Mpinda v Fair Work Commission (No 2)
[2024] FCA 692
•28 June 2024
FEDERAL COURT OF AUSTRALIA
Mpinda v Fair Work Commission (No 2) [2024] FCA 692
File number: WAD 235 of 2021 Judgment of: FEUTRILL J Date of judgment: 28 June 2024 Catchwords: CONTRACTS – informal contracts – intention to create legal relations
AGENCY – solicitor and client – actual authority – implied authority – apparent or ostensible authority
PRACTICE AND PROCEDURE – settlement agreement – compromise agreement
Legislation: Evidence Act 1995 (Cth) ss 55, 56, 59-75, 135, 190
Fair Work Act 2009 (Cth) ss 394, 397, 399A, 588
Fair Work Commission Rules 2024 (Cth) r 10
Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (WA) r 8.1
Cases cited: ACN 115 918 959 Pty Ltd v Hoeys Lawyers Pty Ltd [2021] VSC 79
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (Commonwealth Games case) (1988) 18 NSWLR 540
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCAFC 1833; (2001) 117 FCR 424
Bryne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410
Bull v The Queen [2000] HCA 24; (2000) 201 CLR 443
Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja [2018] NSWCA 26
Carradine Properties Ltd v DJ Freeman & Co [1955–1995] PNLR 219
County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1
Currie v Dempsey [1967] 2 NSWR 532; (1967) 69 SR (NSW) 116
Donellan v Watson (1990) 21 NSWLR 335
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
Federal Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74; (2011) 193 FCR 149
Fray v Voules (1859) 1 El & El 839
Frigger v Trenfield (No 3) [2023] FCAFC 49
GC NSW Pty Ltd v Galati [2020] NSWCA 326
Geoffrey W Hill & Associates (Insurance Brokers) Pty Ltd v Squash Centre (Allawah North) Pty Ltd (1990) 6 ANZ Ins Case 61-012
GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631
Hamilton-Smith v George [2006] FCA 1551; (2006) 247 FCR 238
Harvey v Phillips [1956] HCA 27; (1956) 95 CLR 235
Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539
Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1
Hodgson v Amcor Ltd; Amcor Ltd v Barnes (No 5) [2011] VSC 295
International Harvester Company of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company [1958] HCA 16; (1958) 100 CLR 644
Jones v Sutherland Shire Council [1979] 2 NSWLR 206
Kandola v Mirza Solicitors LLP [2015] EWHC 460 (Ch); [2015] PNLR 19
Kane's Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381
Kent v Hogarth [1995] QCA 472
Massoud v NRMA Insurance Ltd (1995) 62 NSWLR 657
Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353
Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382
Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a Firm) [1979] Ch 384
Mpinda v Fair Work Commission [2022] FCA 1111
Pickersgill v Riley [2004] UKPC 14; [2004] PNLR 31
Pinta v National Finance & Trustees Ltd [1964] HCA 61; (1964) 180 CLR 146
POS Media Online Ltd v Queensland Investment Corporation [2001] FCA 809
Poulet Frais Pty Ltd v Silver Fox Company Pty Ltd [2005] FCAFC 131; (2005) 220 ALR 211
Pourzand v Telstra Corporation Ltd [2014] WASCA 14
Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; (2022) 406 ALR 678
Scott v Davis [2000] HCA 52; (2000) 204 CLR 333
Secombs (a firm) v Sadler Design Pty Ltd [1999] VSC 79
Seltsam Pty Ltd v McGuiness [2000] NSWCA 29; (2000) 49 NSWLR 262
Sinclair, Scott & Co Ltd v Naughton [1929] HCA 34; (1929) 43 CLR 310
Smith v The Queen [2001] HCA 50; (2001) 206 CLR 650
Studer v Boettcher [2000] NSWCA 263
Sydney Attractions Group Pty Ltd v Schulman [2013] NSWSC 858
Thompson v Howley [1977] 1 NZLR 16
Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106
Walker v Walker [1937] HCA 44; (1937) 57 CLR 630
Watson v Foxman (1995) 49 NSWLR 315
Waugh v H B Clifford & Sons Ltd [1982] Ch 374
Division: Fair Work Division Registry: Western Australia National Practice Area: Employment and Industrial Relations Number of paragraphs: 175 Dates of hearing: 4-6 December 2023 Counsel for the Applicant: The Applicant appeared in person with the assistance of an interpreter Counsel for the First Respondent: The First Respondent submits to any order of the Court, save as to the question of costs Counsel for the Second Respondent: Mr CM Beetham with Ms C Stamp Solicitor for the Second Respondent: Minter Ellison Counsel for the Third Respondent: Mr N Ellery Solicitor for the Third Respondent: Gilchrist Connell ORDERS
WAD 235 of 2021 BETWEEN: CLAUDE MPINDA
Applicant
AND: FAIR WORK COMMISSION
First Respondent
WESTERN AREAS LTD
Second Respondent
STEFAN BANOVICH
Third Respondent
ORDER MADE BY:
FEUTRILL J
DATE OF ORDER:
28 JUNE 2024
THE COURT ORDERS THAT:
1.The Court determines the issues ordered to be heard separately by orders made on 8 February 2023 as follows:
(1)Upon the issue of whether the applicant and the second respondent made a binding and enforceable agreement to settle the applicant’s application for an unfair dismissal remedy made under s 394 of the Fair Work Act 2009 (Cth) and lodged with the first respondent on 23 September 2016 (settlement agreement), there was no such settlement agreement.
(2)Upon the issue of whether the third respondent is liable to the applicant for negligence in making a settlement agreement, as the applicant’s agent, without his authority or instruction, the third respondent is not so liable.
(3)Upon the issue of whether the second respondent is indebted to the applicant and (or) liable to the applicant for breach of a settlement agreement for failing to pay a sum due under that agreement, having regard to the determination of issue (1), it is not necessary to determine this issue (3).
2.The matter be listed for further or other orders following the determination of the separate questions at 10.15am (AWST) on 31 July 2024.
3.The costs of the hearing of the separate issues be reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
FEUTRILL J:
Introduction
On 22 October 2021 the applicant, Mr Mpinda, filed an originating process and an affidavit in support by which he made various allegations against the first respondent, the Fair Work Commission, second respondent, Western Areas Limited, and third respondent, Mr Banovich. The allegations relate to an application for unfair dismissal relief Mr Mpinda had lodged in the Commission in 2016 and the circumstances in which the Commission came to treat that application as resolved and closed its file. Western Areas is Mr Mpinda’s former employer and respondent to the proceedings in the Commission. Mr Banovich is Mr Mpinda’s former solicitor who acted as his legal representative in the proceedings in the Commission. Amongst other things, Mr Mpinda sought to have the Commission exercise its power under s 397 of the Fair Work Act 2009 (Cth) to conduct a conference or hold a hearing to determine the merits of Mr Mpinda’s application for an unfair dismissal remedy.
In January 2022 the Commission filed an interlocutory application for summary judgment on the ground that, for various reasons, the originating process and supporting affidavit disclosed no reasonable cause of action against the Commission. Western Areas requested the Court to exercise its power to act on its own motion to dismiss Mr Mpinda’s claim against Western Areas. It contended that Mr Mpinda and Western Areas had made a settlement agreement by which the proceedings in the Commission were compromised and, thereby, Mr Mpinda was barred from continuing with these proceedings. Mr Banovich also filed an application for orders staying these proceedings against him. In substance, he contended that the proceedings against him should not proceed until the issue of whether or not a settlement agreement was made had been determined. After hearing the respondents’ applications, I made orders staying the proceedings against the Commission and granting Mr Mpinda leave to file and serve an amended originating process in a form consistent with my reasons for those orders: Mpinda v Fair Work Commission [2022] FCA 1111. Mr Mpinda subsequently filed an amended originating process.
Consistently with the allegations raised in the hearing determined in Mpinda, in the amended originating process Mr Mpinda seeks a declaration to the effect that the Commission failed (actually or constructively) to exercise power under s 397 of the Fair Work Act. Mr Mpinda also seeks a declaration to the effect that no binding agreement was made between Mr Mpinda and Western Areas to settle the proceedings in the Commission. In the alternative, Mr Mpinda seeks damages against Mr Banovich for breach of his retainer and (or) negligence in making an agreement to settle without his authority or instructions. As against Western Areas, in the alternative, Mr Mpinda seeks damages or the sum due by reason of Western Areas failing to pay the settlement sum under the agreement.
On 8 February 2023 I made orders for the Court to hear separately three issues arising from the amended originating process. The separate issues, rephrased as questions, are as follows:
(1)Was a binding and enforceable agreement made between Western Areas and Mr Mpinda to settle Mr Mpinda’s application for an unfair dismissal remedy made under s 394 of the Fair Work Act and lodged with the Commission on 23 September 2016?
(2)Is Mr Banovich liable to Mr Mpinda for negligence in making a settlement agreement, as Mr Mpinda’s agent, without Mr Mpinda’s authority or instruction?
(3)Is Western Areas indebted to Mr Mpinda and (or) liable to Mr Mpinda for breach of a settlement agreement for failing to pay a sum due and payable under that agreement?
For the reasons given later, the separate questions should be answered (1) No; (2) No; and (3) Not necessary to answer. I will hear the parties on what further or other orders should be made following the determination of the separate questions and on the question of costs.
Background and issues
Mr Mpinda was an employee of Western Areas. His employment was terminated by letter dated 2 September 2016. On 23 September 2016, Mr Banovich, as Mr Mpinda’s legal representative, lodged an application for an unfair dismissal remedy in the Commission.
In accordance with the usual practice of the Commission, a conciliation conference was arranged and held on 2 December 2016 for the purpose of attempting to facilitate a settlement and resolution of the proceedings in the Commission. Ms Lara Wilmot, a solicitor in the employ of Minter Ellison, attended the conference as Western Area’s legal representative. Ms Rachel Chisholm, an employee of Western Areas, also attended on behalf of Western Areas. Mr Banovich, a director of MKI Legal, attended the conference as Mr Mpinda’s legal representative. Mr Mpinda attended. Ms Anne Mullins attended as the Commission’s conciliator. A French-English interpreter also attended to assist Mr Mpinda, whose first language is French, to communicate with the other attendees.
