Oriolo v Wolfram
[2011] NSWSC 544
•09 June 2011
Supreme Court
New South Wales
Medium Neutral Citation: Oriolo v Wolfram [2011] NSWSC 544 Hearing dates: 26 May 2011 Decision date: 09 June 2011 Before: Associate Justice Harrison Decision: 1. The notice of motion filed 10 May 2011 is dismissed.
2. The plaintiff is to pay the defendant's costs as agreed or assessed.
Catchwords: CONTRACT - certainty - negotiations - whether parties had settled proceedings - consideration of first and third limbs of Masters v Cameron [1954] HCA 72 - consideration of parties intentions Cases Cited: Codelfa Construction Pty Limited v State Rail (1982) 149 CLR 337
Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235
Howe v Connell [1997] NSWSC 432
Masters v Cameron [1954] HCA 72
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35
Toll (FGCT) Pty Limited v Alphapharm Pty Limited & Ors (2004) 219 CLR 165Category: Principal judgment Parties: Claudio Oriolo - Plaintiff
Florentina Irena Wolfram - DefendantRepresentation: N Furlan - Plaintiff
R W Seton SC/G Gemmell - Defendant
Martin Place Lawyers - Plaintiff
Pelosi & Associates - Defendant
File Number(s): 2008/287024
Judgment
The issue to be decided is whether the parties have settled these proceedings.
The plaintiff is Claudio Oriolo ("Mr Oriolo"). The defendant Florentina Irena Wolfram ("Ms Wolfram"). For convenience I shall refer to the parties by name.
Background
Ms Wolfram and Mr Oriolo first met in about September 1982. Shortly after they commenced a de facto relationship. In about November 1982, Ms Wolfram and Mr Oriolo married. In about 1986, Mr Oriolo and Ms Wolfram divorced. In 1995, Mr Oriolo returned to Italy and Ms Wolfram continued to reside in Australia. They remained friends.
In 1983, the parties established a company, Comar Enterprises Pty Ltd, for the purchase of conducting some of their joint venture investments. Between 1983 and 2004, the parties invested in the Australian property market together, largely with Mr Oriolo's money. They fell into dispute as to amounts allegedly owed by Ms Wolfram to Mr Oriolo with respect to certain of their investments. They executed a deed in relation to their dispute in 2001 and a subsequent deed in 2004, which was to replace the first deed.
In these proceedings, Mr Oriolo seeks damages for alleged breaches of the 2004 deed. Alternatively, Mr Oriolo claims for breaches of the 2004 deed for relief in respect to alleged breaches of trust and agency duties owed to him by Ms Wolfram. Mr Oriolo's claim is for damages in excess of $850,000. Ms Wolfram has filed a defence and cross claim. She seeks that the deeds be set aside on the basis of unconscionability special disadvantage and undue influence.
The proceedings were set down for a three day hearing to commence on 31 January 2011. On 31 January 2011, an adjournment was granted.
On 10 May 2011, the plaintiff filed a notice of motion seeking:
"1. An order, pursuant to s. 73 of the Civil Procedure Act 2005 (NSW), declaring that the entire proceedings (including the cross claim) have been compromised and settled by the parties on terms that the defendant will:
(a) pay to the plaintiff the sum of $300,000 on or before 1 March 2012; and
(b) pay to the plaintiff the further sum of 29,000 Euros on or before 1 March 2012.
2 An order, pursuant to s. 73(b) of the Civil Procedure Act 2005 (NSW), that the defendant:
(a) pay to the plaintiff the sum of $300,000 on or before 1 March 2012; and
(b) pay to the plaintiff the further sum of 29,000 Euros on or before 1 March 2012.
3. An order that the security for the defendant's costs in the sum of $57,000 given by the plaintiff pursuant to orders made by the Court] be released in full to his solicitor in these proceedings, Bruce Hocking, forthwith, together with any interest earned on that security."
