Lucke v Cleary

Case [2011] SASCFC 118

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

LUCKE v CLEARY & ORS

[2011] SASCFC 118

Judgment of The Full Court

(The Honourable Justice Gray, The Honourable Justice David and The Honourable Justice Stanley)

26 October 2011

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT

CONTRACTS - PARTICULAR PARTIES - PRINCIPAL AND AGENT - AUTHORITY OF AGENTS - IN GENERAL

Appeal from a declaratory order of a judge of the District Court - dispute over property - before a trial in the District Court commenced the parties informed the court that they had reached an agreement to settle litigation - the trial date was vacated at the request of the parties - a deed was drafted, circulated and signed by the four defendants - the plaintiff did not execute the deed - whether there was an enforceable agreement made by the parties in settlement of litigation - whether there was an intention to be bound before the execution of a deed - whether the terms of agreement were uncertain - whether the appellant’s then solicitors had ostensible authority to enter into a contract on behalf of the appellant.

Held: the parties had entered into an enforceable contract - the parties intended to be bound immediately by the terms of their agreement and expected to make a further contract with additional terms in substitution for the original contract - the requirement of a deed was a mechanism to implement the settlement agreement - the appellant’s solicitor had ostensible authority to settle the litigation - appeal dismissed.

APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - POINTS AND OBJECTIONS NOT TAKEN BELOW - WHEN NOT ALLOWED TO BE RAISED ON APPEAL

Application for permission to amend the notice of appeal - appellant sought to add a ground of appeal that the deed was ineffective pursuant to s 29 of the Law of Property Act 1936 (SA) - the defendants opposed the amendment - previous counsel for the appellant had abandoned reliance on a s 29 based argument at the trial – whether the argument was abandoned inadvertently – whether the argument involves the determination of a question of law only.

Held: the ground of appeal is not properly characterised as a strict question of law - the argument was not abandoned at trial inadvertently - it is neither expedient nor in the interests of justice to grant permission – permission refused.

Law of Property Act 1936 (SA) s 29, s 29(1), s 29(2), s 41; Electronic Transactions Act 2000 (SA) s 9; Electronic Transactions Regulations 2002 (SA) s 5(1)(a), referred to.
Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310; Branir v Owston Nominees (No 2) (2001) 117 FCR 424; Love & Stewart Ltd v S Instone & Co Ltd (1917) 33 TLR 475; Waugh v H B Clifford & Sons Ltd [1982] Ch 374, applied.
The University of Wollongong v Metwally (No 2)

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Lucke v Cleary [2011] SASCFC 118
Case
[2011] SASCFC 118
Decision Date

CaseChat Overview and Summary

The appeal concerned a dispute over property, arising after the parties had informed the District Court that they had reached a settlement agreement and had the trial date vacated. A deed was drafted and signed by the four defendants, but the plaintiff did not execute it. The central question was whether an enforceable agreement had been made to settle the litigation, or if the parties intended to be bound only upon the execution of the deed, and whether the plaintiff's solicitors had ostensible authority to enter into such a contract.

The court was required to determine whether the parties had entered into a binding contract, considering whether their intention was to be immediately bound by their agreement, even if a further contract with additional terms was contemplated. It also had to assess whether the terms of the agreement were sufficiently certain and whether the appellant's solicitors possessed ostensible authority to settle the litigation on behalf of the appellant.

The court held that the parties had indeed entered into an enforceable contract. It reasoned that the parties intended to be legally bound by the essential elements of their agreement, which were sufficiently certain and evidenced by an email from the defendants' solicitors on 14 October 2010. The requirement for a deed was considered a mechanism to implement the settlement agreement, rather than a condition precedent to its formation. The court found that the plaintiff's solicitor had ostensible authority to settle the litigation.

