Kisimul Holdings Pty Limited v Simms

[2016] NSWSC 814

Supreme Court

New South Wales

Medium Neutral Citation:	Kisimul Holdings Pty Limited v Simms [2016] NSWSC 814
Hearing dates:	20 June 2016
Decision date:	21 June 2016
Before:	Ball J
Decision:	(1)   A declaration that a valid and immediately binding settlement agreement came into effect on 14 June 2016 between the plaintiff and the fourth, fifth, sixth and seventh defendants (collectively referred to as the Bank Defendants) respectively upon the acceptance by the plaintiff of the without prejudice offer made on behalf of the Bank Defendants by letter of 11 June 2016 (the Settlement Agreement). (2)   An order that the Bank Defendants specifically perform and carry into effect the Settlement Agreement. (3)   An order that the Bank Defendants immediately provide to the plaintiff a draft deed in compliance with clause 1.12 of the letter of 11 June 2016, and thereafter act in a bona fide manner in concluding and agreeing the terms thereof, and as to a Consent Order to dispose of the proceedings. (4)   The Bank Defendants pay the plaintiff’s costs of the notice of motion filed 16 June 2016.
Catchwords:	SETTLEMENT - whether reached – application of the principles in Masters v Cameron
Cases Cited:	Calderbank v Calderbank [1975] 3 All ER 333 Masters v Cameron [1954] 91 CLR 353
Category:	Procedural and other rulings
Parties:	Kisimul Holdings Pty Limited (ABN 85 076 467 457) (Plaintiff) Thomas Craig Simms (First Defendant) Sonia Simms (Second Defendant) Sonia Simms Pty Ltd (Third Defendant) Rural Bank Limited (ACNN 083 938 416) (Fourth Defendant) John Marshall (Fifth Defendant) Jason O’Sullivan (Sixth Defendant) Paul Hutchinson (Seventh Defendant)
Representation:	Counsel: LV Gyles SC (Plaintiff) MC Hoffmann QC with J Hynes (Fourth, Sixth and Seventh Defendants) (mentioned on behalf of Fifth Defendants)   Solicitors: Farrar Lawyers (Plaintiff) Thomson Geer (Fourth, Sixth and Seventh Defendants)
File Number(s):	2014/198168
Publication restriction:	Nil

Judgment

1. By a notice of motion filed on 16 June 2016, the plaintiff, Kisimul, seeks a declaration to the effect that it reached a binding settlement agreement of the proceeding with the fourth to seventh defendants (the Bank Defendants) on 14 June 2016 together with consequential orders.

Background

2. On 8 June 2016, the solicitors for the Bank Defendants sent by email to Kisimul’s solicitor an offer said to be made in accordance with the principles stated in Calderbank v Calderbank [1975] 3 All ER 333.

3. The terms of the offer are not generally relevant to the resolution of this dispute. However, cl 1.2 is relevant. It provided:

The Settlement Sum will be paid within 7 days of the entry into a Deed documenting the agreement between the parties.

The offer was expressed to expire at 5.00 pm on Friday, 17 June 2016.

4. On 10 June 2016, the solicitors for the Bank Defendants sent an email to Kisimul’s solicitor amending the expiry date of the offer to 5.00 pm on Wednesday, 15 June 2016.

5. By an email sent at 6.58 pm on 10 June 2016, Kisimul’s solicitor made a number of comments on the offer. Again, the details are not material to the resolution of this dispute.

6. In response to those comments at 1.23 pm on 11 June 2016, the solicitors for the Bank Defendants sent a revised offer (the Revised Offer) incorporating many but not all of the changes proposed by Kisimul’s solicitor. One change that was not incorporated was a proposal to add to the end of cl 1.2 the words “or 14 days from today, whichever is the earlier”.

7. Relevantly, the Revised Offer included the following term:

1.12   The terms of any agreement will be reduced to a Deed to be drafted by the Bank Defendants’ solicitors and agreed between the parties within 7 days of the date of this letter. The parties will each act in a bona fide manner in an endeavour to conclude and agree the terms of such Deed.