The law
The parties referred to two cases in their submissions : Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 (30 November 1954) and Howe v Connell [1997] NSWSC 432 (per Young J).
Mr Oriolo's counsel submitted that an agreement had been struck on 21 January 2011 and all that remained to be done was to complete the formal documentation. That is, the situation fell within Class 1 of Masters v Cameron . Senior counsel for Ms Wolfram submitted that the parties had not reached an agreement and the situation was more akin to Class 3 of Masters v Cameron .
In Masters v Cameron the issue is whether the parties intended to be bound by the critical letter or whether they only intended to be bound once a more formal agreement was entered into. This case centres around whether this letter falls within first class identified in Masters v Cameron (1954) 91 CLR 353. Masters has been helpfully summarised in Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 at [55]-[59] where Young CJ in Eq recapitulates:
"55 As is well known, the High Court in Masters v Cameron (1954) 91 CLR 353 at 360, said that cases of the present type may belong to one of three classes. The three classes set out were:
1. Where the parties have reached final agreement on the terms of their contract and agree to be immediately bound but wish to restate those terms in a fuller or more precise way in a formal document;
2. Where the parties have reached final agreement on all the terms and intend not to depart in any way from them but the performance of some part of the contract is made conditional on the execution of a formal contract;
3. Where the parties intend there not to be a concluded contract unless and until a formal document is executed.
56 The vital question is always what the parties intended by the words they have used. In a case where the parties have expressly or impliedly indicated that there will be a further agreement, it is a question of construction whether the execution of a further contract is a condition of the bargain or else is merely an expression of the desire of the parties as to how their transaction will be completed: Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284, 289. Each case turns on its own facts.
57 In Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628, MH McLelland J said:
"There is in reality a fourth class additional to the three mentioned in Masters v Cameron ... namely, '... 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.' "
The words quoted derive from Sinclair, Scott & Co v Naughton (1929) 43 CLR 310 at 317.
58 McLelland J's decision was affirmed in this Court as GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631. The court there consisted of Kirby P, Glass and McHugh JJA. The lastmentioned gave the leading judgment with which the other two judges noted their agreement.
59 At page 634, McHugh JA said:
"The decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of surrounding circumstances ... . If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.
Even when a document recording the terms of the parties' agreement specifically refers to the execution of a formal contract, the parties may be immediately bound."
Was there a settlement? The parties had entered into a number of negotiations by way of telephone calls, emails and an exchange of consent judgments, consent orders and terms of settlement. An analysis of these various versions and of the words expressed during these negotiations is required to understand their possible effect and to understand whether it can be seen that the parties, by their conduct, intended to be immediately bound, subject to formal documentation (thus falling into the first category of Masters ), or whether there is no doubt that the parties' negotiations were not at the time intended to be a concluded bargain unless and until a formal contract was executed (thus falling into the third category of Masters ).
Counsel for Mr Oriolo submitted that the proceedings were settled when Mr Oriolo's solicitor sent an email on 21 January 2011 at 9.46 am to Ms Wolfram's solicitor. According to counsel for Mr Oriolo, a lack of agreement between the parties in relation to an outstanding default provision was not a matter affecting the substance of the settlement itself, which had remained largely unaltered since Mr Oriolo and Ms Wolfram had arrived at their original understanding in late November 2010. According to counsel for Mr Oriolo at most, that concern "went to the machinery of working out what is meant by the offer" and is properly to be treated "in the same plight as a request for information".
According to counsel for Mr Oriolo, at all times prior to Mr Hocking sending this email, Ms Wolfram's offer to settle in accordance with the terms of settlement remained open for acceptance and that offer had never been expressly withdrawn. Counsel for Mr Oriolo further submitted that at best, Mr Hocking told Ms Awad that Mr Oriolo would not "accept the default provisions as they are and requires judgment to be entered automatically if Irena defaults". Ms Awad claimed she then told Mr Hocking that she would need to get instructions from her client "regarding your new offer". Counsel submitted that Ms Awad did not claim to have told Mr Hocking that she proposed to treat this as a revocation of her client's offer.