No agreement was made during the conciliation conference. In the days and weeks following the conference there were oral and written communications between Ms Wilmot and Mr Banovich. Western Areas contends that, through those communications and the agency of Ms Wilmot and Mr Banovich, Mr Mpinda and Western Areas made a binding settlement agreement on 9 December 2016, or alternatively no later than 22 February 2017. Western Areas contends that irrespective of whether or not Mr Banovich had actual authority to make a binding settlement agreement on Mr Mpinda’s behalf, in the circumstances, Mr Banovich had apparent or ostensible authority to do so and, therefore, Mr Mpinda is bound by the agreement Mr Banovich made with Ms Wilmot.
Western Areas contends that the settlement agreement was made through an oral offer that Mr Banovich made during a telephone conversation with Ms Wilmot on 9 December 2016. That offer was accepted, in writing, by an email from Ms Wilmot to Mr Banovich on 9 December 2016. The principal terms of the agreement were that Western Areas would provide Mr Mpinda with a written reference and pay him $2,000 ex gratia in exchange for Mr Mpinda releasing Western Areas from his unfair dismissal application. Western Areas contends that the provision of the reference and payment was conditional upon Mr Mpinda making a deed of settlement that captured the principal terms and included usual provisions relating to confidentiality and non-disparagement. Western Areas contends that if the settlement agreement was not made and binding on 9 December 2016, then it was made and binding as of 22 February 2017 when Mr Banovich, on behalf of Mr Mpinda, provided Western Areas with a list of the duties Mr Mpinda wanted Western Areas to include in the reference it was to provide Mr Mpinda.
Mr Banovich also contends that a binding settlement agreement was made between Western Areas and Mr Mpinda on 9 December 2016. He contends that he had the express authority and instructions of Mr Mpinda to make that settlement agreement on his behalf. He contends that the authority and instructions were provided to him during a telephone conversation between Mr Banovich and Mr Mpinda on 8 December 2016. Mr Mpinda denies that he had such a conversation or that he gave Mr Banovich authority and instructions to make a contract to settle his unfair dismissal application for consideration that included payment of $2,000.
Mr Mpinda contends that he made no settlement agreement with Western Areas. That contention appears to be linked to a further contention that any agreement had to be made between Western Areas and Mr Mpinda directly and he has not made any such agreement orally or signed any written agreement. Mr Mpinda also contends that he gave Mr Banovich no authority or instructions to settle his unfair dismissal proceedings on the terms alleged or at all.
It was on common ground that neither Western Areas nor Mr Mpinda executed any deed of settlement and release. It is also common ground that Western Areas has not provided Mr Mpinda with a reference or paid Mr Mpinda $2,000.
The principal issues that arise for determination are questions of fact. First, whether Mr Mpinda gave Mr Banovich express instructions and authority to settle the Commission proceedings for consideration that included the provision of a written reference and payment of $2,000 during a telephone conversation on 8 December 2016. Second, whether Mr Banovich conveyed to Ms Wilmot an oral offer on behalf of Mr Mpinda to settle the Commission proceedings in terms capable of acceptance so as, if accepted, to create an immediately binding settlement agreement during a telephone conversation on 9 December 2016. Third, whether an email from Ms Wilmot to Mr Banovich sent on 9 December 2016 communicated acceptance of such an offer. There are other questions of fact that flow from these matters including whether, in the alternative, a settlement agreement was made through the exchange of correspondence and conduct when Mr Banovich sent an email to Ms Wilmot on 22 February 2027, in substance, identifying the terms of a reference letter that were acceptable to Mr Mpinda and without identifying any changes to the proposed terms of a deed of settlement and release that had been sent to Mr Banovich earlier.
Applicable legal principles
Although the resolution of the principal issues turn on findings of fact, it is convenient to set out the applicable legal principles that provide the framework for consideration of the questions of fact and the legal consequences that follow from them.
Authority of agents to contract on behalf of principals
Although the concept of agency is wider, relevantly, an agent is a person with authority or capacity to create legal relations (make a contract) between the agent’s principal and third parties: International Harvester Company of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company [1958] HCA 16; (1958) 100 CLR 644 at 652 (the Court). The resulting contract is formed directly between the principal and the third party. There is no contract between the agent and the third party: Scott v Davis [2000] HCA 52; (2000) 204 CLR 333 at [227]-[228] (Gummow J).
Actual authority requires the consent of both the principal and the agent, but the manifestation of consent may be express or implied (express or implied actual authority). The scope of the authority is to be ascertained by ordinary principles of construction of contracts and also by reference to proper implication for the course of business between the parties. The scope of an agent’s authority is a question of fact to be determined by the evidence, including authority inferred by inference from established facts: Poulet Frais Pty Ltd v Silver Fox Company Pty Ltd [2005] FCAFC 131; (2005) 220 ALR 211 at [124]-[126] (Branson, Nicholson and Jacobson JJ), and the authorities there cited.
In circumstances in which an agent has exceeded actual authority a direct contractual relationship between the principal and the third party is not created. However, the principal may be estopped from denying that the agent had authority where the principal has by words or conduct conferred apparent or ostensible authority on the agent to effect the contract and the third party relied on that apparent or ostensible authority to make the contract.
In order to succeed on a claim of ostensible authority it is necessary for the third party to establish that: (1) the principal held out (represented) that the agent had authority to contract with the third party on behalf of the principal; (2) the third party relied on that holding out to contract with the agent; and (3) the third party’s reliance was reasonable. There can be no reasonable reliance if the circumstances are such as to put a person on inquiry as to whether the agent has the relevant authority. Establishing reliance is a subjective question of fact. Establishing that reliance was reasonable imports an objective standard; that is, whether a reasonable person in the position of the third party would have acted on the representation of authority. There is a close relationship between these questions and the objective circumstances that inform the assessment of whether the third party, in fact, relied on the representation as to authority: Pourzand v Telstra Corporation Ltd [2014] WASCA 14 at [83]-[84], [86] (McLure P), [113], [115] (Pullin JA) [128]-[131] (Murphy JA), and the authorities there cited.
If a principal is estopped through ostensible authority from denying that the agent had authority, where the agent exceeds authority that is defined in clear and unambiguous terms the agent remains liable to the principal for breach of duty which is strict if not absolute. The agent in such a case is not liable for negligence (although the agent may also be negligent separately) but for acting ultra vires the agent’s authority: Donellan v Watson (1990) 21 NSWLR 335 at 344 (Handley JA, Waddell A-JA agreeing), and the authorities there cited.
The relationship of solicitor and client is quintessentially a relationship of agency whereby the solicitor is agent for the client as principal. In general, the express terms of the retainer dictate the scope of the solicitor’s authority. Absent an express term or express authority, in general, a solicitor does not have implied authority to make contracts on behalf of a client: Kent v Hogarth [1995] QCA 472 at 11 (Pincus JA), citing Pianta v National Finance & Trustees Ltd [1964] HCA 61; (1964) 180 CLR 146 at 152 (Barwick CJ); POS Media Online Ltd v Queensland Investment Corporation [2001] FCA 809 at [157] (Wilcox J).
Nonetheless, the weight of authority supports the proposition that, subject to certain qualifications, a legal practitioner (solicitor or barrister) retained to conduct litigation ordinarily has implied as well as ostensible authority to bind the client to a compromise of the proceedings. In Donellan v Watson Handley JA (Waddell A-JA, agreeing) described the nature of the implied and ostensible authority and qualifications in the following terms (at 342):
…
A solicitor retained to conduct litigation ordinarily has both implied and ostensible authority to bind his client to a compromise of those proceedings: see Chown v Parrott (1863) 14 CB NS 74; 143 ER 372; Prestwich v Poley (1865) 18 CB NS 806; 144 ER 662; Little v Spreadbury [1910] 2 KB 658 and Waugh v H B Clifford and Sons Ltd [1982] Ch 374 at 388. Any instruction from the client which restricts the solicitor's authority to compromise the proceedings will only affect the other party who is on notice of that restriction: see Thompson v Howley [1977] 1 NZLR 16 at 23-25 and the cases there cited.
The authority of counsel briefed in the cause to bind his client to a compromise of the litigation is governed by the same principles: see Neale v Gordon Lennox [1902] AC 465 and Harvey v Phillips (1956) 95 CLR 235.
In some cases however a solicitor may have no implied actual authority to compromise litigation without express instructions. The attitude and circumstances of the client known to the solicitor may be such that an implied term that the solicitor shall have actual authority to do so may not “go without saying”: see Waugh v H B Clifford & Sons (at 387), and Thompson v Howley (at 25).
A solicitor certainly has no actual authority to compromise litigation contrary to his instructions and if he does so he will be liable to the client for any damage sustained by the latter as a result of the unauthorised compromise: see Fray v Voules (1859) 1 El & El 839; 120 ER 1125; Butler v Knight (1867) LR 2 Exch 109 at 112; The Hermione [1922] P 162 and Thompson v Howley (at 23-26): see also Bullen and Leake, 3rd ed (1863) at 83-84, 275.
…
There is a distinction between implied actual authority and ostensible authority. The scope of a legal practitioner’s implied authority to compromise may not be (and is unlikely to be) as extensive as the scope of the practitioner’s apparent authority. Implied authority to compromise is not unlimited: Waugh v H B Clifford & Sons Ltd [1982] Ch 374 at 387 (Brightman LJ, Cumming-Bruce and Ackner LJJ agreeing). To illustrate the point Brightman LJ said (at 387-388):
…
Suppose that a defamation action is on foot; that terms of compromise are discussed; and that the defendant's solicitor writes to the plaintiff's solicitor offering to compromise at a figure of £100,000, which the plaintiff desires to accept. It would in my view be officious on the part of the plaintiff's solicitor to demand to be satisfied as to the authority of the [defendant's] solicitor to make the offer. It is perfectly clear that the defendant's solicitor has ostensible authority to compromise on behalf of his client, notwithstanding the large sum involved. It is not incumbent on the plaintiff to seek the signature of the defendant, if an individual, or the seal of the defendant if a corporation, or the signature of a director.
But it does not follow that the defendant's solicitor would have implied authority to agree damages on that scale without the agreement of his client. In the light of the solicitor's knowledge of his client's cash position it might be quite unreasonable and indeed grossly negligent for the solicitor to commit his client to such a burden without first inquiring if it were acceptable. But that does not affect the ostensible authority of the solicitor to compromise, so as to place the plaintiff at risk if he fails to satisfy himself that the defendant's solicitor has sought the agreement of his client. Such a limitation on the ostensible authority of the solicitor would be unworkable. How is the opposing litigant to estimate on which side of the line a particular case falls?
