Ian Clive Simpson v B.J. Metro Pty Limited

[2007] NSWSC 1403

CITATION:	Ian Clive Simpson v B.J. Metro Pty Limited [2007] NSWSC 1403
HEARING DATE(S):	27 November 2007
JUDGMENT OF:	Hammerschlag J
EX TEMPORE JUDGMENT DATE:	27 November 2007
DECISION:	Proceedings against third defendant and sixth defendant dismissed. Plaintiff to pay the costs of the motion, otherwise no orders as to costs.
CATCHWORDS:	CONTRACT – Whether “Heads of Agreement” for settlement of proceedings binding – Intention of parties where fuller further Deed of Settlement contemplated – Terms and language of agreement indicate intention immediately to be bound
CASES CITED:	Masters v Cameron (1954) 91 CLR 353 G R Securities Pty Limited v Baulkham Hills Private Hospital Pty Limited (1986) 40 NSWLR 631 Helmos Enterprises Pty Limited v Jaylor Pty Limited (2005) 12 BPR 23,021 Howard Smith & Co Limited v Varawa (1907) 5 CLR 68 Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153 Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 L M I Australasia Pty Limited v Baulderstone Hornibrook Pty Limited [2001] NSWSC 886 Ryan (Receiver & Manager of Homfray Carpets Australia Pty Ltd) v Textile Clothing & Footwear Union Australia [1996] 2 VR 235
PARTIES:	Ian Clive Simpson B.J. Metro Pty Limited (ACN 082 945 113)
FILE NUMBER(S):	SC 50170/2007
COUNSEL:	T.J. Morahan (Plaintiff) J.J. Loofs (Third Defendant / Applicant) A. Black (Sixth Defendant / Applicant)
SOLICITORS:	John Spence & Associates (Plaintiff) Massey Bailey (Third Defendant / Applicant) Wotton Kearney Insurance Lawyers (Sixth Defendant / Applicant)

- 19 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST

HAMMERSCHLAG J

27 NOVEMBER 2007

50170/2007 IAN CLIVE SIMPSON v B.J. METRO PTY LIMITED (ACN 082 945 113)

EX TEMPORE JUDGMENT

BACKGROUND

1 HIS HONOUR: The plaintiff owns a property at 9 Stirling Street, Redfern, in the State of New South Wales upon which there is a terrace house.

2 The second defendant was the registered proprietor of adjoining land until 25 June 2003 when the third defendant (an owners’ corporation) took transfer of it. The third defendant has at all material times since then been the occupier of the adjoining land.

3 The first defendant was a builder. It was engaged by the second defendant developer to develop the adjoining land including by demolishing an erstwhile chocolate factory which stood there.

4 The fourth defendant was a director of the first defendant and the fifth defendant was a director of the second defendant.

5 The sixth defendant was the insurer of the first defendant under an all risks insurance policy.

6 The first defendant was wound up by this Court on 15 June 2004.

7 At some time after that the second defendant had receivers appointed and the fifth defendant was made bankrupt.

8 The plaintiff originally commenced proceedings for damages including for trespass and nuisance, arising out of the works which took place next door. He sued the first and second defendants. Apparently those proceedings were settled but the first defendant failed to perform the terms of the settlement.

9 The plaintiff then re-enlivened the proceedings by Statement of Claim dated 1 October 2003, joined the third defendant, the fourth defendant (who was the person responsible for the development site) and the fifth defendant, and subsequently, by Amended Statement of Claim filed on 15 August 2006, joined the sixth defendant.

10 On 27 April 2007, the plaintiff, the third defendant, the fourth defendant and the sixth defendant entered into a written Heads of Agreement (“the Heads”) which, if binding, settled the proceedings between the plaintiff and those defendants.

11 By Notice of Motion dated 14 November 2007, the third and sixth defendants seek declarations that the Heads are binding, an order that the plaintiff specifically perform them, and an order that the proceedings as against them be dismissed.

