a result of the sending of this communication. It is not an acceptance of the second offer. It does not reflect the terms of the settlement offer.
The content of paragraphs 1 to 5 are different from the terms in the second offer. They clearly constitute a counter-offer. Following the sending of that communication at 8.22 am, at 9:02am the plaintiff’s representative sent to the defendant’s representative an email advising that:
…this offer is withdrawn and we will re-submit a revised offer in due course.
There was no offer then available or open for acceptance. No agreement had been reached at that point of time in an objective analysis. On no view could it be said that there was an intention to create legal relations in circumstances where the offer had not been accepted at 9:02am and was it withdrawn.
The plaintiff’s counsel relies upon a communication it then sent at 5:40 pm on 24 June 2019 in which there are contentious assertions and includes, relevantly, the content, quote:
RE: Your client’s acceptance of the wp offer made.
You have accepted the offer made.
You have done so in very considered and comprehensive manner.
Our client considers the matter settled.
Our client will proceed to make the first instalment payment as agreed.
The letter continued in relation to requesting the forwarding of the security documents and standing the proceedings over in order to allow the settlement documents for the first payment to be made.
Where there was no offer open for acceptance, the communication of 24 June 2019 at 5:40 pm could not possibly give rise to a binding agreement. Ms Nolan of counsel on behalf of the plaintiff contends that a commercial Court strikes a balance to give effect to the intention of the parties would find that there has been a binding agreement, taking into account the contention asserted in that communication.
An objective person, in determining whether or not there was a binding legal agreement consistent with the principles identified by the learned Bromwich J in Symons v White (Sydney Catholic Schools) [2018] FCA 949 at [2] would not regard the communication sent on 24 June at 5:40 pm in circumstances where there was no agreement that had earlier been reached and where the offer that had been made had been withdrawn, as reflecting a binding agreement.
Further, the contention that the second offer was accepted does not reflect the language of the second offer or the purported acceptance. The purported acceptance is in different terms. In particular, the second offer referred to mutual releases being given upon the second payment being made. The purported terms in relation to the communication sent at 8:22am on 24 June 2019 assert upon payment of the first instalment and cleared funds that parties file consent orders discontinuing the proceedings with no order as to costs. It could not be clearer that there is a material difference between the content of the second offer and the first offer. Nor is there any apparent identification of the person who might give a guarantee.
The mere fact that one can identify an officer of the company does not mean that there was agreement in respect of the guarantee. It may be that there would be circumstances in which the Court might find that the parties had reached an agreement and might, in particular circumstances, be capable of identifying with certainty a guarantor but that is not this case. The Court does not regard the communication sent on 24 June 2019 at 5:40 pm as giving rise to a binding agreement.
The assertions made that the matter is settled does not, of itself, give rise to an agreement. Nor on a fair reading of the communications can one extract a binding agreement even applying an endeavour to give effect to an intention to create legal relations. No such intention objectively arises on the communications that have taken place. If the matter was in any way the subject of an agreed position reached on 24 June 2016, the next communication sent by the plaintiff on 26 June 2019 at 2:37 pm cannot be reconciled with the existence of the same so far as the plaintiff is concerned. The second sentence asserts:
Our client has not accepted your client’s offer, rather it makes the following counter offer.
That communication makes crystal clear that there has been no agreement or binding relations entered into so far as concerns, subjectively, the plaintiff. More than that, the making of the counter-offer makes clear that the plaintiff, at this point of time, does not regard themselves as bound as a result of the communication sent on 24 June 2019. It might have been open to the plaintiff to respond to the purported accepted in a way that did give rise to binding legal relations, but that did not occur.
In these circumstances, there is no substance in the contention that there was a settlement agreement that this Court should give effect to. Accordingly, the application in a case is dismissed.
I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Judge Street
Associate:
Date: 12 November 2019
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