It follows, in my view, that a solicitor (or counsel) may in a particular case have ostensible authority vis-á-vis the opposing litigant where he has no implied authority vis-à-vis his client. I see no objection to that. All that his opposing litigant need ask himself when testing the ostensible authority of the solicitor or counsel, is the question whether the compromise contains matter "collateral to the suit." The magnitude of the compromise, or the burden which its terms impose on the other party, is irrelevant. But much more than that question may need to be asked by a solicitor when deciding whether he can safely compromise without reference to his client.
…
In Thompson v Howley [1977] 1 NZLR 16 (at 23-24) Somers J also drew a distinction between implied actual and ostensible authority. After considering many of the authorities he went on to express reservations about universal implication of authority to compromise in modern context observing (at 25-26):
… When [a client] instructs his solicitor to commence proceedings I find it difficult to suppose he would contemplate that once commenced the solicitor could settle without reference to him and with no recourse by him. In my view the officious bystander (Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206, 227; [1939] 2 All ER 113, 124) would receive no common answer to his question. Nor does anything in the general law of agency appear to me to warrant such a view. If the authority exists it must be something imposed by the law as a necessary concomitant of the relation of solicitor and client in the particular instance. I cannot think there is anything in that relation which could justify it save only the apparent want of logic and cohesion in the disparity between actual and apparent authority. Nor does experience suggest that solicitors, in this country at all events, conduct the practice of litigation on the footing of the possession of such authority. It is perhaps possible that the inclination shown by the authorities reflects some of the difficulties of communication that then existed: cf Prestwick v Poley (1865) 18 CBNS 806, 816; 144 ER 662, 666, per Montague Smith J. In my view, neither principle nor authority binds me to the proposition that the retainer of a solicitor carries with it actual authority to settle an action he has been retained to commence save only where there are express instructions to the contrary. I am of opinion that as between himself and his client the solicitor requires the authority of the latter. I express no view upon the position when a solicitor is in the position of an advocate in court not being of counsel.
…
In my view, with respect, there is significant force in those observations. Implication of a term of a retainer should be consistent with ordinary principles of contract law. While, in general, it is likely that in the absence of an express term a legal practitioner will have a degree of implied authority to compromise legal proceedings, the implication of such authority is subject to consideration of the terms of the retainer as a whole and the circumstances and context in which the retainer was made. These may indicate that there is no such implied authority, or that any authority is of a limited nature, or is to be given ad hoc within the overall performance of the retainer. On the other hand, I have little difficulty concluding that the act of retaining a legal practitioner, in general, is sufficient to represent that the legal practitioner has authority to enter into a compromise agreement on behalf of the client: see, e.g., the discussion in Waugh v H B Clifford & Sons at 388.
In this case, it is not necessary to resolve the question of the nature or extent of any implied actual authority Mr Banovich may have had to compromise Mr Mpinda’s proceedings in the Commission because Mr Banovich has not alleged that he had implied authority. He alleges that he had express actual authority. That authority is not to be found in the text of the written costs agreement and retainer between Mr Mpinda and MKI Legal. Therefore, if Mr Banovich was given the express authority he alleges, it must have been given ad hoc during the performance of the retainer.
Solicitors’ duty to advise and carry out client instructions
A solicitor owes a client a concurrent duty in tort and in contract (as a term implied by law as a term of the retainer) to exercise reasonable care in the provision of legal services to the client. The standard of care and skill is that which may be reasonably expected of legal practitioners: Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1 at [146] (Malcolm A-JA), [362] (McPherson A-JA), [649] (Ormiston A-JA). The nature of the duty depends on the particular retainer and the circumstances of the case: Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 at 437. The nature or scope of the duty may also depend on the characteristics of the client. An inexperienced client and (or) a client with limited command of the English language may need explanation and advice that would be pointless for an experienced businessperson: Pickersgill v Riley [2004] UKPC 14; [2004] 4 PNLR 31 at [7]; Kandola v Mirza Solicitors LLP [2015] EWHC 460 (Ch); [2015] PNLR 19 at [46]-[48] (Cooke J); Carradine Properties Ltd v DJ Freeman & Co [1955–1995] PNLR 219 at 226 (Donaldson LJ).
In the context of litigation, a solicitor ought to bring to the attention of the client the terms of the settlement and the consequences that flow from them: Secombs (a firm) v Sadler Design Pty Ltd [1999] VSC 79 at [65]. In Studer v Boettcher [2000] NSWCA 263 at [75] Fitzgerald JA (Sheller JA, agreeing) said:
Broadly, and not exhaustively, a legal practitioner should assist a client to make an informed and free choice between compromise and litigation, and, for that purpose, to assess what is in his or her own best interests. The respective advantages and disadvantages of the courses which are open should be explained. The lawyer is entitled, and if requested by the client obliged, to give his or her opinion and to explain the basis of that opinion in terms which the client can understand. The lawyer is also entitled to seek to persuade, but not to coerce, the client to accept and act on that opinion in the client’s interests. The advice given and any attempted persuasion undertaken by the lawyer must be devoid of self-interest. Further, when the client alone must bear the consequences, he or she is entitled to make the final decision.
A solicitor (as an agent) should not proceed on ambiguous or unclear instructions where the consequences of the instructions, as understood, may result in harm or disadvantage to the client. If so, the potential harm or disadvantage should be explained and the instructions clarified or confirmed: Geoffrey W Hill & Associates (Insurance Brokers) Pty Ltd v Squash Centre (Allawah North) Pty Ltd (1990) 6 ANZ Ins Case 61-012 at 76,765 (Gleeson CJ, Kirby P and Mahoney JA, agreeing). Thus, as the High Court (Dixon CJ, McTiernan, Williams, Webb and Fullagar JJ) observed in Harvey v Phillips [1956] HCA 27; (1956) 95 CLR 235 at 242:
…
It is hardly necessary to say that, be [a] compromise wise or unwise in [the clients’] interest, it [is] a matter for [the clients] to decide in the exercise of a judgment formed upon an appreciation of the advice of [their] counsel and solicitor but under no sense of coercion.
…
To make a settlement agreement contrary to the express instructions of a client is a clear breach of the solicitor’s duty. It is no defence that the agreement was made bona fide and for the benefit of the client: Fray v Voules (1859) 1 El & El 839; Thompson v Howley at 24; Donellan v Watson at 342. Further, in Waugh v HB Clifford & Sons Brightman LJ said (at 388):
… it is incumbent on the [solicitors] to make certain that [they are] in fact authorised by [their] corporate or individual client to bind [their] client to a compromise. In a proper case [they] can agree without specific reference to [the] client. But in the great majority of cases, and certainly in all cases of magnitude, [they] will in practice take great care to consult [their] client, and I think that [their] client would be much aggrieved if in an important case involving large sums of money [they] relied on [their] implied authority. …
Otherwise, solicitors have an obligation to carry out a client’s ‘lawful, proper and competent instructions’: r 8.1 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (WA); Midland Bank at 434-435 (Oliver J).
Formation and terms of informal contracts
The traditional approach to whether parties have concluded negotiations and reached an agreement is to enquire whether there has been both offer and acceptance, that is, a clear indication (offer) by one party (the offeror) of a willingness to be bound on certain terms, accompanied by an unqualified assent to that offer communicated by the other party (the offeree) to the offeror (acceptance). However, contracts can be formal or informal, need not be in writing but can be an oral agreement between the parties, or may consist of oral terms and written correspondence between the parties. There are many instances in day-to-day life in which contracts are formed in an informal way after numerous communications (oral and written) over an extended period of time and between different people representing the contracting parties, rather than falling into a textbook analysis of offer and acceptance. As Allsop J (Drummond and Mansfield JJ, agreeing) observed in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 at [369]:
… a number of authorities discuss the need not to constrict one's thinking in the formation of contract to mechanical notions of offer and acceptance. Contracts often, and perhaps generally do, arise in that way. They can also arise when business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting i's and crossing t's or where they think they have done so. … even in the absence of clear offer and acceptance, and even without being able (as one can here) to identify precisely when a contract arose, if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, the court will recognise the existence of a contract. Sometimes this is said to be a process of inference or implication. For my part, I would see it as the inferring of a real intention expressed through, or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: ''and we hereby agree to be bound'' in this or that respect. 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 or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract. The authority for the above can be found in, at least, the following: Meates v Attorney-General [1983] NZLR 308 at 377 per Cooke J (as his Lordship then was); Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117-11,118 per McHugh JA (Hope and Mahoney JJA concurring); Vroon BV v Foster's Brewing Group [1994] 2 VR 32 at 81-83 per Ormiston J (as his Honour then was); Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 at 555 per McHugh JA (with whom Samuels JA concurred); Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601 at 611 per Bingham J (as his Lordship then was) affirmed on appeal at 615; Pobjie Agencies v Vinidex Tubemakers [2000] NSWCA 105 at [22]-[24] per Mason P (with whom Meagher and Handley JJA concurred); Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 at [74]-[80] per Heydon JA; though see Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 178 per Tadgell J (as his Honour then was); and in this context see also Electrical Enterprises Retail Pty Ltd v Rodgers (1988) 15 NSWLR 473 at 489 per Kearney J and Manzi v Smith (1975) 132 CLR 671 at 674.
The existence and terms of an informal contract is determined objectively as a question of fact: Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; (2022) 406 ALR 678 at [15]-[17] (Kiefel CJ and Gageler J), [43]-[45] (Gordon J), [82]-[87] (Edelman and Steward JJ); Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1 at [27] (French CJ, Kiefel and Bell JJ), see, also, [54] (Gageler J, dissenting), [131] (Keane J), [196] (Nettle J), [245]-[246] (Gordon J, dissenting); Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382 at [90] (and the cases cited therein) (Campbell JA, Allsop P and Basten JA, agreeing). Consideration of surrounding circumstances and post-contractual conduct is permissible where the existence or terms of an informal contract are in issue: County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [20] (Spigelman CJ). The consideration of evidence of these matters does not involve interpreting the terms the parties have agreed, but, rather the question of whether the parties have made an agreement and, if so, on what terms. There are no words to interpret; the question is what words were used to express the agreement or 'what did the parties agree?': County Securities at [7].
After establishing the words used to express the agreement the ‘express terms’ of the agreement may then be identified. However, terms may also be inferred or implied from the words used. An informal oral contract may be treated more flexibly with respect to terms implied by fact compared with a detailed formal written contract. In the case of informal oral contracts, the primary focus is on determining what are the actual terms of the contract (express or inferred) and then, after that determination, considering whether any further terms need to be implied: Bryne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 422-423 (Brennan CJ, Dawson, Toohey JJ), citing Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 573 (Deane J).