12 The fourth defendant took no part in the Motion.

13 The sole issue now before the Court is whether the Heads are binding.

THE HEADS OF AGREEMENT

14 It is appropriate to set out the entirety of the Heads.

HEADS OF AGREEMENT
THIS DOCUMENT is made on the 27th day of April 2007
Between IAN CLIVE SIMPSON ( the Plaintiff )
And THE OWNERS STRATA PLAN NO. 68983 ( the Third Defendant )

MICHAEL TERENCE GAMMEL ( the Fourth Defendant )
DEXTA CORPORATION LIMITED (ACN 084 487 712) ( the Sixth Defendant )
(together the Parties )

OPERATIVE PROVISIONS

1 The parties have agreed to settle all matters in connection with the claims brought by the plaintiff as against the Third, Fourth and Sixth Defendants in Supreme Court proceeding 6008 of 2002 without any admission as to liability under the terms as set out in this agreement ( the Agreement ). Supreme Court proceedings 6008 of 2002 are hereinafter referred to as the “ Proceedings ”. It is the intention of the Parties to enter into a further full Deed of Settlement in due course.

2 In full and final settlement of the claims by the Plaintiff against the Third, Fourth and Sixth Defendants, inclusive of all interest and costs, the Third, Fourth and Sixth Defendant will pay to the Plaintiff the sum of $230,000, to be paid as follows:
2.1 the Third Defendant to pay the sum of $40,000 to the Plaintiff ( the Third Defendant's Settlement Sum ), $20,000 to be paid on or before 30 May 2007, and the balance of $20,000 to be paid on completion of the works required to be done by the Plaintiff as set out in paragraph 6 below, that sum to be placed in an interest bearing account on or before 30 June 2007 with interest to be paid to the Plaintiff;
2.2 the Fourth Defendant to pay $40,000 to the Plaintiff ( the Fourth Defendant's Settlement Sum ), $20,000 to be paid on or before 30 May 2007 and the balance of $20,000 to be paid on or before 30 June 2007;
2.3 the Sixth Defendant to pay $150,000 to the Plaintiff on or before 30 May 2007 ( the Sixth Defendant's Settlement Sum ).


Releases

3 Subject to and conditional on the payment of the Third Defendant's Settlement Sum and the observance of the agreed terms of settlement the Plaintiff releases and discharges the Third Defendant, their directors, servants, agents and all related companies and trusts, executors, successors, transferees or assigns, ( the Third Defendant Releasees ) from all claims, costs and expenses, liabilities, entitlements to damages or any other claim whatsoever he has or in the future may have against the Third Defendant Releasees arising from, in connection with, by reason of or in relation to all matters the subject of the Proceedings.

4 Subject to and conditional on the payment of the Fourth Defendant’s Settlement Sum, the Plaintiff releases and discharges the Fourth Defendant, his servants, agents, executors, successors, transferees or assigns ( the Fourth Defendant Releasees ) from all claims, costs and expenses, liabilities, entitlements to damages or any other claim whatsoever he has or in the future may have against the Fourth Defendant Releasees arising from, in connection with, by reason of or in relation to all matters the subject of the Proceedings.

5 Subject to and conditional on the payment of the Sixth Defendant’s Settlement Sum, the Plaintiff releases and discharges the Sixth Defendant, its directors, servants, agents and all related companies and trusts, executors, successors, transferees or assigns ( the Sixth Defendant Releasees ) from all claims, costs and expenses, liabilities, entitlements to damages or any other claim whatsoever he has or in the future may have against the Sixth Defendant Releasees arising from, in connection with, by reason of or in relation to all matters the subject of the Proceedings.

The Works

6 The Plaintiff and the Third Defendant agree to carry out the works set out at items 8, 3, 5, 6, 7, 12, 13, 14, 16, 17, 21, (flashing), 31, 38, 43, 33, 34, 35, 36, 37 and 39 of the Agreed Scope of Works and the compensation estimates provided by BDA Consultants in the as order set out with all items being the responsibility of the Plaintiff with the exception of items 8, 16 and 17 which are the responsibility of the Third Defendant.

