Pierpont v Zanetti & Adpoint Developments Pty Ltd
[2010] QCAT 699
•3 November 2010
| CITATION: | Pierpoint v Zanetti & Ors [2010] QCAT 699 |
| PARTIES: | Adrian Pierpoint |
| v | |
| Paul Zanetti Michelle Zanetti Adpoint Developments Pty Ltd |
| APPLICATION NUMBER: | B141-04 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 9 and 15 September 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | Ann Fitzpatrick, Member |
| DELIVERED ON: | 3 November 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | The parties attend a Directions Hearing on a date to be listed before Senior Member Oliver. |
| CATCHWORDS: | Unsigned Settlement Agreement – jurisdiction of the QCAT – intention to be immediately bound by settlement – agency – ostensible authority Property Law Act 1974 (Qld), ss 11, 59 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Adrian Pierpoint represented by Ms Shannon Moody of counsel, instructed by Mills Oakley Lawyers |
| FIRST RESPONDENTS: | Paul John Zanetti and Michelle Jane Zanetti represented by Mr James O’Regan of counsel, instructed by Maunsell Pennington, Solicitors |
| SECOND RESPONDENT: | Adpoint Developments Pty Ltd, represented by Ms Shannon Moody of counsel, instructed by Mills Oakley Lawyers |
REASONS FOR DECISION
Background
On 7 April 2004 Mr Adrian Pierpoint, the Applicant filed a domestic building dispute application in the then Commercial and Consumer Tribunal, seeking an amount owing pursuant to a domestic building contract together with damages and interest.
On 28 April 2004 the first Respondents Paul John Zanetti and Michelle Jane Zanetti filed a counter claim.
Many interlocutory steps ensued.
The matter was listed for a hearing in the Queensland Civil and Administrative Tribunal. The hearing commenced on 24 March 2010.
On 26 March 2010, settlement discussions took place between the legal representatives for the Applicant and Second Respondent, the Applicant Mr Pierpoint and the legal representatives for the First Respondents and one of the First Respondents, Mr Zanetti. The other First Respondent, Mrs Zanetti was not present at the hearing.
A Settlement and Release Agreement and attached document titled “Consent to Judgment” were prepared.
The Settlement and Release Agreement was executed by the First Respondent, Mr Zanetti; the Applicant, Mr Pierpoint and the second Respondent Adpoint Developments Pty Ltd.
The “Consent to Judgment” was signed by G F Young. Appearing on the face of the document is the notation “Solicitors for First Respondent (instructions obtained by phone from Paul and Michelle Zanetti)”. The document was also signed by “A. Pierpoint for the Applicant and Second Respondent.”
The Settlement Agreement and Consent to Judgment were tendered in the proceeding by both parties and marked as exhibit 25.
Ms Moody, Counsel for the Applicant and Second Respondent sought an order that the application be adjourned to registry.
That order was made.
On 29 July 2010, the First Respondents filed an application for miscellaneous matters.
Earlier, the solicitors for the First Respondents had, on 13 July 2010, filed an affidavit of Michelle Jane Zanetti, sworn 1 July 2010 and an affidavit of Ronald Leonard Mardell, sworn 7 July 2010.
The application relied on these affidavits filed in the Tribunal.
The application seeks orders that:
(1) the Tribunal has jurisdiction to determine whether the proceeding has been compromised; and
(2) the proceeding is not compromised; and
(3) the Tribunal has continuing jurisdiction to hear and determine the proceeding; and
(4) the Applicant and Second Respondent in the proceeding not file or take out the Consent to Judgment, dated 26 March 2010, without further order of the Tribunal permitting them to do so.
The Application was heard in this Tribunal on 9 and 15 September 2010.
On 9 September 2010, the First Respondents were given leave to file and amend their application. That was done on 10 September 2010. The amended application inserted at Annexure A to the Application further grounds with respect to order 2, to the effect that the settlement agreement is ineffective and, further and in the alternative, unenforceable as a result of section 11 and section 59 of the Property Law Act 1974 (Qld).
The Hearing of the Application
The following were made exhibits in the proceeding:
Exhibit 1 Application filed 29 July 2010
Exhibit 2 Letter from Maunsell Pennington, Solicitors to Mills Oakley Lawyers, dated 12 July 2010
Exhibit 3 Domestic building dispute application, dated 7 April 2004, filed by the Applicant
Exhibit 4Amended defence and counter claim of the First Respondents
Exhibit 5Affidavit of Ronald Leonard Mardell, sworn 7 July 2010
Exhibit 6Affidavit of Michelle Zanetti sworn 1 July 2010
Exhibit 7Letter Winchester Young and Maddern to Mr & Mrs Paul Zanetti ,dated 31 March 2010
Exhibit 8Letter Winchester Young and Maddern to Mr Paul Zanetti, dated 16 April 2010
Exhibit 9Affidavit of Justin James Twigg, sworn 8 September 2010
Exhibit 10Amended application of Paul and Michelle Zanetti, filed 10 September 2010
Exhibit 11Affidavit of David Andrew Shaw, sworn 15 September 2010
Oral evidence was given by Mrs Zanetti and Mr Pierpoint. Oral evidence was also given by Mr Glendon Young, of Winchester Young and Maddern, former solicitors for the First Respondents.