Intention to create legal relations
The essence of contract, as a class of obligations, is that there is a voluntary assumption of legally enforceable obligations. Amongst the elements that make an obligation legally enforceable is an intention to create legal relations so as to subject the agreement to the adjudication of the courts. The inquiry about that aspect may take account of the subject matter of the agreement, the status of the parties to it, their relationship one to another, and other surrounding circumstances. The concept of ‘intention’ to create legal relations, as with other contractual contexts, describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties. Where issue is joined about the existence of a legally binding contract, the person asserting the existence of the contract bears the onus of proof: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 at [24]-[26] (Gaudron, McHugh, Hayne and Callinan JJ).
Except for circumstances where the parties to the agreement are in what may be broadly described as a non-commercial relationship, if an agreement is in writing and is signed by the parties an intention to create legal relations is likely to be demonstrated by the parties’ signature and terms of the document. More difficulty arises in circumstances in which the terms are vague, uncertain or incomplete. In such circumstances, vagueness, uncertainty and incompleteness may indicate that the parties did not intend that the ‘agreement’ should be a binding contract. Similarly, where it is alleged that an agreement is made by acceptance of an ‘offer’, the ‘offer’ must be in a form from which an intention to create legal relations is explicit or implicit. That is, an offer or promise to contract with the person to whom the offer is made if the offer is accepted. If it is not an offer in such terms, ‘acceptance’ will not result in an immediately binding contract: see, e.g., Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 130-133 (Brooking J), 168-170 (Tadgell J), 202 (Phillips J). Difficulties also arise in circumstances in which the parties have expressed some form of agreement to make a formal written agreement in the future. The parties may have made no agreement, but merely an agreement to agree in the future. Alternatively, the parties may have intended to make a binding agreement with the intention to replace it with a formal agreement with same or additional terms by agreement: Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 360-361; Sinclair, Scott & Co Ltd v Naughton [1929] HCA 34; (1929) 43 CLR 310 at 317; GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634.
Nonetheless, while categorisation may be helpful in some circumstances, it would be wrong to formulate rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist: Ermogenous at [25]. Every case is different and fact specific. Without prescribing rules, the often cited authorities provide guidance on what matters may be relevant in determining the objective intention of the parties. In this respect, the magnitude, subject matter, or complexities of the transaction may indicate that the agreement was a limited one not intended to have legal effect: Sinclair, Scott & Co Ltd v Naughton at 316-317 (Knox CJ, Rich and Dixon JJ); Baulkham Hills at 634 (McHugh JA, Kirby P and Glass JA, agreeing). Further, broadly, the greater the number of matters upon which further agreement is contemplated, the less likely it is that the parties intend those matters upon which there has been agreement to result in a binding contract. In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (Commonwealth Games case) (1988) 18 NSWLR 540 (at 547-549) Gleeson CJ (Hope and Mahoney JJA, agreeing) made the following relevant observations:
…
There is ample authority for the proposition that reference may be made to the correspondence between the parties subsequent to [the date of the alleged agreement] for the purpose of showing that “it was not in the contemplation of either party that they were to be bound until all the essential preliminaries had been agreed to, nor until a formal contract had been drawn up embodying all the matters incidental to a transaction of such a nature”: Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 669 per Griffiths CJ; see also Howard Smith and Co Ltd v Varawa (1907) 5 CLR 68; Hussey v Horne-Payne (1879) 4 App Cas 311; B Seppelt and Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147 and Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251. In the present case that correspondence has a particular bearing on the interpretation and understanding of the earlier communications in that it constitutes an important source of information as to what are matters incidental, or for that matter essential, to a transaction of the nature in question. In a case where a court is required to make a judgment concerning the intention of the parties in relation to what might broadly be described as a Masters v Cameron ((1954) 91 CLR 353) dispute, it will normally be of importance that the court have an understanding of the commercial context in which the dispute arises, and a most significant feature of that context will relate to the subject which the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract. In some cases, such as transactions involving the sale and purchase of land, or leases, courts may properly feel well equipped to form a view on such matters without the need for much evidence. In many cases, however, of which the present is a good example, there is a need for evidence in one form or another as to what subjects would be regarded as requiring agreement between the parties. In this case the best evidence on that subject is to be found in the actual communications between the parties and, in particular, in the issues which they in fact addressed when they set about drafting their detailed contract.
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 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 have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.
Reference has earlier been made to “intention”. Cases which typically give rise to problems of the kind presently under consideration are cases in which there is no doubt that the parties had a common intention that at some stage, and by some means, they would enter into contractual relations. They have entered into negotiations for that specific purpose. The problem which arises is that they have exchanged communications which, on the one hand, use the language of agreement but, on the other hand, disclose an expectation that at some future time a document embodying the terms of their contractual arrangement will be brought into existence. Where, as in the present case, the communications which the parties have exchanged are in writing, the question of their “intention” is, prima facie, to be resolved objectively, and as a matter of construction of the relevant documents. Thus, in Sinclair Scott Co Ltd v Naughton (at 317), dealing with precisely such a problem as arises in the present case, the majority in the High Court said:
“… We think, as a matter of construction, that the execution of the further contract was a condition or term of the bargain and not a mere expression of the desire of the parties as to the manner in which a transaction already agreed to will in fact go through ... The case is not one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.”
In Masters v Cameron (at 362), the majority in the High Court said:
“The question depends upon the intention disclosed by the language the parties have employed, and no special form of words is essential to be used in order that there shall be no contract binding upon the parties before the execution of their agreement in its ultimate shape.”
Although there are qualifications to it, this general test of objectivity is of pervasive influence in the law of contract. …
Gleeson CJ then concluded, on the facts of that case:
…
The communications relied upon by the appellant as constituting a contract, construed with regard to the subject matter of the negotiations and the surrounding circumstances, and in the light of subsequent communications between the parties, do not appear to me to evidence an intention to make a concluded bargain. Rather, they show that, in a context where it was contemplated that there would be express agreement on a number of important matters which the parties had not yet got around to discussing, or in respect of which their discussions were still at a very incomplete stage, the parties had made an agreement on the most important subject of their transaction, that is, the price, in the confident expectation that they would in due course come to terms on the other issues that needed to be addressed. The important matters to which I refer include, in particular, the definition of the rights which the appellant was to have (that is to say the subject in respect of which the appellant stated its “expectations” following 13 June 1986) and the matter sometimes loosely referred to as the possibility of boycott.
For those reasons I am of the view that the appellant's primary contention must fail.
…
Witnesses
Mr Mpinda
Mr Mpinda was the applicant’s only witness. Mr Mpinda made and tendered two affidavits. The first was sworn 20 October 2021. The second was sworn 23 March 2023. Subject to objection to paragraphs 20 to 49 of the first affidavit, which is addressed later in these reasons, Mr Mpinda’s affidavits were received into evidence. Mr Mpinda was then cross-examined at some length.
Mr Mpinda’s first language is French. He is able to understand and speak English to a degree, but not sufficiently to be cross-examined in English. Accordingly, an interpreter was affirmed and assisted with interpreting all aspects of the proceedings. The interpreter worked alone for three days with limited breaks during the trial. She interpreted the whole proceedings (submissions and evidence). The Court is very grateful to her for her assistance and tireless effort throughout the trial.
As for written English, Mr Mpinda is self-represented and he has filed many documents in the Court, including his affidavits, in English. There are also records of emails between Mr Mpinda and Mr Banovich in evidence which are in English. I infer from these documents that Mr Mpinda has a reasonably good command of written English. That is, when he has time and the ability to obtain assistance to understand and write in English, he is able to do so and has reasonable proficiency in written English.
Mr Mpinda’s evidence was directed towards the background to the Commission proceedings, commencement and prosecution of those proceedings, the conciliation conference during those proceedings and the absence of any agreement to settle those proceedings or any instructions to Mr Banovich to settle those proceedings. Making some allowance for the difficulties of giving evidence through an interpreter and the passage of time since the events the subject of his evidence, I consider that Mr Mpinda was an honest witness who did his best to give truthful evidence. However, as will be explained later in these reasons, his evidence regarding a conversation with Mr Banovich on 8 December 2016 was not entirely satisfactory. I do not accept that he had a positive recollection of not providing Mr Banovich with instructions as opposed to no recollection of having done so.
Ms Wilmot
The second respondent, Western Areas, called Ms Wilmot and tendered her affidavit affirmed 15 April 2023. Ms Wilmot had been a solicitor in the employ of Minter Ellison and had acted for Western Areas in the Commission proceedings against Western Areas. Ms Wilmot’s evidence-in-chief primarily relates to the events Western Areas contends resulted in Mr Mpinda and Western Areas making a binding settlement agreement.
Mr Mpinda briefly cross-examined Ms Wilmot. In the course of her cross-examination, if not already clear from her examination-in-chief, Ms Wilmot candidly admitted that she had no independent recollection of the relevant events. In my assessment, Ms Wilmot was an honest and truthful witness, but she was not able to give any meaningful direct evidence of the conversations by which Western Areas alleges that Mr Banovich made an offer to settle which, if accepted, would result in an immediately binding contract.
Mr Banovich
The third respondent, Mr Banovich, also gave evidence and tendered an affidavit affirmed 9 May 2023. Mr Banovich had acted as Mr Mpinda’s solicitor in the Commission proceedings against Western Areas. Mr Banovich’s evidence-in-chief also deals with instructions and advice given by and to Mr Mpinda in connection with the Commission proceedings. He also gave evidence about conversations with Ms Wilmot during which Western Areas alleges that Mr Banovich communicated to Ms Wilmot offers to settle on Mr Mpinda’s behalf. Mr Banovich gave evidence of conversations with Mr Mpinda during which he alleges that Mr Mpinda gave him express instructions to make an offer to settle with Western Areas. Mr Mpinda also cross-examined Mr Banovich.
Much like Ms Wilmot, Mr Banovich had little or no real recollection of the conversations. He was heavily reliant on documents either as the only source of his recollection or as a means by which his memory was refreshed out of court. I also consider that Mr Banovich was an honest and truthful witness and he did his level best to remember facts. However, Mr Banovich was also not able to give any meaningful direct evidence of what was said during key conversations with Ms Wilmot or Mr Mpinda.