Counsel for Mr Oriolo further submitted that even on Ms Awad's evidence, Mr Hocking did not make a counter offer during that conversation. Alternatively, counsel submitted that even if a counter offer was made, it did not have the effect of revoking Ms Wolfram's offer.
Counsel for Mr Oriolo referred to Howe v Connell , where Young J (as he then was) considered a similar situation. In that case, solicitors for parties to proceedings in the Court resolved that those proceedings would settle by way of discontinuance and deed of release. One of the solicitors then drafted a notice of discontinuance and deed of release that "went too far". The notice of discontinuance dealt with costs and the deed of release contained a release that went beyond the cause of action litigated. Young J held that the proffering of the deed of release was not a counter offer and that even if it was, it did not revoke the original offer. Young J stated:
"...it seems to me that, generally speaking, settlements in litigation are intended to be final as soon as the barristers or solicitors involved shake hands - whether they do that physically or notionally over the telephone. The reasonable litigator on the Bondi bus would think that as soon as the legal representatives have reached an agreement as to the principle on which the matter is to be settled then the cause of action has been converted into the new contractual right. Accordingly the situation is one where the first category of Master v Cameron applies, that is that there has been final mutual assent but the people who are to draw up the formal agreement have power to set it down but not alter its terms. However, the present case is more like the fourth category of Masters v Cameron, which was enunciated by McClelland CJ in Eq in Baulkham Mill. Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628, that there is an immediate binding of the parties by the terms upon which they have agreed, whilst they expect that a further contract will be made in substitution for that first contract."
His Honour continued:
"Even if there had been no completed contract, it is not always the case that a counter offer revokes an offer. Often that will be the case because the counter offer is inconsistent with the offer and impliedly revokes it. Examples are Hyde v Wrench (1840) 3 Beav 334; 48 ER 132; and Baker v Taylor (1906) 6 SR (NSW) 500. However the true rule is set out by the Privy Council in Khaled v Athanas Bros (Aden) Ltd (1967) 1 BPR 9310, a decision of the Privy Council on appeal from the Court of Appeal for Eastern Africa. The rule is that if a counter offer is made, the person to whom it is made may treat the counter offer as revoking the offer. On the other hand, the offeree may just ignore it and accept the offer. Furthermore, though this does not flow from the Privy Council's decision, it seems to me that if the "counter offer" merely goes to the machinery of working out what is meant by the offer, it is in the same plight as a request for information; see Stevenson, Jaques & Co v McLean (1880) 5 QBD 346. Thus, even though the request may take the form of the tender of a draft document, the request is either not a "counter offer" or alternatively is not a counter offer which revokes the offer. Accordingly this point does not avail the defendant either."
The parties' correspondence
Whether or not an agreement was reached between the parties is to be determined objectively. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern whether there was an agreement. The meaning of the terms of an agreement is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the agreement - see Codelfa Construction Pty Limited v State Rail (1982) 149 CLR 337 at 350; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 at [40]; (2004) 218 CLR 451 at 462; Toll (FGCT) Pty Limited v Alphapharm Pty Limited & Ors (2004) 219 CLR 165 at 179. Hence, the approach I have adopted is to refer to the telephone calls and correspondence known to both parties. I have not included evidence as to the solicitors' subjective beliefs. I shall refer to the correspondence and telephone calls in chronological order.
The starting point is the correspondence between the parties dated 26 November 2010 and 29 November 2010. On 26 November 2010 at about 3.28 am (Italian time) or 1.28 pm Australian time, Ms Wolfram emailed Mr Oriolo. The email is in Italian. The translation reads as follows:
"Dear Micio
As I have understood the need to be very clear, I am making a last attempt in the clearest form I can manage and I have to ask you to reply by the 30 th November.
I can sign and guarantee my proposals in two ways:
1. $150,000 payable on or before 1 st March 2011.
2. $300,000 payable on or before 1 st March 2012.