Reasons for the Application
Annexure A to the Amended Application of the First Respondents sets out that one of the Respondents, Michelle Zanetti, did not sign the Settlement Agreement and at no time accepted the terms of the settlement agreement. Further, Michelle Zanetti never authorised her solicitor, Glen Young, to accept the terms of the Settlement Agreement. Mr Young, in purporting to accept the terms of the Settlement Agreement on behalf of Michelle Zanetti, acted beyond his express, implied and ostensible authority. If Michelle Zanetti is not bound to the settlement agreement then neither is her husband and Co-Respondent, Paul Zanetti as, on a proper construction of the agreement, it was not intended to take effect unless both parties agreed to its terms.
It is asserted by the First Respondents that because:
§ Michelle Zanetti did not sign the Settlement Agreement;
§ nobody signed a Settlement Agreement on Michelle Zanetti’s behalf;
§ Michelle Zanetti did not provide anyone with written authority to sign a Settlement Agreement on her behalf;
the settlement agreement is ineffective and, further and in the alternative, unenforceable as a result of section 11 and section 59 of the Property Law Act 1974 (Qld).
Evidence
Mrs Zanetti
Mrs Zanetti’s evidence was that she is married to Paul Zanetti, the other First Respondent. They are joint tenants of a property at lot 19, The Panorama, Tallai, Queensland. The home at that address is the subject of the dispute in the main proceeding.
Mrs Zanetti’s affidavit records that:
i.At no time did she give oral instructions or authority to Glen Young or any other solicitor or representative of Winchester Young and Maddern that:
(a)Paul Zanetti was authorised on her behalf to give them instructions and, specifically, to give them instructions to settle the proceedings;
(b)they had instructions to settle proceedings on her behalf.
ii.She had not given Mr Zanetti power of attorney to act on her behalf in any matter and at no time had she given Paul authority to make decisions and give instructions on her behalf in respect of the proceedings, including in regard to the settlement of the proceedings.
iii.Mrs Zanetti confirmed that she did not attend the trial, either in person or by telephone. She acknowledged that up to the time of the trial of the proceeding, which commenced on 24 March 2010, she had limited dealings with Mr Young of Winchester Young and Maddern. She did not attend his office to give instructions in the course of the matter.
iv.On the third day of the hearing, 26 March 2010, Mrs Zanetti recalled at about 8am her husband received a phone call from Glen Young. After the phone call her husband said words to her to the effect:-
“Glen said our situation is “desperate”. We would have to seriously consider settling with the builder or we will be in a worse position. We could lose the case and have a judgment against us. Glen said we don’t really have a choice. I have to go now I’m running late.”
Mrs Zanetti had no further discussion with her husband until he telephoned her at around midday that day and said words to the effect:-
“Glen advised that he had no option but to settle with the builder. Mainly because the building inspector was not licensed at the time therefore not a credible witness. Glen believes we have got no choice. We are negotiating at the moment but if they win judgment they could receive over $400,000 but we could agree to settle for $170,000 made up of $80,000 claim plus interest and costs. It will be ok.”
Mrs Zanetti recalled saying to her husband, “how could this happen?” From that point she became very distressed.
v.At approximately 1pm she received another telephone call and spoke to Glen Young. She recalls he said to her words to the effect:-
“Paul has asked me to explain to you what has happened.”
Mrs Zanetti said in her affidavit that she had limited recollection of what he said because she was too upset. She recalled that he may have said something along the lines that:-
“We have to settle… One thing they are insisting on is a registered mortgage…”.
She became alarmed at the word “mortgage” and said, “I am sorry Glen. I can’t talk to you. I’m too upset” and hung up the phone. The phone call lasted about 30 seconds.
vi.After this conversation, at about 2pm she telephoned her father and she recalled telling him, “no I won’t agree to or sign anything until I have got legal advice”.
vii.A couple of hours later, Mr Young rang her and asked to speak to her husband. She recalls the conversation as follows:-
“I have tried Paul’s mobile and could not get through. I need to talk to him about signing some documents.”
Her response was:-
“You will have to try him on his mobile.”
viii.Since that time she had no further communication with Glen Young, other than in correspondence.
ix.Mrs Zanetti had a conversation with her husband shortly afterwards where she discussed the matter with him and said that she was not signing anything she did not agree with.
x.Mrs Zanetti said that she did not see the Settlement Agreement on 26 March 2010 and in fact did not see it until sometime later.
xi.She was very emotional, distressed and depressed. She said that she was not in a position to take action or make any firm decisions about the situation. Her state of mind was reflected in emails from her husband to Glen Young of 29 March, 8 April and 12 April 2010. They are exhibits MJZD, E and F respectively to her affidavit.
xii.Relevantly, the email from Paul Zanetti to Glendon Young, dated 8 April 2010 records, “… Michelle is still in shock and distressed in regard to what’s happened to us. She’s afraid to sign an agreement she does not agree with, or understand. She is confused, under great stress and duress... she is seeking independent advice and I expect that I will be in a better position to know her position once she has received advice in regards to her position.”