Documents
Each of the affidavits tendered in evidence exhibited a number of documents. A number of additional documents were tendered during the cross-examination of Mr Mpinda or separately. The most relevant documents comprise communications involving one or more of Ms Wilmot, Mr Banovich and the Commission or Mr Banovich and Mr Mpinda. The main events relevant to the separate issues took place between November 2016 and April 2017. As already mentioned, none of the witnesses who gave evidence at trial had any real recollection of what was said during telephone or other conversations that had taken place, if at all, seven or so years before the trial. That is completely understandable and in no way reflects poorly on any witness. However, the consequence is that the Court is largely left with only the documentary record from which to determine whether a settlement agreement was made and, if so, on what terms and whether Mr Mpinda positively instructed Mr Banovich to settle on those terms.
Some observations about the evidence
Oral evidence of communications
In Ms Wilmot’s affidavit and evidence-in-chief she gave evidence of telephone conversations with Mr Banovich on 6 December 2016 and 9 December 2016. She said that Mr Banovich had made offers to settle Mr Mpinda’s claim on certain terms during those conversations. The affidavit then reproduces the contents of file notes of those conversations that were exhibited to her affidavit. In her examination-in-chief Ms Wilmot clarified that she had no independent recollection of those telephone conversations and her affidavit was merely a summary of the file notes exhibited to the affidavit. In my view, Ms Wilmot’s evidence of the conversations with Mr Banovich as recorded in her affidavit are reconstructions taken from the contents of her file notes.
In Mr Banovich’s affidavit and evidence-in-chief he gave evidence of telephone conversations with Ms Wilmot on 7 and 9 December 2016. In his examination-in-chief he gave evidence to the effect that his recollection of those conversations was based on emails he received from Ms Wilmot on 7 and 9 December that were exhibited to his affidavit. Mr Banovich also gave evidence of conversations with Mr Mpinda on 13 September 2016 and 8 December 2016 and that he had made file notes of those conversations that were exhibited to his affidavit. His evidence-in-chief was that his recollection was based on the file notes. Mr Banovich gave evidence of other conversations with Ms Wilmot or Mr Mpinda and said that his recollection was based on the contents of various documents prepared around the time of those conversations all of which were also exhibited to his affidavit.
The extent to which Mr Banovich had any independent recollection of the conversations recounted in his affidavit and evidence-in-chief is not clear. His evidence regarding the nature of his recollection commenced with the following question and answer concerning the conversation with Mr Mpinda on 13 September 2016:
So, as you sit here now, do you have any independent recollection of those events that are described in paragraph 8, or is your recollection based only on the affidavit and the file note?---My recollection is based on the file note.
That response and similar responses concerning his recollection of conversations with Mr Mpinda on 8 December 2016 and Ms Wilmot on 9 December 2016, which Mr Banovich said were based on the file note or email from Ms Wilmot exhibited to his affidavit, may be contrasted with his responses concerning other conversations where Mr Banovich said he had, at least, some real recollection of the conversation. With respect to a conversation with Mr Mpinda on 28 November 2016 Mr Banovich gave evidence that the basis of his recollection was: ‘Just the record that was put in one of the firm’s invoices, and I do vaguely recall the conversation. But nothing more than what was recorded in the invoice and part of the usual course of discussing preparatory information to a client prior to going to – forward to a conciliation.’ Mr Banovich gave a similar response about the usual practice of the firm concerning a conversation with Mr Mpinda on 2 December 2016 and a conversation with Ms Wilmot on 5 December 2016. Mr Banovich also gave evidence that appeared to be a genuine recollection of events during the conciliation conference on 2 December 2016. With respect to a conversation with Mr Mpinda on 6 December 2016 Mr Banovich said that his memory had been ‘refreshed’ from an email exchange of that day between Mr Mpinda and himself that was exhibited to the affidavit. With respect to a conversation with Ms Wilmot on 7 December 2016, Mr Banovich also said his memory was refreshed from the email he received from her that day which was exhibited to his affidavit.
Having regard to the questions and responses during his evidence-in-chief and other aspects of his evidence referred to later in these reasons, I am not satisfied that Mr Banovich had any independent recollection of conversations with Mr Mpinda on 13 September and 8 December 2016 referred to in his affidavit. I am also not satisfied that he had any independent recollection of a conversation with Ms Wilmot on 9 December 2016. In my view, the statement of his recollection of the conversations recorded in his affidavit is reconstruction drawn from the contents of the documents exhibited to his affidavit.
Documentary evidence of communications
It follows that the principal evidence of the key conversations are file notes of Ms Wilmot or Mr Banovich and emails. To the extent that these documents record oral conversations they are hearsay or, in the words of the Evidence Act 1995 (Cth), previous representations. Evidence of previous representations is generally not admissible unless it falls within one of the exceptions in the Evidence Act: s 59 – s 75. I say it is ‘generally’ not admissible because evidence of previous representations may be admitted into evidence by consent: s 190. Also, ‘not admissible’ in s 59 means ‘not admissible over objection’. Therefore, if no objection is taken to the admissibility of evidence of a previous representation, that evidence is admitted into evidence: Seltsam Pty Ltd v McGuiness [2000] NSWCA 29; (2000) 49 NSWLR 262 at [149] (Spigelman CJ); Federal Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74; (2011) 193 FCR 149 at [26] (Ryan, Jessup and Perram JJ). Also, the hearsay rule does not apply to certain documents that are business records: s 69.
Section 69 of the Evidence Act provides relevantly:
69 Exception: business records
(1) This section applies to a document that:
(a) either:
(i)is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business; or
(ii)at any time was or formed part of such a record; and
(b)contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.
(2)The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made:
(a)by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact; or
(b)on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.
(3) Subsection (2) does not apply if the representation:
(a)was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding; or
(b)was made in connection with an investigation relating or leading to a criminal proceeding.
…
A file note prepared by a solicitor may constitute a business record, for the purposes of admission into evidence, but it is vulnerable to discretionary exclusion under s 135 of the Evidence Act. In Hodgson v Amcor Ltd; Amcor Ltd v Barnes (No 5) [2011] VSC 295 at [10]-[22] Vickery J considered that a solicitor’s file note was a business record, but that it should be excluded in circumstances in which the note was ‘written in rather cryptic shorthand’, was ‘not in narrative form’, consisted of ‘jottings of an unidentified person’ and was undated because the ‘shortcomings as to the proof of the document and its precise meaning, [were] substantially outweighed by the danger that the evidence might be unfairly prejudicial…’. Also, in general, a file note prepared in the course of performing contentious work would not fall within the exception by operation of s 69(3).
The rationale for the exception is that business records, of their nature, tend to be reliable evidence of the information recorded in them: Sydney Attractions Group Pty Ltd v Schulman [2013] NSWSC 858 at [81]–[82] (Sackar J) cited with approval in Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja [2018] NSWCA 26 at [93] (Leeming JA, Basten and Gleeson JJA agreeing). However, in the circumstances to which s 69(3) is directed, that reliability is undermined because a business record prepared in those circumstances may be self-serving and unreliable.
Here, Mr Mpinda made no objection to the admissibility of the file notes of Ms Wilmot or Mr Banovich or to the emails to the extent that these documents are evidence of previous representations. As such, any evidence of previous representations in those documents (hearsay) is evidence in the proceedings whether or not the document is admissible under the business record exception: Bull v The Queen [2000] HCA 24; (2000) 201 CLR 443 at [76] (McHugh, Gummow and Hayne JJ).
Even if it were demonstrated that a document contains inadmissible hearsay, once the document is admitted into evidence (without objection) the statement is not deprived of probative value: SNF (Australia) at [25] (Ryan, Jessup and Perram JJ) citing Walker v Walker [1937] HCA 44; (1937) 57 CLR 630 at 638 (Evatt J). Once admitted into evidence the Court may give such weight to the hearsay as is considered appropriate: Frigger v Trenfield (No 3) [2023] FCAFC 49 at [393]-[394] (Allsop CJ, Anderson and Feutrill JJ).
Nature of evidence of communications
Although prepared in the context of contentious legal proceedings, the file notes are not business records of the kind to which the exclusion in s 69(3) of the Evidence Act is directed. That is, they are not self-serving statements about facts related to the contentious proceedings. However, there are aspects of the documents that would have rendered them vulnerable to exclusion, if otherwise admissible, under s 135 of the Evidence Act if objection had been taken to their admissibility.
Insofar as evidence of oral conversations are relied upon to prove an ‘offer to contract’ and the terms of that offer, it is necessary to prove what was said with a sufficient degree of precision to be satisfied that an offer capable of acceptance and, thereby, if accepted, capable of forming a legally binding contract, was made during the conversation. In this respect, although made in reference to oral statements alleged to be misleading and deceptive, the observations of McLelland CJ in Watson v Foxman (1995) 49 NSWLR 315 (at 318-319) provide a useful guide to the nature of evidence about oral contracts and the precision required to prove what was said during conversation(s) in which the contract is alleged to have been made.
The file notes are of their nature brief and not comprehensive. They do not purport to record what each party to the conversation said verbatim. The notes of Ms Wilmot, in particular, are in somewhat cryptic shorthand and are not in narrative form. That affects the utility and weight that can be given to the notes in circumstances in which Ms Wilmot has no independent recollection of the conversations and her memory was not refreshed by the notes. Nonetheless, it is not necessary for evidence of an oral communication to be given in direct speech in order for it to be admissible as evidence of the words spoken during the communication: Kane's Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381 at [123] (Jackman J) and the authorities there cited.
In general, evidence of a conversation may take one of three forms or some combination of them. First, a witness may recount the actual words used by the participants in the conversation. Second, a witness may recount the substance, purport or gist of what was said during the conversation. Third, a witness may state a conclusion as to the effect of the conversation. For example, the witness may make a statement in a conclusionary form such as ‘we agreed that …’. At common law, the last form of evidence is inadmissible, but evidence is routinely given in one or both of the first two forms: Hamilton-Smith v George [2006] FCA 1551; (2006) 247 FCR 238 at [79] (Besanko J). The reason that the last form is inadmissible is because it is a statement of an opinion about the effect of the words spoken during the conversation. It is the task of the Court to determine the effect of what was said or the conclusion that is to be reached. Without recounting either the words spoken or the substance of the conversation it is not possible to test or consider if the conclusionary statement is well-founded. While these observations are made with respect to oral evidence of a witness in court, the same principles can be applied to hearsay statements received into evidence. Hearsay evidence in one or both of the first two forms is of utility. Hearsay in the third form is of little, if any, probative value.