For both cases I can do without Trevor's consent, therefore you will be guaranteed of a result. In both cases, you will have half the amount from the house in Romania by the 1 st March 2012.
That is the best I can do considering my situation which is legal from a financial structures point of view and my lack of independence.
I wish I could have done more for your but I have no other possibility.
Let me know.
A kiss
Topo"
On the same day at about 3.30 am Italian time, or 1.30 pm Australian time Ms Wolfram emailed Mr Oriolo. The translation of that email reads:
"Subject: PROPOSAL
As regards money deposited in COTS, it will be released immediately in case one of the two agreements is accepted."
On 29 November 2010, Mr Oriolo sent Ms Wolfram an email. Its translation reads:
"Subject: Re: FINAL PROPOSAL
WITHOUT PREJUDICE
Dear Topo, following your email of 26 th November 2010, having decided to avoid a continuation of this over 10-year agony and on condition that our lawyers find suitable guarantees which may avoid a reopening of the case:
I accept your proposal of $300,000 plus my half of the apartment in Romania (Euro 35,000 as indicated by you) payable by the 1 st March 2012.
I am asking you to please advise our lawyers of our compromise.
Obviously (as per your other email of 26 th November), contextually to the signing of the agreement, your lawyers will release the amount deposited in Court as guarantee.
Hugging you, Claudio
P.S. I hope I can count on your advice and help in order to minimize my lawyer's bill."
[Mr Oriolo's emphasis added]
The parties had agreed between themselves that Ms Wolfram was to pay $300,000 plus half the price of the apartment in Romania valued at Euro 35,000 by 1 March 2012. While the parties understood that they had reached an agreement, they had intended that there was not a concluded contract unless a formal document was executed. That document was to be drawn up by their respective solicitors. ( Masters v Cameron Class 3).
On 25 December 2010, Ms Wolfram signed an acknowledgement and I have included the contents of this document under the next heading.
The solicitors' correspondence
Both parties instructed solicitors to act for them. Mr Bruce Hocking acted as solicitor for Mr Oriolo. Mr Florin Burhala of Florin Burhala Solicitors of Melbourne acted as solicitor for Ms Wolfram, although Ms Faten Awad from that firm conducted most of the negotiations on behalf of Ms Wolfram.
From early December 2010, Mr Oriolo's solicitor and Ms Wolfram's solicitors were in communication with each other with respect to the "settlement". It is common ground that neither solicitor regarded the understanding arrived at by their respective clients as constituting a binding settlement agreement.
On 6 December 2010, Mr Hocking sent an email to Mr Burhala. The email stated that Mr Hocking believed that the parties had reached a compromise. He set out four terms in relation to the settlement. They were:
"1. Payment of A$300,000 payable on or before 1 March 2012 (I am nor aware of the security to be given but at least a second mortgage over the property at XXXX XXXX
2. Payment of E35,000 payable on or before 1 March 2012
3. Immediate Release to us of funds provided by Mr Oriolo & held as security for costs
4. Parties enter into Deed of Release"
On 8 December 2010, Mr Hocking followed up by sending an email to Ms Awad. The email reads, "More importantly has the matter settled subject to documentation"
On 9 December 2010, Ms Awad, emailed Mr Hocking:
"...
As such, our understanding of the agreement between the parties is as follows:
1. The Defendant pay the Plaintiff A$300,000 on or before 1 March 2012;
2. The Defendant pay the Plaintiff half of the net proceeds of the sale of the unit in Bucharest, E29,000, on or before 1 March 2012;
3. The Defendant consent to the release of funds provided by the Plaintiff held as security for costs;'
4. Parties enter into Deed of Release.
Kindly advise if your client is agreeable to the above."
..."
It is not necessary to reproduce the correspondence between the solicitors. Between 8 and 20 December 2010, negotiations as to the terms of the settlement were still continuing.