xiii.The email from Paul Zanetti to Glendon Young, dated 12 April 2010 sets out:-
“… Michelle is in no state of mind to be committing to any agreement she did not understand or agree with, especially while under such stress and emotional anxiety.”
xiv.Mrs Zanetti says that she took steps to instruct a legal advisor. It took until the end of May 2010 to obtain tapes of the proceedings to provide to the legal advisor.
xv.After taking legal advice, Mrs Zanetti sent a letter to Glendon Young, dated 1 June 2010. The letter is exhibit MJZ-G to her affidavit. Relevantly, in that letter, she denies giving Mr Young instructions on 26 March 2010, or any day, in regard to an agreement or to have her husband give instructions on her behalf. She said that she did not ever instruct Mr Young that her husband could make decisions on her behalf.
xvi.Mrs Zanetti expressly denied in that letter that her telephone discussions with Mr Young on 26 March 2010 could be interpreted as referring to her husband for instructions.
Mr Young responded, in a letter dated 17 June 2010, exhibit MJZ-H. The letter sets out Mr Young’s position that Mr Zanetti had always been the person providing instructions on behalf of both himself and Mrs Zanetti from the time instructions were first received. Mr Zanetti attended the hearing and gave instructions at the Tribunal hearing. He said that until the letter of 1 June 2010 was received, Mrs Zanetti had never once raised that Mr Zanetti was unable to provide instructions on her behalf. Mr Young’s letter records that on the 2 occasions he spoke to Mrs Zanetti on 26 March 2010 he was told by her that he should talk to her husband.
Mrs Zanetti refers to a transcript of the Tribunal proceedings on 26 March 2010, exhibit MJZ-1 to her affidavit. In particular she notes the request by Ms Moody, of counsel, as follows:-
“… I would like Mr Young to place on the record that he has obtained instructions from Mrs Zanetti to the terms of the settlement agreement and the terms of the consent for judgment.”
xix.Mr Young is recorded as saying:-
“Yes, Member I’ve spoken to Mrs Zanetti and she’s given me those instructions.”
xx.Mrs Zanetti swears that she did not give instructions to Glen Young to accept either the terms of the settlement agreement or terms of the Consent to Judgment.
The following matters emerged out of cross examination of Mrs Zanetti.
Counsel for the Applicant and Second Respondent asked Mrs Zanetti if her husband gave instructions in the matter on her behalf. Mrs Zanetti responded that she had never given her husband authorisation but he dealt with matters. She agreed that she and her husband discussed things and that there had been a consistent course of conduct where Mr Zanetti provided all instructions to Mr Young for the two of them.
When counsel for the Applicant and Second Respondent asked Mrs Zanetti about telephone conversations between she and her husband on the morning of 26 March 2010, Mrs Zanetti agreed that she had been told by her husband that Glen Young recommended settlement. She said that there were 4 or 5 telephone calls from her husband and that she was happy for her husband to deal with it for both of them. She recalled that there had been a discussion of a mortgage in registrable form.
Mrs Zanetti agreed with counsel for the Applicant and Second Respondent that she was upset about agreeing to a mortgage but felt she had no alternative because of Mr Young’s advice.
Mrs Zanetti denied being aware that her husband had signed a written settlement agreement.
When questioned by counsel for the Applicant and Second Respondent about her telephone conversations with Mr Young, Mrs Zanetti agreed that she was too upset to speak to Mr Young and denied that she told Mr Young to speak to her husband.
Mrs Zanetti also said that she was too distressed to think about her husband acting on her behalf but she agreed that she knew he was dealing with things for the two of them.
In relation to the terms of the settlement Mrs Zanetti agreed with counsel for the Applicant and Second Respondent that she understood the settlement would bring an end to everything, that the Zanetti’s had 6 months to pay $170,000 from 26 March 2010. She agreed that the time for payment expired on 26 September 2010.
Mrs Zanetti said that she and her husband did not talk about how to find the sum of $170,000 or about suing their expert witness, Jeffrey Hill and Associates to get the money.
She agreed that she was depressed after this and said that she thought it was unfair. For 6 years she thought they would win their case.
Counsel for the Applicant and Second Respondent put it to Mrs Zanetti that she was feeling sick because she thought she was bound to the agreement. Mrs Zanetti said she was not sure if she was bound. She said that she knew it was intended to end the claim but she was unsure if the settlement agreement was the end of it.
Counsel for the Applicant and Second Respondent showed Mrs Zanetti a letter from Winchester Young & Maddern to Mr and Mrs Paul Zanetti dated 31 March 2010. Mrs Zanetti denied having seen the letter before. She denied having deliberately omitted it from her affidavit. That letter is exhibit 7 in the proceedings.
The letter sets out Mr Young’s views in relation to the case and in particular the reasons for settlement of the matter on “these unfavourable terms”.
Counsel for the Applicant and Second Respondent showed Mrs Zanetti a letter from Winchester Young and Maddern to Mr Paul Zanetti, dated 16 April 2010. That letter is exhibit 8 in the proceedings. It sets out Mr Young’s understanding that he was acting for and on behalf of Mr Zanetti and Mrs Zanetti and that he had instructions from Mrs Zanetti to the effect he was to act on Mr Zanetti’s instructions. He confirmed that Mr Zanetti’s instructions were to settle the action on the terms set forth in the Settlement and Release Agreement. He sets out his opinion that Mr and Mrs Zanetti are bound by the terms of the Agreement.