Dismissals

7 Subject to and conditional on the payment of the Third Defendant's Settlement Sum and the observance of the agreed terms of settlement the Parties agree that the Plaintiff’s claim against the Third Defendant in the Proceedings be dismissed with no order as to costs.

8 Subject to and conditional on the payment of the Fourth Defendant’s Settlement Sum the Parties agree that the Plaintiff’s claim against the Fourth Defendant in the Proceedings be dismissed with no order as to costs.

9 Subject to and conditional on the payment of the Sixth Defendant’s Settlement Sum the Parties agree that the Plaintiff’s claim against the Sixth Defendant in the Proceedings be dismissed with no order as to costs.

Bar to Suit

10 This Agreement may be pleaded by any of the Releasees as a bar to any claim by the Plaintiff to the extent that such claim is stated to be released by this Agreement.

Confidentiality

11 The Parties agree not to disclose or permit to be disclosed, either directly or indirectly, to any other person the terms of this Agreement, the negotiations leading thereto or any part thereof, except to the extent required by law or for the purpose of enforcement of its terms.

Costs

12 The Parties agree to bear their own costs in respect of the instructions and preparation of this Agreement.

Assurances

13 The Parties agree to do all acts and things necessary or desirable to implement and give full effect to the provisions and purpose of this Agreement.

Authorisation

14 The persons executing the Agreement warrant that they are authorised to enter into the Agreement.

SUBSEQUENT EVENTS

15 On 17 May 2007 the third defendant's solicitors (Massey Bailey) wrote to the plaintiff's solicitors (John Spence & Associates) in the following terms:

“We refer the informal [sic] settlement conference on 27 April 2007 and the Heads of Agreement agreed to between the parties on that date.
We understand that you are preparing the Deed of Settlement. We have not heard anything from you since 27 April 2007.
In view of the impending payment to be made by our client under clause 2.1 of the Heads of Agreement, please let us have your draft deed as a matter of urgency.”

16 On 23 May 2007 the plaintiff's solicitors responded by letter which contains, amongst others, the following statement:

“We note that at the said conference agreement was reached between the respective parties as to a suitable basis for the resolution and settlement of the above-referenced proceedings. In particular, on that occasion a Heads of Agreement document setting out the relevant terms and conditions as agreed between the respective parties was prepared and entered into.
Pursuant to the Heads of Agreement, it was recognised and agreed that a formal Deed of Settlement setting out in full the arrangement between the respective parties would be prepared and drafted by us. We would indicate that this step has now been attended to and completed by us.
…
The mere submission of this Deed in its present form is not of itself intended to confer or convey the entering into of contractual obligations or the making of any allowance, admission or concession whatsoever and on the part of any of the parties to it. No agreement or binding relations shall be deemed to be created or entered into merely by the submission of this document and until such time as the Deed of Settlement in amended and final form has been agreed upon and executed by each of the parties hereto.”

17 On 24 May 2007 the sixth defendant's solicitors (Wotton & Kearney) wrote to the plaintiff's solicitors asking for an electronic version of the Deed of Settlement by email to facilitate the proposed amendments being marked up and being distributed to all concerned on the basis that they expected their client to require amendments.

18 On 29 May 2007 the sixth defendant's solicitors informed the plaintiff's solicitors that they held the "Insured’s settlement sum" in the form of a cheque made payable to Spence & Associates Trust Account, and that the sixth defendant "is accordingly willing and able to settle as soon as these terms have been agreed".

19 There was at this point an issue about the incidence of GST and an issue about whether the Deed of Settlement should contain clauses for discontinuance of the proceedings as opposed to their dismissal.