The appeal was dismissed. The court also refused the appellant permission to amend its notice of appeal to add a ground relating to the Law of Property Act 1936 (SA), finding that the argument was not a pure question of law, had not been inadvertently abandoned at trial, and that granting permission was neither expedient nor in the interests of justice.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The plaintiff put a subsidiary argument that his solicitors at the time, however, lacked ostensible authority to bind him to the execution of the deed. For reasons which will become relevant later in my reasons, it is important to note, however, that the plaintiff did not dispute that his solicitor was cloaked with ostensible authority to settle the litigation in the District Court.The District Court’s reasons for judgment The learned trial judge commenced with a consideration of the principle in Masters v Cameron.[2] [2] (1954) 91 CLR 353. Her Honour considered the principle applicable to the resolution of disputes where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract. Her Honour referred to the three classes of case identified by the High Court in Masters v Cameron.[3][3] (1954) 91 CLR 353 at 360. Her Honour noted that the High Court concluded that the first two classes constituted binding contracts, the third did not. Applying these principles, the learned trial judge considered whether the parties had reached an agreement and, if so, into which class the agreement fell. The learned trial judge was not satisfied that there had been a concluded agreement as at 14 October 2010 but was satisfied that the parties had reached a concluded agreement by early November 2010. She set out her reasons as follows:[4]I agree that commonsense has a part to play in this inquiry. I think that the evidence that the parties intended to make a binding agreement as at 1 November 2010 and prior to the execution of a formal contract is clear and compelling. The documentary evidence of the email correspondence together with the final form of the deed published by the plaintiff are evidence of such an agreement. There is no express statement that agreement was subject to execution of the deed. The deed was, in my view, the mechanism to implement the agreement. The terms are readily apparent, there is no uncertainty and acceptance of the terms was made in writing. I agree with the plaintiff that there may have been some uncertainty as to the terms as at 14 October 2010 but there was no uncertainty at 1 November 2010. I am of the view that the Deed published by the plaintiff on 1 November 2010 reflected a binding agreement. The parties evidenced an intention to make a concluded bargain. The discussions were not at an incomplete stage. The plaintiff’s solicitors had ostensible authority to make a concluded bargain in the terms of the Deed published by them on 1 November 2010. In my view they had such authority by necessary implication.[4] Reasons for Decision at [47]. Accordingly, the learned trial judge found for the defendants and made a declaration that the parties by their solicitors reached a binding agreement and agreed the terms of the deed of settlement provided by the plaintiff’s then solicitors on 1 November 2010.The appeal to this Court

Ratio Decidendi

Legal Principle Established

His Lordship explained that a compromise does not involve collateral matter merely because it contains terms which the court could not have ordered by way of judgment in the action.[36][36] [1982] Ch 374 at 387.Consideration The principal attack mounted by the plaintiff on the reasoning of the learned trial judge is that her Honour failed to have proper regard to the intention of the parties that their agreement would be subject to the execution of a deed. He submitted that the terms of the settlement contemplated the execution of a deed and that, until that had occurred, there could be no binding agreement between the parties. As such, the nature of the parties’ negotiations, which were subject to the execution of a deed, led to the conclusion that this case fell into the third category identified in Masters v Cameron.[37][37] (1954) 91 CLR 353 at 360. I do not accept this submission. In my view, the relevant issue which fell for determination by the learned trial judge was whether the parties had entered into a binding contract. As Allsop J (as he then was) said in Branir v Owston Nominees (No 2):[38]The essential question in such cases is whether the parties’ conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement … which bespeaks an intention to be legally bound to the essential elements of a contract.[38] (2001) 117 FCR 424 at 525. In my view, the evidence discloses an intention on the part of all of the parties to be legally bound to the essential elements of a contract as at 14 October 2010. At that time, the parties had agreed the essential terms of an agreement pursuant to which the litigation was settled. True it is that the agreement concluded between the parties at that stage contemplated that there would be mutual discharges and releases to be perfected in a deed, the execution of which would fix the date by which settlement would occur on the transfer of the Clovelly Park property, and that the drafting of the deed necessarily implied that there would be further negotiations between the parties as to its contents. Nonetheless, I consider that at this stage the parties had reached a binding agreement. The essential terms of that agreement were set out in the email of 14 October 2010 from the solicitors for the third and fourth defendants. The suggestion of a deed came not from the plaintiff, but from the third and fourth defendants. The requirement of a deed was, as the learned trial judge found, no more than a mechanism to implement the settlement agreement itself which was contained in that email. In my view, it would be erroneous to construe what occurred as evincing an intention on the part of the plaintiff, or any of the other parties, to the settlement agreement to reserve his, or their, negotiating position until such time as a deed was executed. This was not an ‘in principle’ agreement, or an agreement to agree at some future time.[39] On the contrary, the subsequent conduct of the plaintiff evidenced the existence of a binding agreement from the time the other parties accepted the proposal contained in the email of 14 October 2010.[39] Booker Industries Pty Ltd v Wilson Parking (Qld)Pty Ltd (1982) 149 CLR 600 at 604.