Having regard to the principles to which reference has been made, to the extent that the file notes or emails record the gist, purport or substance of what was said during the conversations referred to in them, I have had regard to the hearsay statement as evidence of what was said and by whom. To the extent that they record conclusions about the effect of the conversation, I place no weight on them. The extent to which I have accepted the hearsay statements and the weight attributed to them is explained later in these reasons.
Objections to Mr Mpinda’s evidence
Western Areas objects to paragraphs 20 to 49 of Mr Mpinda’s affidavit sworn 20 October 2021 on the ground that these paragraphs are not relevant. At the time the affidavit was tendered, these paragraphs were provisionally received into evidence on the basis that I would rule on their admissibility in these reasons.
The most fundamental rule of the law of evidence, both at common law and under s 56 of the Evidence Act, is that evidence cannot be admitted unless it is relevant. Evidence that could rationally effect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding is relevant and admissible: s 55 and s 56 of the Evidence Act. In determining relevance it is necessary to identify what are the issues at the trial. In a civil case the issues are usually identified by pleadings, but, here the separate questions serve that purpose. Behind the ultimate issues there will often be many other issues about other facts that are relevant to the ‘facts in issue’: Smith v The Queen [2001] HCA 50; (2001) 206 CLR 650 at [7] (Gleeson CJ, Gaudron, Gummow and Hayne JJ).
Paragraphs 20 to 49 of Mr Mpinda’s first affidavit contain a mixture of submissions, conclusions and statements. These paragraphs describe matters relating to Mr Mpinda’s employment by Western Areas, events during his employment and the termination of his employment. Broadly, the matters described relate to his claims in the Commission proceedings and culminate with allegations to the effect that the termination of his employment was not a genuine redundancy.
The matters referred to in paragraphs 20 to 49 are not directly relevant to any of the separate questions. However, they have indirect relevance in that they provide part of the background and context to the Commission proceedings and, if nothing else, provide some evidence of Mr Mpinda’s subjective state of mind about the nature and strength of his claims against Western Areas. That state of mind is relevant, at least, to the likelihood of Mr Mpinda providing instructions to Mr Banovich to settle on the terms upon which it is alleged the settlement was made with Western Areas. I will admit the statements not for the purpose of proving the factual foundation for Mr Mpinda’s claims against Western Areas in the Commission proceedings, but for the purpose of proving his state of mind regarding the nature and strength of his claims as a background fact and part of the context in which the conciliation conference and settlement discussions took place. In so doing, I take into account that while the paragraphs are evidence of Mr Mpinda’s state of mind at the time his evidence was given, they do not, necessarily, provide evidence of his state of mind in 2016. Accordingly, I place little weight on these paragraphs.
Onus and burden of proof
In general, the party seeking declaratory relief carries the burden of proving the facts upon which the declaration is sought: Massoud v NRMA Insurance Ltd (1995) 62 NSWLR 657 at 658-660 (McLelland CJ). There are two aspects to the concept of burden of proof. First, there is burden of proof as a matter of law and pleading of establishing on the balance of probabilities an entitlement to relief or a positive defence. Second, there is a burden of proof in the sense of introducing evidence. The burden in the first sense falls on the party pleading an entitlement to relief or a positive defence. The practical burden in the second sense may shift constantly throughout a trial as evidence is introduced: Currie v Dempsey [1967] 2 NSWR 532; (1967) 69 SR (NSW) 116 at 125 (Walsh JA).
In this case, the burden of proof as a matter of law with respect to the first separate issue (whether there was a settlement agreement) is not straight-forward. Although Mr Mpinda has sought declaratory relief, Western Areas first raised the issue as a defence to Mr Mpinda’s claim against the Commission. Therefore, Mr Mpinda’s claim for declaratory relief is, in effect, by way of reply to Western Areas’ defence.
At the hearing of the Commission’s and Mr Banovich’s interlocutory processes Western Areas had submitted that the Court should act on its own motion to dismiss the proceedings against Western Areas because Mr Mpinda had no reasonable prospect of prosecuting a claim against them. Western Areas submission was, in effect, that the unfair dismissal application had been resolved by a binding settlement agreement made between Mr Mpinda and Western Areas. That issue emerged as a separate issue because the question of whether or not the Commission has failed in its statutory duty or function turns on whether the unfair dismissal application was settled. In substance, unless it is demonstrated that the unfair dismissal application was settled, Mr Mpinda’s proceedings in the Commission remain unresolved. Therefore, Western Areas as the party asserting the existence of the settlement agreement has the legal, if not a practical, onus of proving that a binding settlement agreement was made: see, e.g., GC NSW Pty Ltd v Galati [2020] NSWCA 326 at [80] (Gleeson JA, White JA and Emmett AJA agreeing); ACN 115 918 959 Pty Ltd v Hoeys Lawyers Pty Ltd [2021] VSC 79 at [983]-[987] (Blue AJ).
However, insofar as Mr Mpinda’s claims declaratory relief, as Hutley JA observed in Jones v Sutherland Shire Council [1979] 2 NSWLR 206 (at 213) ‘a court should refrain from making a declaration as to the existence of a fact, when there is no evidence one way or other of the fact, though in certain other litigation, by reason of the burden of proof assigned by law to the other party, the person applying for the declaration might succeed in that contest’. Therefore, if Western Areas fails to prove that a binding settlement agreement was made on the balance of probabilities, it does not necessarily follow that Mr Mpinda is entitled to a positive declaration that, as a matter of fact, there was no such agreement. It would only mean that the first separate question should be determined in Mr Mpinda’s favour.
Insofar as the second separate issue is concerned, Mr Mpinda has the onus of proving the terms of his retainer and, in effect, that Mr Banovich was not instructed to enter into a binding settlement agreement on his behalf. Again, due to the nature of Mr Mpinda’s evidence-in-chief, Mr Banovich has a practical onus of proving that Mr Mpinda positively gave him those instructions. Mr Mpinda has the onus of proving the facts relevant to the third separate issue if the first separate issue is determined against him.
Evidence and uncontroversial facts
Mr Mpinda was employed by Western Areas from 10 September 2008 to 2 September 2016 in the positions of core-yard technician and geological technician. Western Areas terminated Mr Mpinda’s employment by letter dated 2 September 2016.
Shortly after his employment was terminated, on 13 September 2016, Mr Mpinda had a meeting with Mr Banovich. Mr Banovich gave evidence that summarised the advice given and instructions received during that meeting. Discussions during the meeting were in English and Mr Banovich gave evidence that this slowed the meeting and that he had to speak in simple terms to assist Mr Mpinda to understand him.
Mr Banovich made a file note of his meeting with Mr Mpinda. That note was tendered without objection as an attachment to Mr Banovich’s affidavit. Mr Banovich read his note and gave evidence to the effect that it was an accurate record of what was said at the meeting. The relevant part of the note is in the following terms.
…
(v) Represent him at Mediation to try to resolve the case.
(vi) Prepare for trial if the matter didn’t settle.
…
I accept that the note is an accurate record of the advice given and instructions received on 13 September 2016. Nonetheless, neither the note nor Mr Banovich’s evidence summarising what was said during that meeting contains any reference to Mr Banovich providing Mr Mpinda with an explanation of the conciliation process or the nature and effect of a settlement agreement. Nor is there any evidence of an explanation of the manner in which a settlement agreement could be made through the agency of Mr Banovich as Mr Mpinda’s legal representative and agent. There is no evidence of what, if any, steps Mr Banovich took to satisfy himself that the advice he gave to Mr Mpinda, in English, was understood correctly.
After meeting with Mr Banovich, MKI Legal sent an email to Mr Mpinda requesting him to deposit $5,500 into the firm’s trust account and attaching a cost agreement, fact sheets relating to legal costs and a copy of Schedule 1 (Costs) from the Federal Circuit Court Rules 2001 (Cth). Mr Mpinda deposited $5,500 into MKI Legal’s trust account. The costs agreement tendered into evidence is unsigned. However, Mr Banovich relies on cl 12 of the agreement that makes provision for ‘deemed acceptance’ in circumstances in which instructions are given or amounts are paid into trust on account of legal fees.
By cl 3 of the costs agreement, MKI Legal is retained to represent and advise Mr Mpinda in respect of the ‘Matter’. The matter is described in the schedule to the agreement as ‘Employment Advice’. By cl 15 of the costs agreement Mr Mpinda appointed MKI Legal as his agent to act on Mr Mpinda’s behalf in conducting the ‘File’. The term ‘File’ is defined to mean ‘the file or files relating to such matters which are the Client’s instructions to MKI Legal and MKI Legal’s advice to the Client’. There is no evidence of Mr Banovich or any other person providing Mr Mpinda with an explanation of the terms and effect of the costs agreement including the term by which MKI Legal was appointed as his agent.
Nonetheless, it is tolerably clear that Mr Mpinda gave Mr Banovich his authority and instructions to commence proceedings in the Commission for an unfair dismissal remedy as a consequence of Western Area’s terminating his employment on 2 September 2016. Therefore, in accordance with those instructions, on 23 September 2016, MKI Legal filed an unfair dismissal claim in the Commission on behalf of Mr Mpinda.
On 28 September 2016 the Commission prepared a document addressed to Mr Mpinda’s email address. That document confirmed receipt of his application for an unfair dismissal remedy and gave notice that a conciliation conference would be held on 15 November 2016. The document also provided a brief explanation of the conciliation process and that its aim was to assist Mr Mpinda and Western Areas to reach a mutually agreed resolution of Mr Mpinda’s application and, thereby, avoid legal proceedings. The notice of listing of the conciliation conference attached to the document referred to a listing for conciliation by telephone. Mr Mpinda gave evidence to the effect that he did not receive that document.
On 29 September 2016 Mr Banovich and Mr Mpinda met in person to discuss the listing of the conciliation conference and the making of a request for a French language interpreter to be present at the conference. The meeting is recorded in MKI Legal’s itemised invoice to Mr Mpinda of 2 December 2016 as a relatively short meeting – no more than 12 minutes. There is no evidence that anything more was discussed concerning the conciliation process.
On 29 September 2016 Mr Banovich sent an email to the Commission to request an interpreter and offering to attend in person at the conciliation conference. The same day the conciliation conference listed at 11:15am on 15 November 2016 was cancelled and it was relisted at 2:15pm on 15 November 2016 with a French interpreter booked.
On 10 November 2016 Ms Wilmot sent an email to the Commission attaching a notice that Minter Ellison were acting for Western Areas and requesting a change of time and date for the conciliation conference. Thereafter, the conference was rescheduled to 23 November 2016 and later, by notice from the Commission, rescheduled to 2 December 2016. In the process of rescheduling, the conciliation was listed to be in person at the Commission premises in Perth.