20 On 30 May 2007 the third defendant's solicitors emailed the plaintiff's solicitors attaching a further marked up draft of the Deed of Settlement saying the following:

“Our client is still reviewing the deed and these comments are forwarded in anticipation of our instructions. We may have further requests shortly but thought it best to send you the attached document to consider in the meantime. We will be in further contact as soon as possible to confirm whether there are any further matters we are instructed to raise.”

21 On 31 May 2007 (the deadline for payment having passed) the sixth defendant's solicitors wrote to the plaintiff's solicitors as follows:

“The Sixth Defendant considers that the matter should be stood over until 6 July 2007 so as to allow for the Deed of Settlement to be finalised and for payment of the Settlement Sums.
As discussed, please will you note the Sixth Defendant’s appearance at the directions hearing and please advise as to the orders made.”

22 The plaintiff's solicitors responded on 12 June 2007 in a lengthy letter indicating that most of the changes to the Deed of Settlement were acceptable, but not all.

23 The letter said, amongst others, the following:

“We refer to previous correspondence and discussions with you in relation to this matter and in particular to your e-mail dated 29th May 2007 and the draft Deed of Settlement in amended form which was then forwarded by you.
As earlier indicated by us, we would advise that the initial draft of the proposed Deed of Settlement which was earlier forwarded by us was submitted without the instructions of our client Mr Simpson or the thoughts and observations of Mr Morahan of Counsel having been obtained. That course was adopted in the interest of expediency. As indicated to you in our earlier letter dated 23rd May 2007, we reserved the rights to effect further amendments and alterations to the proposed Deed of Settlement which was put forward as a working draft. We would indicate that we have now obtained the thoughts and suggestions of Messrs Simpson and Morahan and that there have been some additional amendments to the wording of the proposed Deed as a result of that input.
In addition we have the advantage of having been provided with a copy of the draft Deed of Settlement in marked-up form and indicating those changes which are proposed by Wotton & Kearney, Insurance lawyers, on behalf of Dexta Corporation Limited (the Sixth Defendant) as well as the marked-up copy which has been forwarded by your firm.
Having endeavoured to take on board all those changes and alterations which have been put forward by the various parties (other than Mr Michael Gammel) we have proceeded to prepare the proposed Deed of Settlement in amended and hopefully final form. The opportunity is taken of forwarding herewith (and still as a working draft until finally approved and consented to by each of the relevant parties) the Deed of Settlement as revised by us.”

24 The letter concluded with the following statement:

“We trust that the proposed Deed of Settlement in its now-amended form is in order and acceptable, and we look forward to receiving your confirmatory advices at an early opportunity.”

25 On 22 June 2007 the sixth defendant's solicitors wrote to the plaintiff's solicitors and said, amongst others, the following:

“Our client is anxious to have this matter finalised as soon as possible. As I have previously advised you, I already hold a settlement cheque. It appears the there is some prospect that there will be continued disagreement on the terms of the Deed, in particular in relation to the rectification works. Our client is of the view that it should not have to continue to incur ongoing legal expense in the circumstances and accordingly puts your client on notice that if the terms of the Deed cannot be agreed before the end of this month that it will attend to payment of the " Insurer’s Settlement Sum " on the basis of the terms as set out in the Heads of Agreement dated 27 April 2007 and will further rely on the terms of the Heads of Agreement.”

26 On 4 July 2007 the third defendant's solicitors wrote to the plaintiff's solicitors saying, amongst others, the following:

“Directions Hearing
We set out below our client's instructions in relation to the last draft of the deed. As the deed may not be finalised by the next directions hearing on 6 July 2007, we will mention the matter on behalf of the active parties and request that the matter be stood over for one month.
Payments under heads of agreement
We confirm that we have received the second instalment payable by our client under the heads of agreement and have requested that a controlled money account be opened. We expect confirmation from our bank tomorrow that the account has been opened and we will then deposit the funds in accordance with clause 2.1 of the heads of agreement. “

27 On 16 August 2007 the third defendant's solicitors wrote to the plaintiff's solicitors in terms which included the following:

“2. The issue of whether the proceedings would be dismissed or discontinued was discussed at the settlement conference on 27 April 2007 and the parties agreed that the proceedings would be dismissed with no order as to costs. That agreement was set out in the Heads of Agreement. In that regard:
(a) our client puts your client on notice that it regards the Heads of Agreement as binding on the parties and will seek to enforce them if your client does not comply with them.