Mrs Zanetti denied deliberately keeping this letter out of her affidavit and denied having seen the letter. Mrs Zanetti expressly denied giving instructions to Mr Young or to her husband as asserted in the letter.
Counsel for the Applicant questioned Mrs Zanetti in relation to a phone call on 26 March 2010 from Mr Young to her which arose because Mrs Zanetti had signed the Settlement Agreement but forgotten to sign the Consent to Judgment.
Mrs Zanetti confirmed that she recalled Mr Young saying he needed to speak to Paul about signing documents and that she suggested he ring Paul’s mobile.
Mrs Zanetti said that she only saw the Consent to Judgment signed by Mr Young sometime afterwards. When it was put to her, Mrs Zanetti denied that the reason she did not dispute Mr Young’s ability to sign the Consent to Judgment was because he had authority from her husband as her agent.
Counsel for the Applicant and Second Respondent raised with Mrs Zanetti the passage in the transcript of proceedings on 26 March 2010 where Mr Young told the Tribunal that he had instructions from Mrs Zanetti in relation to the settlement.
Counsel for the Applicant and Second Respondent put to Mrs Zanetti that on her version there were no direct instructions but that she had armed her husband with instructions to act on her behalf and knew what was agreed on the day. Mrs Zanetti agreed with this proposition.
Finally, counsel for the Applicant referred Mrs Zanetti to the Settlement and Release Agreement and obtained her agreement that Mrs Zanetti knew that the settlement sum was $170,000 to be paid in 6 months, that there was to be a caveat over the land and that there was to be a mortgage over the property.
Mrs Zanetti also agreed that she knew the Applicant wanted a warranty that there was equity in the house sufficient to cover the $170,000.
Mrs Zanetti agreed that she assumed the caveat and mortgage would be dealt with quickly.
Glendon Young
Mr Young was subpoenaed by the Applicant to attend to give evidence and to produce certain documents from his file.
Mr Young gave evidence that during the course of the matter he only ever received instructions from Mr Zanetti and he inferred from that, that Mr Zanetti was giving instructions on behalf of his wife. Mr Young said that Mr Zanetti would often speak of he and his wife wanting certain outcomes. Mr Young said there was no suggestion Mr Zanetti was not passing information on. He said that he could not recall having more than half a dozen conversations with Mrs Zanetti, mainly of a social nature, when he visited their home.
Mr Young said that Mrs Zanetti did not participate in meetings with him in his office over the 5 years that he acted for them.
He said that he believed based on those things that Mr Zanetti was authorised by Mrs Zanetti to give instructions about the proceedings.
Mr Young gave evidence about the course of the settlement negotiations, including that he understood Mr Zanetti was giving instructions in the action. He saw Mr Zanetti speak to Mrs Zanetti by phone on two occasions. On one occasion Mr Zanetti asked Mr Young to talk to Mrs Zanetti.
In that conversation Mr Young said to words to the effect:
“Do you want to talk to me about the matter?”
Mr Young gave evidence that Mrs Zanetti was distressed and said, “talk to Paul.”
Mr Young said that Mr Zanetti phoned Mrs Zanetti after the Applicant had requested a charge over the home. Mr Young recalls Mr Zanetti saying that it would distress Mrs Zanetti and destroy their marriage. He told Mr Young that Mrs Zanetti would be upset if he settled on those terms. Mr Young said that there had been a change later, whereby he had instructions from Mr Zanetti to accept an offer with a charge over the property being part of the terms.
Mr Young confirmed again that he understood Mr Zanetti to be conveying instructions on behalf of both himself and Mrs Zanetti.
He gave evidence that he had to call Mr Zanetti to say documents had not been signed. It appears that Mr Zanetti had left the hearing by that time to return home. Mr Young rang Mrs Zanetti and asked if she wanted to talk to him. Mrs Zanetti said, “talk to Paul”.
Mr Young then telephoned Mr Zanetti. He said that Mr Zanetti authorised him to sign the consent order on behalf of himself and Mrs Zanetti, although he could not recall the words used by Mr Zanetti.
Mr Young said that thinking back he was not sure why he noted on the Consent to Judgment document that he had instructions by telephone to sign.
After he hung up from Mr Zanetti he endorsed the consent order and the matter was called on. He said the Consent to Judgment was signed within minutes of the telephone call. He said that the Consent to Judgment was a contemporaneous record of what he had been told.
Mr Young said in relation to the terms of settlement that the whole purpose of the 6 month payment provision in the Settlement Agreement was so that the First Respondents could commence action against their expert witness from Jeffery Hill and Associates.
On the issue of assuring counsel for the Applicant and Second Respondent that he had Mrs Zanetti’s instructions in relation to the settlement, Mr Young said that he told Ms Moody of counsel that he had those instructions, but that he would call her and ask her. Mr Young said that he had to call Mrs Zanetti in relation to Mr Zanetti returning to sign the Consent to Judgment and that he proposed to ask her in that conversation. His evidence was that when he asked her if she wanted to discuss the settlement she said “Talk to Paul”.