On 17 November 2016 Western Areas filed its response to Mr Mpinda’s claim in the Commission. Mr Banovich sent it to Mr Mpinda by email the same day and requested Mr Mpinda’s comments on it.
Mr Mpinda prepared written comments on Western Area’s response and provided it to Mr Banovich. Mr Mpinda gave evidence that he gave it to Mr Banovich during a meeting. It is unclear when or how it was provided to Mr Banovich, but nothing turns on that matter. The nature of Mr Mpinda's response indicates that he had a reasonably good comprehension of written English and was also able to write in English to a good standard. There was no evidence to the effect that Mr Mpinda obtained assistance from any other person to read and prepare documents in the English language.
On 28 November 2016 Mr Banovich and Mr Mpinda had a telephone discussion for the purpose of preparing for the conciliation conference. MKI Legal’s itemised invoice to Mr Mpinda of 2 December 2016 records Mr Banovich undertaking work described as ‘considering and reviewing client considerations’. I infer that is a reference to the document Mr Mpinda prepared commenting on Western Area’s response. Mr Banovich gave very limited details of what was discussed on 28 November 2016. His evidence was limited to general descriptions of the topics of conversation which included ‘the process of conciliation’.
Mr Banovich gave no evidence of his usual practice or what, if any, advice he usually provided to clients regarding ‘the process of conciliation’. He gave no evidence of providing any advice to Mr Mpinda concerning the formation or effect of a settlement agreement. He gave no evidence of providing any advice or explanation to Mr Mpinda to the effect that Mr Banovich, as his legal representative and agent, could make a settlement agreement with Western Areas on Mr Mpinda’s behalf during the conciliation conference or at any other time.
I have not overlooked that the use of the expression ‘I confirm that my client accepts your client’s offer’ is language consistent with an intention to create an immediately binding contract by acceptance of an offer to contract on certain terms. Therefore, that expression suggests that Ms Wilmot had understood from her conversation with Mr Banovich that he had made an offer to contract on the terms identified in the two bullet points on behalf of Mr Mpinda and she was purporting to accept that offer on behalf of Western Areas. However, the mere fact that a person purports to accept an offer does not mean that, as a matter of fact, an offer to contract has been made or, if the purported acceptance is subject to further or other conditions that the offer, as made, has been accepted.
Having regard to the absence of any evidence of the words spoken in the discussion between Ms Wilmot and Mr Banovich, the use of the word ‘proposal’ in her file note to describe the substance of what Mr Banovich said, the use of the word ‘advise’ and expression ‘prepared to settle’ and description of the terms of the proposed settlement in her email to Mr Banovich, I am not satisfied that a deed of settlement formed a term of any offer to settle that Mr Banovich conveyed to Ms Wilmot on Mr Mpinda’s behalf during the telephone discussion between Ms Wilmot and Mr Banovich recorded in Ms Wilmot’s file note and referred to in her email of 9 December 2016. Nor am I satisfied that Mr Banovich conveyed an offer, in any form, to settle on terms that included a deed of settlement and release containing ‘usual provisions for confidentiality and non-disparagement’. Nor am I able to infer from the evidence of the parties’ discussions and conduct before 9 December 2016 that Mr Banovich had conveyed to Ms Wilmot at some earlier point in time that Mr Mpinda ‘agreed’ that the terms of any settlement agreement would be recorded in a deed of settlement or that such a deed would include ‘usual provisions regarding confidentiality and non-disparagement’.
Western Areas contends, in effect, that it is to be inferred from the parties’ conduct before and after 9 December 2016 that during the negotiations it was always understood or there was agreement that the terms of any settlement agreement would be recorded in a deed of settlement. Western Areas relies on an email from Ms Wilmot to Ms Chisholm of 5 December 2016 in which Ms Wilmot records the outcome of the conciliation conference. In that email Ms Wilmot concludes: ‘The parties agreed the terms of any settlement were to be recorded in a deed of settlement.’
That email was tendered without objection. It clearly contains a previous representation that is not admissible under s 59 of the Evidence Act. Nonetheless, for the reasons given earlier, the Court may receive the hearsay evidence and give it such weight as considered appropriate. As the email records a conclusion about the effect of discussions and not the words spoken or substance of them, it is not evidence from which any conclusion about the existence of an ‘agreement’ may be reached. Accordingly, I give no weight to that statement in that email.
Further, Western Areas did not open its case on the basis that there was an agreement of that nature made at the conciliation conference. Therefore, Mr Mpinda had no notice that Western Areas intended to rely on the previous statement in that email for the purpose of proving that there had been an agreement or assumption from 2 December 2016 that the terms of any settlement agreement would be recorded in a deed of settlement. Nonetheless, while I place no weight on the conclusionary statement in Ms Wilmot’s email to her client of 5 December 2016, it is likely that there was discussion of a deed of settlement during the conciliation conference and the requirement for there to be a deed of settlement was a term of Western Areas’ offer of 7 December 2016. In these circumstances, as of the discussion between Mr Banovich and Ms Wilmot on 9 December 2016, it would have been in the contemplation of Mr Banovich that Western Areas would require as a term of settlement that the parties make a deed, but there is no evidence that Mr Banovich conveyed to Ms Wilmot that Mr Mpinda accepted that term or that he agreed to the inclusion of confidentiality and non-disparagement provisions in any deed or as a term of any agreement.
As to the parties’ conduct after 9 December 2016, Western Areas submits that it is consistent with Mr Mpinda and Western Areas making a binding agreement to settle on the terms set out in Ms Wilmot’s email of 9 December 2016, including that the terms be recorded in a deed of settlement and release, alternatively, that the parties made such an agreement no later than 22 February 2017 when Mr Mpinda provided Western Areas with information necessary to complete a reference in terms to which Mr Mpinda agreed. I do not accept that submission.
If I were to accept that Mr Banovich had conveyed to Ms Wilmot an offer to contract on Mr Mpinda’s behalf in the telephone conversation on 9 December 2016 (which I do not), the effect of Ms Wilmot’s email of 9 December 2015 is not to accept the offer so conveyed, but to make a counter-offer to settle on the terms Mr Banovich conveyed with an additional term that the agreement be captured in a deed of settlement including usual provisions regarding confidentiality and non-disparagement. The correspondence that passes between Ms Wilmot and Mr Banovich after 9 December 2016 is consistent with an agreement to make a deed of settlement, but is not consistent with an immediately binding settlement agreement.
While the parties may have agreed the principal terms that Western Areas would provide Mr Mpinda with a written reference and pay him $2,000, the parties’ subsequent conduct indicates that there was significant uncertainty as to any other terms of a settlement agreement upon which further agreement was necessary. The terms of the written reference Western Areas was to give Mr Mpinda had not been discussed or agreed. There was no evidence of what, if any, terms might meet the description of ‘usual provisions regarding confidentiality and non-disparagement’. That is, there was no evidence that such terms were ‘known’ and were incorporated by reference into the agreement as opposed to bespoke terms upon which further agreement was necessary. There was no evidence of any discussion or ‘agreement’ on any mechanism by which the uncertainty of the terms of Mr Mpinda’s reference or the confidentiality and non-disparagement provisions could be resolved.
Aside from the evident uncertainty of the terms of the settlement agreement that Western Areas contends was made on binding terms, it is evident from the parties’ subsequent conduct that, as of 9 December 2016, no consideration had been given or agreement had been reached on numerous other aspects of the terms of settlement. Mr Banovich submitted that the terms of the draft deed of settlement and release were ‘boiler plate’ in support of his submission that a binding agreement was made on 9 December 2016. That is, the deed was effectively dealing only with the mechanics by which the agreement made on 9 December 2016 was to be put into effect. I do not consider that label is necessarily accurate for all terms in the draft deed, but, in any case, whether or not ‘boiler plate’ inclusion of further or additional terms manifestly required mutual agreement. The scope and intricacy of the terms of the draft deed of settlement and release strongly suggests that any agreement made on 9 December 2016 was ‘half baked’ and further agreement was necessary and contemplated before Mr Mpinda’s unfair dismissal proceedings would be finally settled on terms to which both parties agreed.
The draft deed contains provisions dealing with the mechanics of giving effect to the principal terms of the settlement. Western Areas’ provision of a reference and payment of $2,000 is conditional upon execution of the deed. That suggests that execution of the deed is an essential condition of any agreement the parties made. There is no obligation to provide the reference or make the payment within a period of time from, say, 9 December 2016. Thus, proposed cl 2.1 and cl 2.2 of the draft deed are inconsistent with a ‘binding’ agreement made on 9 December 2016.
Proposed cl 2.3 of the draft deed makes provision for filing a notice of discontinuance within 3 days of payment of the $2,000. Therefore, in effect, discontinuance of the Commission proceedings is conditional upon, first, execution of the deed, and second, payment of the settlement sum. That also suggests that execution of the deed is an essential condition of the agreement the parties made and, also, that there was no agreement that Mr Mpinda would not prosecute his unfair dismissal claim unless and until he was paid $2,000. While it is implicit that Mr Mpinda would release Western Areas from his unfair dismissal claim in exchange for a reference and $2,000, there is no evidence of any communications about the timing and mechanism for giving effect to that release before Ms Wilmot sent Mr Banovich the draft deed on 14 December 2016. For example, a term of a settlement agreement could have been that Mr Mpinda agreed to discontinue his application before the Commission: see, s 588 of the Fair Work Act; r 10 of the Fair Work Commission Rules 2024 (Cth). Therefore, proposed cl 2.3 suggests that there had been no agreement on the mechanism by which the Commission proceedings would be terminated as of 9 December 2016.
Proposed cl 5 contains a provision for confidentiality. It requires the parties to keep the existence and terms of the deed and ‘the discussions leading to the settlement reflected in this deed’ confidential. That suggests that the obligation to keep the terms of the settlement and negotiations confidential only arises on execution of the deed. It is also significant that it does not characterise the discussions leading to the settlement reflected in the deed as a ‘settlement agreement’.
Proposed cl 8 contains provisions for reciprocal or mutual non-disparagement. Again, the obligations of non-disparagement take effect as a term of the deed, not as a term of any prior ‘settlement agreement’.
The draft deed contains many other proposed terms that were not mentioned in Ms Wilmot’s email of 9 December 2016.