(b) ….”

28 On 22 August 2007, the plaintiff's solicitors wrote to the third defendant's solicitors stating, amongst other things, that:

“In relation to point 2 (a), we are well-aware of the significance which you seek to place on the Heads of Agreement and the enforceability of same. With every respect, we disagree and we hold the contrary view. We maintain that the Heads of Agreement document was intended to set out and reflect the basis of settlement and the relevant terms of same which were negotiated and agreed upon on that day, but on the clear understanding that the parties would have the opportunity to “sleep on it” and that it was dependent on a final and detailed Deed of Settlement being prepared and executed. We are adamant that we would not have allowed our client to enter into final terms without a “cooling-off” period or an opportunity for review and reflection. Indeed the fact that the Heads of Agreement document could not have been final in nature is borne out factually by the number of changes which have since occurred and which clearly demonstrate that consensus between the parties had not been fully reached.”

29 Leaving aside the statement that had been made by the plaintiff's solicitors in the letter of 23 May 2007 concerning the non-binding nature of the draft Deed of Settlement proffered under cover of it, the letter of 22 August 2007 was the first suggestion on behalf of the plaintiff in the correspondence that the Heads were not binding.

30 Notwithstanding the respective positions taken by the parties, endeavours to reach finality on the terms of the Deed of Settlement proceeded.

31 On 2 November 2007 the third defendant's solicitors provided the plaintiff's solicitors with a duly executed Deed of Settlement by their client and a trust account cheque for $20,000 in favour of the plaintiff's solicitor’s trust account.

32 At a meeting on 6 November 2007 the plaintiff's solicitors informed the solicitors for the third and sixth defendants that the plaintiff did not accept that settlement had been reached by the Heads of Agreement.

33 Later that day the sixth defendant’s solicitors wrote to the plaintiff's solicitors enclosing a Deed of Settlement executed by their client and a cheque for $150,000.

34 Hence these proceedings.

THE APPLICABLE PRINCIPLES

35 Parties may agree immediately to be bound even though they may wish to restate their terms in a fuller or more precise way in a formal document, or they may agree immediately to be bound even though there would be a more formal agreement subsequently which could contain other terms. Whether parties who reach agreement intend immediately to be bound depends on their intention as disclosed by the language they have employed. Where they contemplate the subsequent execution of a formal contract but do not express their agreement to be subject to or conditional upon the execution of a formal document, whether they intended immediately to be bound again depends upon their intention, disclosed by the language they have used. See Masters v Cameron (1954) 91 CLR 353 at 360; G R Securities Pty Limited v Baulkham Hills Private HospitalPty Limited (1986) 40 NSWLR 631; Helmos Enterprises Pty Limited v Jaylor Pty Limited (2005) 12 BPR 23,021 at [52], [55] and [56].

36 Subsequent conduct of the parties may not generally be used to construe the terms of a previously concluded agreement, but it may be considered in determining whether their dealings gave rise to a binding contract. Post contractual conduct is not admissible on the question of what a contract means, but it is admissible on whether a contract was formed: Howard Smith & Co Limited v Varawa (1907) 5 CLR 68 at 77; Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153 at 164.

37 The existence of matters of importance on which the parties have not reached consensus in the informal agreement will render it less likely that they intended immediately to be bound before the execution of a formal agreement. In order to determine in what areas they were and were not in agreement, and what matters they considered necessary in order for an agreement to exist, it is legitimate to examine their subsequent conduct. An important consideration will normally be the commercial context in which the dispute arises, and a most significant feature of that context will relate to the things which the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract: Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 at 548.

ARE THE HEADS BINDING?