On 21 December 2010, Mr Hocking emailed Mr Burhala attaching "a draft of consent orders for your comment" and stated that the "Romanian amount" had not been included as it was a separate agreement but that it could be added in if desired. This consent judgment/order relevantly provides:
- Judgment for the Plaintiff in the sum of $300,000
- Each party pay their own costs
- Payment by 1 March 2012 and a charge over Defendant's interest in xx xxxx xxxx Double Bay ("the Double Bay property") for $300,000 plus any interest
- 10 per cent interest on unpaid judgment sum
On 23 December 2010, Mr Hocking emailed Mr Burhala with a consent judgment attached. Mr Hocking advised was authorised to sign on behalf of Mr Oriolo. The consent judgment relevantly reads:
- Judgment for $300,000 and Euros 29,000
- The Defendant charges her interest in the Double Bay property
- 10% interest
- Release of security for costs
On 24 December 2010, Ms Awad spoke to Mr Hocking by telephone. She said that her client Ms Wolfram was not agreeable to that consent judgment. The sticking point was that Ms Wolfram wanted the consent order to state that the matter had been struck out with a right to reinstatement.
On 25 December 2010, Ms Wolfram signed an acknowledgement. This document was attached to Mr Oriolo's affidavit. It reads:
"I FLORENTINA IRENA WOLFRAM acknowledge and confirm that:
1. I wish for the matter to settle in accordance with my instructions.
2. I completely understand the terms of settlement that Mr Oriolo and I have agreed to.
3. I have read and understood the letter and advice provided by Florin Burhala Lawyers dated 24 December 2010, and agree to the settlement despite their advice against it.
4. I am in the right frame of mind to adequately assess my situation and make a decision to settle on this basis."
On 26 December 2010, Mr Oriolo and Ms Wolfram spoke directly to each other by telephone. Mr Oriolo said that the agreement was "okay".
On 29 December 2010, Mr Hocking received an email from Ms Awad. In anticipation of settling the matter, Ms Awad attached draft terms of settlement and draft consent orders. These consent orders relevantly reads:
- Hearing vacated
- Proceedings struck out "with a right of reinstatement"
- Release of security for costs
These Terms of Settlement relevantly provide:
- Settlement Sum of $300,000 and Euros 29,000
- If defendant defaults plaintiff can reinstate proceedings with respect to the amount of settlement sum that is outstanding at date of default
- 8 per cent interest
- Makes no reference to any form of charge, mortgage or security over any property
On 10 January 2011, Mr Hocking received an email from Ms Awad. Ms Awad advised, "... we are not in a position to obtain instructions from our client as she is currently overseas and will return on 19 January 2011." The letter concluded, "Please find enclosed, for your attention the Consent Orders and Terms of Settlement which have been amended. We kindly request that if your client is agreeable to same, that he sign and return same to our office by 19 January 2011, for our client's approval and execution. ..." The attached consent orders were:
"BY CONSENT the parties agree to the following orders:
1. That the Hearing listed on 31 January 2001 be vacated.
2. That the proceedings be struck out with a right of reinstatement.
3. The monies paid by the Plaintiff as security for costs, totalling $57,000, be released to the Plaintiff's solicitors, Martin Place Lawyers.
4. That no orders be made as to costs."
As at 11 January 2011, both solicitors agreed that there were still three "sticking points" in reaching a settlement. They were:
1. Interest rate of 10%
2. Charging of Ms Wolfram's interest in the Double Bay property.
3. That the Consent Orders include judgment be entered on terms to be handed up and to be confidential unless the Defendant does not pay on the due date.
On 19 January 2011, Ms Awad emailed Mr Hocking stating, "Our client has instructed us to proceed with the matter."
On 19 January 2011, Mr Hocking replied with a short email to Ms Awad. It says, "Does this mean you have withdrawn your offer to settle"
On 20 January 2011, Ms Awad emailed Mr Hocking. It says:
"Our client has nit [sic] instructed us to withdraw her offer as set out in the Terms of Settlement.