Such Deed will include the terms contained in this paragraph 1, together with standard terms of the type usually included in a Settlement Deed. In the absence of agreement between the parties as to the terms of such Settlement Deed, then the terms of this letter will immediately bind them to the agreement formed upon acceptance by Kisimul of this Offer.

8. Kisimul’s solicitor responded to the Revised Offer at 3.23 pm on 11 June 2016. The response was in the following terms:

I have now obtained instructions from Kisimul. Some residual concerns relate to the amendments to clauses 1.2 and 1.12 of the offer.

The payment trigger in clause 1.2 is seven days after the execution of the deed. Clause 1.12 provides the offer once accepted it is immediately binding but there is no payment obligation in the absence of the execution of the deed. That was part of the reason that we sought the inclusion of the 14 day sunset date regardless of the deed being executed and request that this be included as part of the offer. I can assure you that Kisimul has every desire to agree on the terms of the deed as quickly as possible.

In terms of the deed, we are happy to prepare the first draft of the document in order to expedite finalisation of the dispute and on the basis that both parties will in good faith use their best endeavours to finalise the deed. Please let us know of your position in relation to these matters.

9. The solicitors for the Bank Defendants replied at 4.35 pm on 11 June 2016 suggesting some amendments to cl 1.2 on a “without instructions” basis to deal with the issue raised by Kisimul’s solicitor. Later that day, at 5.22 pm, the solicitors for the Bank Defendants sent an email withdrawing the proposal to amend cl 1.2. That email said:

I have just spoken to the bank. As you know we have been sending on a subject to instructions basis. My specific instructions are that given the circumstances of this matter the bank, the bank [sic] will require the deed to be signed before it is obliged to make any payment. Like your client the bank wishes to conclude this matter as soon as possible but considers an essential element of the settlement is the deed. Subject to your views we think that the offer in an agreed basis is accepted and meanwhile we expedite the preparation of the deed.

10. There was then some correspondence between the solicitors concerning the terms of the deed and the delay in its preparation. At 11.45 am on 14 June 2016, the solicitors for the Bank Defendants sent to Kisimul’s solicitor an email enclosing a draft deed of release. The covering email stated:

Would you please note that although the Bank and the lawyers for John Marshall [the fifth defendant] have seen previous iterations of the Deed, the documents are sent to you on a subject to instructions basis in order to finalise matters as quickly as possible.

11. Kisimul’s solicitor responded to that email at 4.11 pm on 14 June 2016, making a number of comments and attaching a revised deed incorporating those comments.

12. Both the draft circulated by the solicitors for the Bank Defendants and the draft circulated by Kisimul’s solicitor departed from the terms of the Revised Offer in material respects.

13. At 4.56 pm on 14 June 2016, the solicitors for the Bank Defendants responded to the email sent by Kisimul’s solicitor taking issue with a number of the amendments proposed by Kisimul.

14. At 5.07 pm on 14 June 2016, Kisimul’s solicitor sent the solicitors for the Bank Defendants an email which said:

I refer to your letter containing an offer of compromise that was annexed to you [sic] email with red track changes received at 1.23pm on 11 June 2016. I hereby give notice that the plaintiff accepts that offer as an immediately binding agreement.

Please review the deed that I have sent with track changes in light of the accepted offer.

15. By an email sent at 5.36 pm on 14 June 2016, the solicitors for the Bank Defendants contended that Kisimul was not able to accept the Revised Offer on the basis that that offer had, in effect, been rejected prior to its purported acceptance.

Consideration

16. It is plain from the terms of cl 1.12 of the Revised Offer that the offer specifically contemplated that the parties would execute a deed of release, that there would be negotiations of the terms of that deed of release, but that notwithstanding those matters, a binding agreement would come into effect immediately on acceptance of the terms of the offer. Consequently, this is a case that falls within the first class of case identified by the High Court in Masters v Cameron [1954] 91 CLR 353 – that is, a case where the parties intended on acceptance of the offer to be bound immediately, though expressing a desire to draw up their agreement in a formal document at a later stage. In such a case, acceptance of the offer assuming it remained on foot gave rise immediately to a legally binding agreement.