Counsel for the Applicant and Second Respondent asked Mr Young, if in his opinion the Settlement Agreement was not binding until later, whether he would have consented to the terms of settlement being made an exhibit in the proceedings. Mr Young said that it was not his view that Mrs Zanetti had to sign the agreement as she had agreed to it. He said that the signing was required by Ms Moody and he agreed to pursue that, not for the purpose of making the agreement binding.
Finally Mr Young said that the first time he was aware Mrs Zanetti was disputing that he had her instructions to settle the matter and that there was no concluded agreement was when he received a letter from her dated 1 June. He put his position in a response dated 17 June to the effect that Mr Zanetti had instructions to settle for both of them.
Under cross examination, Mr Young reiterated that he was instructed by Mrs Zanetti that Mr Zanetti was authorized to give instructions in relation to the conduct of the litigation. He said that she confirmed this to him twice in the one day.
On Counsel for the First Respondents taking him over the two telephone conversations with Mrs Zanetti on 26 March 2010, Mr Young said that during the first telephone call Mrs Zanetti was in tears and had difficulty speaking. He conceded that she may have said words to the effect “I’m too upset to talk to you”. During the second telephone call he said that when he asked “Can we discuss the Terms of Settlement”, she was still sobbing and upset and said “Talk to Paul”.
In answer to a question from me, Mr Young said that Ms Moody had prepared the Settlement Agreement and had made provision for Mrs Zanetti’s signature and that she was concerned to ensure Mrs Zanetti signed in her own right. Mr Young said that Ms Moody wanted confirmation that she would sign. In answer to a further question from me he confirmed that Mrs Zanetti never said words to the effect “Go ahead and settle on those terms”. He said that he could not discuss the terms of settlement with her as she would always refer him to her husband. This did not surprise him as that had always been the case.
Mr Young also gave evidence of a conversation he had with Ms Moody after the Tribunal hearing was adjourned, when he was asked by her to ensure Mrs Zanetti signed the Agreement because Ms Moody was concerned that she would not sign and Ms Moody did not want her applying to set aside the settlement.
Mr Pierpoint
Mr Pierpoint gave evidence that he relied upon the representation of Mr Young that both of his clients had agreed to the Settlement Agreement and that in reliance upon that he had adjourned the mater and agreed to a settlement over a 6 month period.
Exhibit MJZ-1 MJ Zanetti affidavit – transcript of audio
No objection was taken by the Applicant to the accuracy of the transcript exhibited to Mrs Zanetti’s affidavit, although it is noted that it is not an official transcript.
Apart from the excerpts referred to by the witnesses, I note the following:
Track 4
Moody: “...the way we would like to proceed is to ah...give this document to the Tribunal, have it made an exhibit in the proceeding. Um...we propose ...it requires that certain things must be done including the payment of monies. If those monies are not paid in the particular fashion there is a signed consent to judgement which may only be entered on the terms contained herein. Because of that we can’t ask you to discontinue the proceedings. They will, we suggest, need to be adjourned to the registry. Ahh...but if that is suitable to the Tribunal, um, we are confident that the ...the matters provided for in the deed will then, providing there is a suitable, ah...compliance, mean that the parties will in...in...in due course be discontinued after the payment of monies and other things.”Ms Moody also raised with the Member her client’s intention to pursue an issue of reserved costs against the Queensland Building Services Authority, which had intervened in the proceedings at one point. It was noted that as the matter was adjourned to the registry that issue could be dealt with in due course.
Settlement and Release Agreement
The Settlement and Release Agreement (Settlement Agreement) refers throughout to obligations on the part of both Paul and Michelle Zanetti, called the Zanettis in the body of the Agreement. The Settlement Terms impose positive obligations on them both to pay the settlement sum of $170,000.00 and sign a Consent to Judgment; to sign and return a caveat, to sign and return mortgage documents and to pay interest on any unpaid settlement sum.
The Settlement Terms set out expressly that the Zanetti’s agree:
· they are jointly and severally liable to pay the Settlement Sum;
· to confer upon Mr Pierpoint and/or Adpoint an interest over the Property sufficient to support the caveat;
· to do all things reasonable and necessary to cause the caveat to be lodged over the Property;
· to sign a mortgage in registrable form in the amount of $170,000.00;
· that the property is not subject to any defects for which Mr Pierpoint and/or Adpoint is responsible and to release and indemnify Mr Pierpoint and Adpoint with respect to claims;
· to provide to Mr Pierpoint on request information about the terms and amount of their Mortgage, and also to provide statements evidencing same within 2 days of any request;
· that they have both received legal advice about the agreement.
The Settlement Terms set out express consents on the part of the Zanetti’s that:
· they consent to a non lapsing caveat being lodged over the Property in the name of Mr Pierpoint and/or Adpoint to secure the Settlement Sum;
· they give their consent to the Caveat pursuant to s 126(1)(b) of the Land Title Act 1994 (Qld).