Given your previous emails we understand that your client has instructed you to proceed with the hearing on the 31 st January and as such we are preparing the matter for this.
Should you wish to discuss the offer to settle or the hearing please contact me."
So as at 20 January 2011, Mr Hocking asked Ms Awad whether Ms Wolfram's offer to settle had been withdrawn and Ms Awad had replied that Ms Wolfram had instructed her to withdraw the offer. Hence, as at 20 January 2011 the offer to settle had been withdrawn so no agreement had been reached.
The telephone calls and emails on 21 January 2011
On 21 January 2011, there were two telephone calls and emails between Ms Awad and Mr Hocking. The content of these telephone conversations is in dispute. It is Mr Oriolo's case that the agreement was reached on this day.
The first telephone call on 21 January 2011
On 21 January 2011, Ms Awad was in Darwin. At 8.00 am she was due to attend a conference with her client for the forthcoming migration review that was to commence at 9.00 am. Before the conference, she telephoned Mr Hocking. Mr Hocking had deposed in his affidavit that he made this telephone call but, during cross examination, when he was referred to Ms Awad's telephone records he acknowledged that it was Ms Awad who had made the call. Her telephone records show that this phone call took place at 7.43 am Darwin time (9.13 am Sydney time) and was of seven minutes duration, of which she says that only about 30 seconds or so was taken up with Mr Hocking's receptionist putting the call through to him. Mr Hocking disputed that the call took seven minutes. His explanation for the length of the call being much shorter is that he had only just arrived at work that morning as he does not usually start until 9.30 am and his receptionist had to locate him in the office. Mr Hocking says Ms Awad's conversation with him was very short and estimates that it was a few minutes.
Ms Awad's version of the telephone call is as follows:
"Mr Hocking: "I have received instructions from my client. He agrees to no charge over the property. He also agrees to the default interest rate of 8%. However, he won't accept the default provisions as they are and requires that default judgment be entered automatically if Irena defaults. He does not want the hassle of having to take the matter back into court and go through the litigation process again."
Ms Awad: "I have specifically drafted the Terms this way in accordance with my client's instructions. Irena believes she has a strong case and is only making an offer in the hope to bring finality to the matter and avoid the cost and hassle of litigation. I will need to get instructions and get back to you about whether she will agree to this."
Mr Hocking: "I will await your advice. I am glad this matter has finally settled, it would have been a nightmare to run. I will let my client know that he does not need to come from overseas now."
Ms Awad: "Bruce this matter has not settled yet. I would not be advising your client not to attend the hearing until Irena gives me instructions regarding your new offer."
Mr Hocking: "I know. It would be terrible to run this matter there are many transactions that go over a few years. It's complicated."
Ms Awad: "As you know, we do not have the file, so I will take your word for it. I will get back to you with my client's instructions about your offer." "
Mr Hocking's version of the telephone conversation is as follows:
"My client wants to accept your client's offer. I will send you the terms of settlement, the consent orders which I have signed on his behalf with some minor changes in ink just to clarify a small point." He then says that at some stage he said, "I'm glad it's settled up as after such a long time and with so many transactions the case would be a nightmare to run."
Mr Hocking's evidence is that at no time during the conversation did he say to Ms Awad that Mr Oriolo would not "accept the default provision as they are and that he requires that default judgment be entered automatically if Irena defaults. He does not want the hassle of having to take the matter back into court and go through the litigation process again" or words to that effect. He denies saying anything about the default provisions during this conversation. Mr Hocking also deposed that at no time did he say that Mr Oriolo had rejected Ms Wolfram's offer of settlement as recorded in the terms of settlement document nor did he say that any part Ms Wolfram's offer was not acceptable to Mr Oriolo.
Mr Hocking agreed that Ms Awad had said to him during this conversation that, "the matter was not yet settled." (T 20.1). He also gave evidence that the major part of the discussion in this telephone conversation on this day was whether Ms Wolfram had capacity to enter the contract. (T 20.21-22). Ms Awad's evidence is that the subject of Ms Wolfram's capacity arose in a later conversation.