17. It is also apparent that the Revised Offer contemplated at least the possibility that the parties would commence negotiations of the terms of a formal deed before the offer was accepted. Under the terms of the offer, the deed had to be agreed between the parties within 7 days of the date of the offer, not within 7 days of the date the offer was accepted.

18. There is no suggestion in this case that the terms of the offer, if accepted, did not constitute a legally binding agreement. It is not suggested, for example, that the terms of any agreement constituted by the Revised Offer and its acceptance were void for uncertainty.

19. Nor is it suggested that Kisimul’s solicitor’s email sent at 3.23 pm on 11 June 2016 is to be construed as a counter offer or as a rejection of the Revised Offer. The Bank Defendants accept that that email was a request for information or a request that the Bank Defendants consider making a further amendment to overcome the anomaly identified by Kisimul’s solicitor.

20. Similarly, it is not suggested that the email sent at 5.22 pm on 11 June 2016 by the solicitors for the Bank Defendants could be construed as a withdrawal of the Revised Offer. The Bank Defendants accept that that email should be interpreted as a statement that the Bank Defendants were not prepared to put a further revised offer in the terms sought by Kisimul and that it was important to the Bank Defendants that the parties continue with their negotiations for a formal deed.

21. The Bank Defendants submit, however, that Kisimul must be taken to have rejected the Revised Offer or made a counter offer to the Revised Offer by proposing changes to the draft deed of release in the email sent by Kisimul’s solicitor at 4.11 pm on 14 June 2016. That is said to be so because a number of the changes requested by Kisimul’s solicitor were materially different from the terms set out in the Revised Offer, whereas cl 1.12 of that offer required the deed to include the terms set out in the offer, among others.

22. I do not accept that submission. The email sent at 4.11 pm on 14 June 2016 must be understood in context. The context was one in which an offer had been made by the Bank Defendants which, up until that point of time, had neither been accepted nor rejected. That offer contemplated that the parties would negotiate a formal deed of release and the parties had begun that negotiation process before the offer had been accepted. In my opinion, the fact that the Bank Defendants or Kisimul sought to include additional or different terms in the formal deed of release from the terms of the Revised Offer does not of itself demonstrate that the Bank Defendants were withdrawing the offer or Kisimul was rejecting it. It simply indicates that they were negotiating the terms of a deed contemplated by the Revised Offer.

23. The position may have been different if one party or the other insisted on including in the deed terms that were inconsistent with the terms of the Revised Offer. However, that is not this case. In this case, the Bank Defendants proposed the terms of a formal deed which departed from the terms of the offer. Kisimul proposed alternative terms which again departed from the terms of the offer. The Bank Defendants rejected a number of those amendments. In response, Kisimul accepted the Revised Offer and asked for the deed to be revised to reflect the terms contained in it. Viewed objectively, none of that could be described as a rejection by Kisimul of the terms of the Revised Offer. At most, all that could be said is that Kisimul was seeking to use the negotiations for a formal deed to see whether it could do better than it could simply by accepting the Revised Offer. That is something that it could have done either before or after accepting the Revised Offer. The fact that it sought to do it before acceptance does not indicate that it was rejecting the Revised Offer or putting a counter offer.

24. It follows that Kisimul is entitled to the orders that it seeks.

Orders

25. The court makes the following orders:

1. a declaration that a valid and immediately binding settlement agreement came into effect on 14 June 2016 between the plaintiff and the fourth, fifth, sixth and seventh defendants (collectively referred to as the Bank Defendants) respectively upon the acceptance by the plaintiff of the without prejudice offer made on behalf of the Bank Defendants by letter of 11 June 2016 (the Settlement Agreement).

2. An order that the Bank Defendants specifically perform and carry into effect the Settlement Agreement;

3. An order that the Bank Defendants immediately provide to the plaintiff a draft deed in compliance with clause 1.12 of the letter of 11 June 2016, and thereafter act in a bona fide manner in concluding and agreeing the terms thereof, and as to a Consent Order to dispose of the proceedings.

4. The Bank Defendants pay the plaintiff’s costs of the notice of motion filed on 16 June 2016.

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Decision last updated: 21 June 2016