The Settlement Terms record that prior to the parties entering into the Settlement Agreement, the Zanettis provided warranties to Mr Pierpoint and Adpoint that:
a) the mortgage currently lodged over the Property is for a sum of approximately $500,000;
b) the caveat currently lodged over the Property by Craig Mitchell is for approximately $12,000.00;
c) there is no other registered or unregistered interest in the Property; and
d) in consideration of (a), (b) and (c) there is sufficient equity in the property to cover the Settlement Sum.
The Settlement Terms set out an express undertaking by the Zanettis that they will not without the prior written consent of Mr Pierpoint and Adpoint draw down upon or increase their existing mortgage, and will not further encumber the Property. This undertaking is said to continue until the terms of the Settlement Agreement have been fully complied with by the Zanettis.
The Settlement Terms set out a release and discharge of Mr Pierpoint and Adpoint of any claim by the Zanettis including their Counterclaim in the proceedings.
There are some obligations cast onto Mr Pierpoint in the Settlement Terms including within seven (7) days of the date of the Settlement Agreement, giving to the Zanettis all certificates for the Property that are in his possession, power or control.
Finally, the parties have agreed at clause 1.27 that “Upon payment of all amounts due under this Settlement Agreement, Mr Pierpoint agrees to the removal of the Caveat and (if applicable) Mortgage, and the parties agree to discontinue the Proceedings and Counterclaim.”
Correspondence between the solicitors
On 12 July, 2010 the new lawyers for the First Respondents filed in this Tribunal a copy of their letter to the solicitors for the Applicant and Second Respondent advising that the terms of the Settlement Agreement were at no time accepted by Michelle Zanetti. They advise that it is their clients’ position that the Agreement was not intended to be binding on one party if it was not accepted by the other. It is asserted that there has been no settlement of the proceedings, which merely stand adjourned. They anticipated receiving instructions to seek leave to file and rely on some additional material, in particular, expert evidence.
The affidavit of Justin James Twigg, sworn 8 September 2010, records that he is a solicitor in the employ of the Mills Oakley Lawyers, the solicitors for the Applicant and Second Respondent. He swears that he has reviewed the file and on or around 15 July 2010, in accordance with terms of the Settlement Agreement, Mills Oakley Lawyers provided Winchester Young and Maddern with a Form 2 Mortgage in registrable form for execution by the First Respondents. On or around 16 July 2010, a copy of the Form 2 Mortgage in registrable form was also provided to Maunsell Pennington, the solicitors now acting on behalf of the First Respondents. At the time of swearing his affidavit he had no advice that the Form 2 Mortgage had been executed by the First Respondents.
The affidavit of David Andrew Shaw, sworn 15 September 2010, records that he is a solicitor in the employ of Mills Oakley Lawyers. He exhibits a letter from his employer firm to the lawyers for the First Respondents, dated 13 September 2010 setting out that their clients have performed their obligations under the Settlement Agreement insofar as Mr Pierpoint and Adpoint agreed to an adjournment of the hearing on an understanding that the matter had been settled and that the matter was adjourned to the registry to allow the terms of settlement to be carried out. The letter says that their clients have acted to their detriment insofar as they have not sought to bring the matter on so that the hearing might be concluded, and have not sought any order for costs against the First Respondents. The letter further notes that the letter from Maunsell Pennington of 12 July 2010 was the first assertion that the Settlement Agreement was not binding on the First Respondents.
I note that neither solicitor from Mills Oakley refers to Mr Pierpoint having complied with his obligations under clause 1.16 of the Settlement Terms that “Within seven (7) days of the date of this Settlement Agreement, Mr Pierpoint will give to the Zanettis and/or Winchester Young Maddern all certificates for the Property that are in his possession, power or control”.
Holding as Joint Tenants
A title search of the property in question, exhibited to the affidavit of Mrs Zanetti, as Exhibit MJZ-A, reveals that Mr and Mrs Zanetti hold the estate and land as joint tenants.
The Tribunal’s function
The Tribunal’s function in hearing the current Application is to determine whether it has the jurisdiction to continue to hear the Application and Defence and Counterclaim currently adjourned to the Registry, having been part heard. (See Skaines v Kovac Enterprises Pty Ltd (2006) QSC 120; and Lightfoot and Anor v Temple (2010) QCAT 124).
His Honour Justice Fryberg said at page 9 of the Skaines decision:
“...the obligation falls upon the Tribunal to determine whether it has jurisdiction.
In the present case, it can only determine its jurisdiction by resolving the question whether the dispute which undoubtedly existed at the time the proceedings were commenced in the Tribunal has ceased to exist. It can only do that by deciding whether the compromise alleged by Kovac was indeed a compromise, whether the agreement for compromise has been terminated, or whether for some other reason the alleged compromise has become ineffective.”
The original application in this matter was made in the former Commercial and Consumer Tribunal (CCT). Its jurisdiction was, relevantly, to decide a “building dispute”, pursuant to its enabling legislation, section 77(1) of the Domestic Building Contracts Act 2000 (Qld) and pursuant to section 8 of the CCT Act. This Tribunal has taken over the functions of the CCT. In accordance with s 271 of the Queensland Civil and Administrative Act 2009, for pending matters such as this, the Tribunal has only the functions that the CCT had and can only make a decision that the CCT could have made.