38 Mr Morahan of counsel, for the plaintiff, put the following as supporting the conclusion that the parties did not intend immediately to be bound:

a firstly, use of the title “Heads of Agreement”, which he put indicated that the Heads were preliminary only. He relied upon a statement by Barrett J in L M I Australasia Pty Limited v Baulderstone Hornibrook Pty Limited [2001] NSWSC 886 at [23] to the effect that the title 'Heads of Agreement', may be taken to indicate that it is of a preliminary nature only;

b secondly, the use of the words in cl 1 of the Heads "It is the intention of the Parties to enter into a further full Deed of Settlement in due course." This, he put, contemplated not only execution of a further instrument but one which the parties contemplated would contain further terms;

c thirdly, the use in cl 3 and cl 7 of the Heads of the words "… and the observance of the agreed terms of settlement" which, it was put, was a reference to the further terms of settlement which were to be embodied in the further full instrument contemplated by cl 1; and

d fourthly, the third and sixth defendants’ subsequent conduct in not paying or offering to pay the amounts provided for in cl 2.1 and cl 2.3 by 30 May 2007, which was conduct inconsistent with an intention immediately to be bound.

39 A critical difficulty facing the plaintiff is that nothing was identified on his behalf as any matter of importance upon which the parties had not reached consensus in the Heads. It was not put that there was any such matter.

40 In my view, the parties, by the Heads, reached agreement on those things which they regarded (or would ordinarily be expected to have regarded) as required to be covered by their settlement. These were the amounts to be paid and when they were to be paid, the terms of the releases which were to be given in consideration of those payments, and in respect of the third defendant, the further work to be done by it. That work was specified clearly and precisely in cl 6. It was not put that any aspect of cl 6, nor indeed any other provision, was uncertain or incomplete.

41 The use of the description “Heads of Agreement” may indicate preliminary agreement but it does not bear upon whether the agreement, even if preliminary, is or is not binding. That depends on the operative provisions of the instrument. The provisions here foreshadow the entry into of a further instrument in due course.

42 The substance of the operative provisions, and whether the words used by the parties in them indicate an intention immediately to be bound, is the critical matter. The use of the description "Heads of Agreement" is not inconsistent with the parties intending immediately to be bound, but nevertheless contemplating a further formal document.

43 Mr Morahan placed some significance on the words in cl 3 and cl 7 “observance of the agreed terms of settlement” putting that this was a reference to further terms to be agreed in the further instrument. Those words in cl 3 and cl 7, in my view, refer to the additional obligations upon the third defendant only (in contrast to the fourth and sixth defendants whose only obligation was to pay) to carry out the work specified in cl 6.

44 If the parties had subsequently agreed further terms which made payment conditional upon other matters not specified in the Heads, those words could refer or could have referred to further agreed terms. However, it is only the third defendant to whom those words apply. The only obligation on the fourth defendant and sixth defendant was an obligation to pay. The third defendant on the other hand was required to carry out certain work. That, in my view, is to what the reference in cl 3 and cl 7 by the words, "observance of the agreed terms of settlement", relates.

45 The Heads embody separate arrangements between the plaintiff on the one hand and each of the three defendants on the other.

46 There is no logical or rational reason why the third defendant's settlement would be conditional upon more terms being agreed, whereas that of the fourth and sixth defendants would not. This is a further indication that the reference to the “agreed terms of settlement” in cl 3 and cl 7 is not a reference to such further obligations as might have been incurred by the third defendant upon the entry into of some later full and further instrument in due course, but rather to the work described in cl 6.

47 Mr Morahan put that the plaintiff's solicitors, in their letter of 23 May 2007, indicated a view that there was no binding agreement. If the view of the solicitors be relevant, it seems to me that the letter says nothing of the binding or otherwise nature of the Heads. It appears to me to draw a distinction between the Heads and the subsequent proposed Deed of Settlement. If anything, the letter points in the other direction.

48 There are various additional clear indications that the parties by the words they used intended immediately to be bound.