About 30 minutes after 9.43 am the telephone conversation on 21 January 2011, Mr Hocking forwarded an email to Ms Awad. It stated:
"Further to our telephone conversation I now attach Consent Orders and Terms of Settlement which we have agreed to. I have emailed a copy to the Plaintiff and advised him that it will not be necessary to come to Australia for the case.
WE need to sign asap so I can inform the Court and vacate the hearing.
I have ask [sic] the Plaintiff to sign and fax to me copies and then in due course he can send me a hard copy of the Terms of Settlement."
These consent orders are as follows:
"BY CONSENT the parties agree to the following orders:
1. That the Hearing listed on 29 January 2011 be vacated.
2. That the proceedings be struck out with a right of reinstatement.
3. The monies paid by the Plaintiff as security for costs, totalling $57,000 and interest be released to the Plaintiff's solicitors, Martin Place Lawyers.
4. That no orders be made as to costs."
The second telephone call
On 21 January 2011, at around 10.55 am (Darwin time) (11.25 am Sydney time), Ms Awad made a further short telephone call to Mr Hocking. Her telephone records show that this call took 30 seconds. Ms Awad's version of that telephone conversation is as follows:
"Mr Hocking: "I know we have not reached an agreement."
Ms Awad: "That is certainly not what your email says. It says we have agreed when I specifically told you that I had to get my clients' instructions before you consider this matter has settled."
Mr Hocking: "I know that, it's not what I meant."
Ms Awad: "Again that is not what your email says. In any event, I have spoken to Florin who met with Irena and Trevor this morning. Irena is not going to accept your client's counter-offer and intends to make a new offer on completely new terms to the discussions we have been having. Given that Trevor is concerned about her ability to make payment and her state of mind, he is proposing to make a payment of $150,000.00 in full and final settlement payable within 40 days."
Mr Hocking: "Please put the new offer in writing and I will seek my client's instructions."
Ms Awad: "I will get Florin to do this to you shortly." "
Mr Hocking's evidence is that "at no point during that conversation did I say to Ms Awad 'I know we have not reached agreement' or words to that effect."
Mr Hocking recalled that this conversation included words to the following effect:
"Ms Awad: "I have spoken to Mr Burhala who has met with Mrs Wolfram this morning to sign the Terms of Settlement, but she would not be able to meet such and she wishes to make a new offer. We are also concerned about Ms Wolfram's mental health and her capacity to give instructions.
Mr Hocking: "That makes things very difficult for both of us". "
Mr Hocking gave evidence that he thinks that in this conversation Ms Awad put to him an offer of payment in the sum of $150,000 in 40 days. (T 21).
Ms Awad's file notes [Ex 1] are consistent with her version of the two telephone calls. Mr Hocking has no file notes of these conversations but says that he has a clear recollection of the contents of them.
On 21 January 2011 at 12.15 pm, Ms Awad emailed Mr Hocking and her principal solicitor Mr Burhala. It stated:
"I did at no time agree to anything.
I advised you that I would need to obtain instructions from my client to confirm her agreement. Once I have confirmation why he agrees to the changes as we discussed I will confirm same with you and we can then sign the Terms Of Settlement and Consent Orders.
Until then, I would urge you not to assume that this matter has resolved."
On 21 January 2011, at 12.48 pm (Melbourne time), Ms Awad was copied into an email to Mr Hocking from her principal, Florin Burhala, making a new offer on a without prejudice basis. On 21 January 2011 at 2.45 pm (Melbourne time), Mr Hocking responded to Mr Burhala's email, "Thank you for your email which I have forwarded to my client and will speak to you next week."
On 24 January 2011, Ms Awad received an email forwarded by Mr Burhala which he had received from Mr Hocking at 11.28 am that same day. It stated, "It appears that we should apply to the Court to vacate the hearing date until such time as your client has a medical report as to her condition and ability to defend the proceedings." The email also talked about "taking evidence in Italy & Melbourne etc."