The First Respondents contend that the building dispute which existed at the time of the original application and their counterclaim has not ceased to exist by virtue of the Settlement and Release Agreement (Settlement Agreement).
The Applicant and Second Respondent contend that the Settlement Agreement is and remains at all times a valid and binding agreement, which provides for the complete disposition of the Applicant’s claim and the First Respondents’ counterclaim, by entering judgment upon non performance or discontinuance upon performance.
The First Respondents’ Application seeks certain orders. Mr O’Regan, counsel for the First Respondents clarified that the First Respondents are seeking findings, not orders in the nature of a Declaration.
Has the proceeding been compromised?
The First Respondents’ submissions
The First Respondents submit that there is no binding or effective Settlement Agreement as against Mrs Zanetti because:
(a) The parties did not intend any Settlement Agreement to be binding until the Settlement Agreement was executed by all parties and it has not been executed by or on behalf of Mrs Zanetti;
(b) Further and alternatively, even if the parties did intend for there to be a binding settlement agreement before execution of the Agreement by all parties (which is denied), there is no binding or effective agreement against Mrs Zanetti because:
(i)the Settlement Agreement is either ineffective or unenforceable against Mrs Zanetti pursuant to s 11 or s 59 of the Property Law Act 1974 (Qld);
(ii)Mr Young lacked actual authority to enter the Settlement Agreement on her behalf;
(iii)Mr Young lacked ostensible authority to settle the Proceedings on the terms of the Settlement Agreement;
(iv)to the extent Mr Young had any ostensible authority to enter the Settlement Agreement upon Mrs Zanetti’s behalf;
(A) the Applicant has chosen not to rely upon Mr Young’s ostensible authority; and
(B) alternatively, if the Applicant did rely upon Mr Young’s ostensible authority, the Tribunal should as a matter of discretion refuse to enforce the Settlement Agreement against Mrs Zanetti.
(c) As a result of s 11 Property Law Act 1974 (Qld), Mr Young had no actual authority to enter into a settlement on the terms of the Settlement Agreement.
(d) Mrs Zanetti at no time authorised Mr Zanetti to provide instructions to Mr Young on her behalf regarding settlement. Mr Young did not regard Mr Zanetti as having authority to provide instructions regarding settlement on behalf of Mrs Zanetti.
The First Respondents further submit that there is no binding or effective Settlement Agreement as against Mr Zanetti because:
(a) the objective intent of the Settlement Agreement was that it only took effect if both of the First Respondents executed the document;
(b) the consideration under the Settlement Agreement is expressed to include “the mutual promises contained in this agreement”. Further it contains a proposed joint obligation of Mr and Mrs Zanetti to pay the Settlement Sum. Without Mrs Zanetti being a party to the agreement, Mr Zanetti does not receive the consideration of a promise by Mrs Zanetti to also be jointly and severally liable to pay the settlement sum. Similarly the Settlement Agreement proposes that the Applicant receive an interest in land, jointly owned by Mr and Mrs Zanetti and that the Zanettis as joint tenants execute a mortgage in registrable form. These proposed terms indicate that the contract is only effective if both Zanettis are parties to the contract.
The Applicant and Second Respondent’s Submissions
The Applicant and Second Respondent submit that there is a valid and binding compromise agreement between the parties and that the Tribunal has jurisdiction to determine this issue. The Applicant and Second Respondent seek to distinguish between a finding of a valid compromise and a finding as to whether the compromise is enforceable. They say that there are questions as to the Tribunal’s jurisdiction to determine issues of enforceability and even if the questions are answered affirmatively, whether the Tribunal should exercise its discretion to do so.
The Applicant and Second Respondents assert the evidence before the Tribunal establishes that the Settlement Agreement was intended by the parties to be immediately binding on them. That is that the facts fall within the first category described in Masters v Cameron[1].
[1] (1954) 91 CLR 353.
They also argue that Mr Young and Mr Zanetti had Mrs Zanettis’ actual and ostensible authority to compromise the proceedings on her behalf on the terms set out in the Heads of Agreement, Settlement Agreement and Consent to Judgment. The Heads of Agreement were never tendered in evidence.
The Applicant and Second Respondent argue that:
(a) By making the Settlement Agreement and Consent to Judgment both known to the Tribunal and an exhibit in the proceedings, the clear intention of the parties was to unequivocally convey to the Tribunal that they had concluded a valid and binding agreement which provided for certain things to occur, including in time the final disposition of the proceedings, and that the agreement was not contingent upon any other step occurring (such as Mrs Zanetti signing the Settlement Agreement).
(b) The terms of the Settlement Agreement are more than a mere accord executory. There were obligations immediately imposed upon the parties, for valuable consideration, which were sufficient to characterise the agreement as enforceable in itself, even though it did not provide for the immediate disposal of the Applicant’s claim or the First Respondents’ counterclaim.
(c) The Settlement Agreement leaves no room for the proceedings to be continued, as it provides exhaustively for the manner in which they are to be ended – either by consent discontinuance, or consent judgment.
(d) The parties reduced their agreement to writing so that they could be left in no doubt as to its terms. However, once the parties agreed that the written document did embody the terms of their agreement, a binding contract came into existence immediately on the terms evidenced by the Agreement.