49 Firstly, by cl 11 the parties agreed that they were not to disclose or permit to be disclosed either directly or indirectly to any other person the terms of the agreement except to the extent by law or for the enforcement of its terms. (emphasis added). This is a clear indication of an intention that the Heads were immediately enforceable.

50 Secondly, there are a number of provisions which, if the Heads were not intended to be binding, would have no field of operation. These include:

a clause 10 by which the parties agreed that “This Agreement”, meaning the Heads, was available to be pleaded as a bar to the plaintiff’s claim to the extent that such claim is stated to be released by the agreement;

b clause 12 which is an agreement to bear the costs of the instructions and preparation of “this Agreement”;

c clause 13 which provides for further assurances; and

d clause 14 under which the parties executing the Heads warranted their authority to do so.

51 In my view, this case falls into the well known category 1 in Masters v Cameron where parties intend immediately to be bound but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. At the lowest, it falls into the category considered in G R Securities Pty Limited v Baulkham Hills Private HospitalPty Limited and Helmos Enterprises Pty Limited v Jaylor Pty Limited, where parties agree immediately to be bound but expect to make a further contract which by consent might contain additional terms.

52 Mr Morahan placed substantial emphasis on subsequent conduct. He focused his submissions on what, he put, was an indication that the third and sixth defendants did not intend to be bound because neither had sought to make payment by 30 May 2007.

53 Given my conclusion that the terms of the Heads clearly indicated that the parties intended immediately to be bound, their subsequent conduct in not paying by the due date would be a breach of their obligations not any indication of any intention not originally to be bound.

54 There is further difficulty for the plaintiff, it seems to me, in the context of the events as they unfolded that the conduct relied upon cannot fairly be described as indicating such an intention.

55 The parties envisaged the execution of a further formal deed. Their legal representatives embarked on trying to finalise one. As a matter of practicality moneys were not paid, given an expectation that a further document would be executed. Nothing emanating from any of the defendants at any time, or from the plaintiff until the letter of 22 August 2007, on a fair reading, indicated any intention that the Heads were not binding in original form.

56 The subsequent conduct, at best, is ambiguous and would not form any safe ground for a conclusion that there was no intention immediately to be bound especially given the clear terms of the Heads, see: Ryan (Receiver & Manager of Homfray Carpets Australia Pty Ltd) v Textile Clothing & Footwear Union Australia [1996] 2 VR 235 at 238.

CONCLUSION

57 Given my conclusion that the Heads were binding, it follows that the proceedings between the parties were settled on its terms.

58 There are, in my view, some questions which arise with respect to relief.

59 In prayer 1, a declaration is sought that the proceedings as against the third and sixth defendants have been compromised.

60 It follows from what I have said that the proceedings have been so compromised.

61 I do not consider however, that there would be any utility in making a declaration in those terms.

62 The next prayer is for an order that the plaintiff specifically perform his obligations under the Heads. There do not appear to be any obligations performable by the plaintiff other than the carrying out of work, which is not susceptible to such an order.

63 It was not put by Mr Morahan that any delay in payment was a breach entitling the plaintiff to have terminated the Heads. Tender of payment has been duly made and tender of performance by the third defendant has been duly made.

64 In these circumstances, a decree for specific performance is also of no utility.

65 The proceedings as against the sixth defendant are dismissed.

66 Under the terms of settlement each party is to pay its own costs of the proceedings. Accordingly, there will be no order as to costs other than in respect of the Motion.

67 The plaintiff is to pay the sixth defendant's costs of the Motion dated 14 November 2007.

68 In a letter of 2 November 2007 the third defendant tendered to proceed with the work. It clearly offered to perform its obligations under the Heads. In those circumstances, it seems to me the appropriate relief is that the proceedings against the third defendant should also be dismissed.

69 The proceedings against the third defendant are dismissed and the plaintiff is to pay the third defendant's costs of the Motion dated 14 November 2007.

**********