Counsel for Mr Oriolo submitted that as to the varying accounts of the conversations of 21 January, the evidence of Mr Hocking should be preferred over that of Ms Awad. Counsel submitted that Mr Hocking is a very experienced solicitor and that the email he sent at 9.46 am confirms what he says transpired during the conversation. That is, Mr Hocking having accepted, on his client's behalf, an offer that did not propose a counter offer or any departure from the terms of settlement.
Senior counsel for Ms Wolfram submitted that there was no settlement for two basic reasons. Firstly, that if Ms Awad's version of events should be preferred, then there was in fact a counter offer made by Mr Hocking in the conversation on 21 January 2011 and that there was never a meeting of the minds. Secondly, if Mr Hocking's version of events was to be preferred, then there is still no settlement because the parties intended that there would only be a binding agreement on the signing of the documents.
As was stated in Howe v Connell , each case depends on its facts. As previously stated, the parties intended that there was not to be a concluded agreement until the formal document drawn up by their solicitors had been executed. As at 11 January 2011, there were three sticking points that had to be resolved before settlement could occur. They were, firstly, the interest rate of 10 per cent; secondly, the charging of Ms Wolfram's interest in the Double Bay property; and thirdly, what was to happen if Ms Wolfram defaulted in payment (the default provision).
On 20 January 2011, it was clear from the correspondence that Ms Wolfram's offer was withdrawn. On that day Mr Hocking had asked Ms Awad whether Ms Wolfram's offer to settle had been withdrawn and Ms Awad had replied that Ms Wolfram had instructed her to withdraw the offer. That being so, in order to reach an agreement there had to have been a counter offer by one of the parties and an acceptance by the other. This did not occur.
Where there is a conflict in the evidence of Mr Hocking and Ms Awad, I prefer the evidence of Ms Awad, as it is more accurate. She had file notes of the telephone conversations, which took place on 21 January 2011 and those notes accord with her evidence. Counsel for Mr Oriolo submitted it was not known when the file notes were made and little weight should be given to them. However, if it was to be asserted that they were not made contemporaneously this should have been put to Ms Awad in cross examination.
I accept that the first telephone call on 21 January 2011 took longer than a few minutes. In Mr Hocking's version of that call, he does not make any reference as to what Ms Awad said during that entire conversation. In Mr Hocking's version of events, there was a short conversation in which he says that his client wanted to accept Ms Wolfram's offer. However, in the first conversation on 21 January 2011, I accept that Mr Hocking told Ms Awad that Mr Oriolo had agreed to there being no charge over the property and default interest was to be charged at 8 percent. I also accept that Mr Hocking said that his client would not accept the default provision. His client wanted default judgment to be entered. That meant one "sticking point" or one impediment to settlement remained.
In his first affidavit Mr Hocking makes no mention of the second telephone conversation that occurred on 21 January 2011. In his latter affidavit he did recall that occurred but disputed the contents of that conversation.
The telephone calls and emails make it clear that at no time after 19 January 2011 did Ms Awad make or accept an offer on behalf of her client. Even if she had done so, the sticking point of what to do if her client defaulted in payment had not been resolved. This default provision was not considered by the parties to be merely part of the machinery left to the solicitor to work out but remained a true impediment to settlement. The solicitor for Ms Wolfram never signed the terms of settlement and consent orders nor did she ever say she would do so. In fact, Ms Wolfram's solicitor never stated that the matter had settled. Her evidence is to the contrary. Hence, It is my view that there was no meeting of the minds and no agreement to a settlement between the parties. In these circumstances, this matter should proceed to trial. The notice of motion filed 10 May 2011 is dismissed.
Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed.
The Court orders:
1. The notice of motion filed 10 May 2011 is dismissed.
2. The plaintiff is to pay the defendant's costs as agreed or assessed.
Decision last updated: 09 June 2011
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