Proposed cl 2.4 makes provision for deducting an amount from the $2,000 for income tax and to make an additional payment for superannuation. Neither of these matters were the subject of any discussion or written communications. Ms Wilmot’s file note refers to a proposal to settle for $2,000 and in her email she expressed that as ‘$2,000 (gross)’. The extent to which the payment to Mr Mpinda was intended to be gross or net is not addressed in the evidence of the discussions on 9 December 2016. Ms Wilmot’s email is not consistent with her file note, but it is consistent with the manner in which she framed Western Areas’ offer of 7 December 2016. Thus, it is not clear on the state of the evidence if Mr Banovich conveyed to Ms Wilmot that Mr Mpinda was prepared to settle for $2,000 (gross) or $2,000 (after tax). There is also no evidence of any discussion about what, if any, superannuation would be payable or the extent to which that was included in or excluded from the $2,000 payment. These are matters that create uncertainty about the nature of any ‘offer’ made and ‘accepted’ on 9 December 2016. That uncertainty and the need to address and remove it is reflected in proposed cl 2.4 of the draft deed.
Proposed cl 3 contains a provision by which Mr Mpinda acknowledges a continuing obligation to maintain the confidentiality of information he acquired while employed by Western Areas. Proposed cl 9 contains a provision requiring Mr Mpinda to return property of Western Areas in his control or possession ‘[u]pon execution of this deed’. While provisions of that nature might be relatively standard and uncontroversial, there is no evidence that they were the subject of any discussions or communications before 9 December 2016. For example, Ms Wilmot’s email of 9 December 2016 makes no mention of the deed of settlement containing other standard or usual provisions in addition to confidentiality (which I infer is a reference to a provision like proposed cl 5, not proposed cl 3) and non-disparagement.
Proposed cl 4 contains a provision for mutual releases. Each party releases the other from all ‘Claims’ (as defined in proposed cl 1.1), promises not to make, take or institute any Claim against the other party and indemnifies the other party in relation to loss, cost, damage and expense suffered as result of the indemnifying party making a claim against the other party covered by the release. While as noted earlier, it is implicit that Mr Mpinda would release Western Areas from his claims in the Commission proceedings, the terms of the proposed release are wider than his unfair dismissal claim as the definition of ‘Claim’ includes a wider range of claims. Except, possibly, for Ms Wilmot’s ambiguous file note dated 6 December 2016 which refers to ‘mutual deed’, there is no evidence of any discussion of mutual or any releases. Proposed cl 7 contains a provision acknowledging that either party may plead the deed as a bar to any claim. It is the corollary of the mutual releases. Again, while mutual releases, releases of claims defined in terms that are wider than the specific claim the subject of the proceedings settled, indemnities for making released claims and provisions relating to bars of future claims are not unusual, neither Ms Wilmot’s email of 7 December nor her email of 9 December 2016 makes any mention of mutual release or of releases that extend beyond settlement of the existing proceedings. Further, a release that goes beyond settlement of the existing proceedings and the indemnity are matters upon which Mr Banovich ought to have given Mr Mpinda advice and are matters upon which his agreement was required.
Proposed cl 6 contains a provision that addresses the consequence of breach of the deed by the parties. The effect of it is to require the party in breach to indemnify the other party against any loss, costs, damage or expense incurred as a consequence of the breach. The indemnity may or may not be co-extensive with any damages that may flow from breach. For example, it may not be subject to the same concepts of causation and remoteness that would apply to a breach. Also, the indemnity would extend to legal costs incurred and, therefore, the party indemnified may recover all legal costs rather than costs on a party and party basis. Again, there is no evidence of a provision of that nature being the subject of discussions or communications between the Ms Wilmot and Mr Banovich. Again, it is a matter upon which Mr Banovich ought to have given Mr Mpinda advice and upon which Mr Mpinda’s agreement was required.
Proposed cl 10 contains a number of general provisions. Proposed cl 10(b) is an acknowledgment by Mr Mpinda that he 'is aware of and understands the consequences of entering into this deed, including the consequences of providing the release and indemnity in clause 4’. That suggests that it is the deed, and not any prior agreement, by which Mr Mpinda is to release Western Areas from his unfair dismissal claim. Proposed cl 10(e) contains an entire agreement provision in the terms: ‘This deed states all the express terms of agreement between the Parties in respect of its subject matter. It supersedes all prior discussions, negotiations, understandings and agreements in respect of its subject matter.’ That provision suggests that the deed was intended to replace any ‘agreement’ that had been made before it was executed. However, nowhere in the draft deed is there any mention of a prior settlement agreement the terms of which are reflected or captured in the deed. On the contrary, proposed recital E records ‘the Parties have agreed to settle all Claims either Party has against the other, now or in the future, on the terms set out in this deed’.
Virtually nothing, except for an agreement to provide a written reference (on as then unknown terms), to pay $2,000 and for provisions relating to confidentiality and non-disparagement (on as then unknown terms), in the draft deed of settlement and release Ms Wilmot sent to Mr Banovich on 14 December 2016 had been the subject of discussion or communication, let alone agreement, between the parties before 14 December 2016. The draft deed, as is reflected in proposed recital E, is an agreement to settle all claims that one party has against the other. It is a mutual deed of settlement and release that picks up and includes settlement of Mr Mpinda’s unfair dismissal claim, but goes beyond mere settlement or compromise of his claim in those proceedings.
The communications between Ms Wilmot and Mr Banovich after 14 December 2016 also suggest that execution of a deed was necessary to create legal relations between Western Areas and Mr Mpinda. Ms Wilmot’s email of 14 December 2016 invited Mr Banovich to ‘let [her] know if [he] had any changes to the deed’. Mr Banovich later communicated, in effect, that Mr Mpinda wanted changes to be made to the Schedule to the draft deed which contained the reference Western Areas was to provide to Mr Mpinda. These were the subject of further communications and amendments to the draft deed that were made. Ms Wilmot’s email of 6 April 2017 again invited Mr Banovich to review the deed and inform Ms Wilmot if there were any changes to the deed and to otherwise arrange for the deed to be signed and returned.
Western Areas submits that, in the alternative to its submission that an agreement was made on 9 December 2016, the email from Mr Banovich to Ms Wilmot of 22 February 2017 in which Mr Banovich provided a list of the duties that Mr Mpinda had requested Western Areas include in his reference resulted in the formation of a binding settlement agreement on the terms recorded in the draft deed of settlement and release. I do not accept that submission.
The correspondence passing between Ms Wilmot and Mr Banovich on 24 and 25 January and 22 February 2017 was correspondence about the changes that Mr Mpinda wanted made to the draft deed and, in particular, the proposed Schedule to that deed containing the reference Western Areas was to provide to Mr Mpinda. Ms Wilmot had conveyed by her email of 25 January 2017 a request for Mr Mpinda to provide a list of the specific duties that he was requesting Western Areas to add to the reference. She added: ‘This request will then be considered by my client.’ That suggests that any reference and the terms of it were to be the subject of mutual agreement. Also, that the mere provision of a list of duties would not result in any agreement as the list was to be ‘considered’ by Western Areas. Mr Banovich’s email of 22 February 2017 merely provided the list of duties for Western Areas’ consideration.
Evidently following that consideration, Ms Wilmot prepared a further draft deed and sent it to Mr Banovich by email on 6 April 2017. That email was not expressed to record the deed in final and agreed form. Her covering email again invited Mr Banovich to let her know if he had any changes to the draft deed.
While it could be inferred that the absence of any request for changes to the main terms of the draft deed in Mr Banovich’s communications with Ms Wilmot reflected agreement or acquiescence with those terms, the final form of the draft deed, including the reference in the Schedule was not the subject of any communication of agreement from Mr Banovich to Ms Wilmot. Mr Banovich gave evidence that staff at his firm tried, unsuccessfully, to contact Mr Mpinda in April, May and June 2017. There was no evidence of any further communications between Ms Wilmot and Mr Banovich after 6 April 2017. Therefore, there was no communication from Mr Banovich on behalf of Mr Mpinda that the terms of the draft deed sent to him on 6 April 2017 were accepted by Mr Mpinda.
I also take account of the following conduct, or absence of conduct, on the part of Western Areas that is consistent with the absence of any final and binding agreement between Western Areas and Mr Mpinda.
It was common ground that Western Areas has not provided Mr Mpinda with a reference or paid him $2,000. There is no evidence that Western Areas executed the deed of settlement and release by counterpart. There is no evidence of Western Areas taking any steps to enforce an agreement with Mr Mpinda. That is, there is no evidence of Western Areas demanding Mr Mpinda execute the deed of settlement and release. There is no evidence of Western Areas taking any steps to have Mr Mpinda’s unfair dismissal proceedings dismissed under s 399A of the Fair Work Act (failure to discontinue after a settlement agreement has been concluded).
I have not overlooked the email from Ms Wilmot to Ms Mullins of 12 December 2016, copied to Mr Banovich, in which she said that the ‘parties have reached an agreement to settle this matter on mutually acceptable terms’. That email also indicated that Ms Wilmot was ‘in the process of preparing the draft deed of settlement and intend to be in a position to provide this to Mr Banovich for his client’s review early next week’. Therefore, taken as a whole and in context, that email is equivocal. The reference to an agreement does not necessarily convey ‘binding agreement’ particularly as it was contemplated that there would be a deed of settlement prepared. That is, the email is consistent with the parties having reached an ‘in principle’ agreement that was subject to preparation and execution of a deed of settlement.
Having regard to the evidence and matters described earlier taken as a whole, reasonable business persons would not understand Ms Wilmot and Mr Banovich to have concluded a final and binding contract on behalf of Western Areas and Mr Mpinda made on 9 December 2016 or 22 February 2017 to settle Mr Mpinda’s unfair dismissal proceedings.
Disposition
It follows that the preliminary questions should be answered as follows:
(1)Was a binding and enforceable agreement made between Western Areas and Mr Mpinda to settle Mr Mpinda’s application for an unfair dismissal remedy made under s 394 of the Fair Work Act and lodged with the Commission on 23 September 2016?
No.
(2)Is Mr Banovich liable to Mr Mpinda for negligence in making a settlement agreement, as Mr Mpinda’s agent, without Mr Mpinda’s authority or instruction?
No.
(3)Is Western Areas indebted to Mr Mpinda and (or) liable to Mr Mpinda for breach of a settlement agreement for failing to pay a sum due and payable under that agreement?
Not necessary to answer.
I certify that the preceding one-hundred and seventy-five (175) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Feutrill. Associate:
Dated: 28 June 2024
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