(e) It was not necessary in order for there to be a binding agreement that the Settlement Agreement document be signed by Mrs Zanetti.
(f) That the Settlement Agreement was intended to be immediately binding on the parties, including Mrs Zanetti, and that Mrs Zanetti agreed to this, is evident from:
(i)the statements of both Ms Moody and Mr Young to the Tribunal that the Settlement Agreement represented a concluded agreement between the parties;
(ii)the fact that the Settlement Agreement and Consent to Judgment were both made an exhibit in the proceedings;
(iii)the fact that the Settlement Agreement is signed by each of Mr Pierpoint, Adpoint and Mr Zanetti;
(iv)the fact that Ms Moody asked Mr Young to, and Mr Young did, inform the Tribunal that the only party who had not signed the Settlement Agreement (Mrs Zanetti), had consented to the Settlement Agreement and the Consent to Judgment, and authorised him to inform the Tribunal of that consent;
(vi)the fact that the Consent to Judgment is signed by Mr Young in his capacity as the solicitor for Mr and Mrs Zanetti;
(vii)the delay of some 3 months before Mrs Zanetti first raised the argument that Mr Young had acted without her express authority and that she did not consent to the terms of the Settlement Agreement; and
(viii)the lack of any request from Mills Oakley to Winchester Young Maddern for the return of the Settlement Agreement with Mrs Zanetti’s signature.
(g) Glenn Young had both actual and ostensible authority to agree to the terms of the Settlement Agreement and Consent to Judgment on behalf of Mrs Zanetti;
(h) Mr Young had the express authority of Mrs Zanetti to compromise the proceeding on the terms set out in the Settlement Agreement, such authority being conveyed either by Mrs Zanetti personally or by Mr Zanetti as her expressly appointed agent.
(i) Mr Zanetti acted as agent for Mrs Zanetti in relation to the Settlement Agreement and Consent to Judgment, having both the ostensible and actual authority to negotiate and agree to the terms of settlement on her behalf.
(j) Mr Young received instructions (apparently exclusively) from Mr Zanetti over a 5 year period, such instructions were represented by Mr Zanetti to be on behalf of both his wife and himself.
(k) On the day of settlement, Mr Zanetti telephoned Mrs Zanetti to inform her of the progress of settlement negotiations. She remained silent and allowed her husband to continue the settlement negotiations on her behalf and to conclude them as her agent. At no time did she revoke her authority for Mr Zanetti to act on her behalf, nor did she take the opportunity to talk to Mr Young when he rang her, nor call either Mr Zanetti or Mr Young, to advise that a Settlement Agreement could not be concluded by them other than with her express consent.
The Applicant and the Second Respondent submit that whether or not the Settlement Agreement complies with s 11 and/or s 59 of the Property Law Act 1974 (Qld) has no bearing on the issue of whether the Settlement Agreement is a valid contract. Detailed submissions were also made to the effect that sections 11 and 59 of the Property Law Act 1974 (Qld) did not apply to the agreement to execute mortgage documents. They argued that compliance with the Property Law Act 1974 (Qld) is not a matter which the Tribunal has jurisdiction to determine.
The Applicant and the Second Respondent submit that because the Settlement Agreement is signed by Mr Zanetti, it is binding on him even if it is not binding on Mrs Zanetti. This is made clear by payment of the Settlement Sum, the liability for which is expressed to be joint and several.
Analysis
This application raises the following issues:
(a) Are the terms of settlement agreed?
(i)Was Mr Zanetti, Mrs Zanetti’s agent for the purpose of agreeing the terms of settlement and so instructing Mr Young?
(ii)Was Mr Young exercising ostensible or actual authority in order to agree the terms of settlement?
(b) Is there a valid and enforceable agreement?
(i)Has Mr Young exceeded his ostensible authority by purporting to agree to collateral matters, and if so what is the impact on the agreement?
(ii)Has there been a breach of sections 11 and 59 of the Property Law Act 1974 (Qld), so that any agreement is unenforceable? If so, does that impact on the validity of the agreement? Can the offending provisions be severed from the agreement to leave a valid and enforceable agreement?
(iii)Was there an intention by the parties not to be bound by any agreement until all parties had signed the Settlement Agreement, or did the parties intend to be immediately bound by the agreement they had reached? Is Mr Zanetti bound by the agreement even if Mrs Zanetti is not bound?
·Does the Settlement Agreement fall within the 3rd category of Masters v Cameron, or does it fall within the 1st category?
·What is revealed of the intention of the parties, when the evidence is examined, the language of the agreement scrutinised, the conduct of the parties examined and the subject matter of the agreement considered?
Are the terms of settlement agreed?
Was Mr. Zanetti, Mrs Zanetti’s agent for the purposes of agreeing the terms of settlement and so instructing Mr Young?
Although Mrs Zanetti denies giving Mr Zanetti authority to act as her agent the evidence reveals that she left the conduct of the proceedings to him for a period of approximately 6 years, never attending their solicitor’s office or instructing Mr Young directly.
In relation to settlement of the proceedings, the evidence is that Mrs Zanetti knew settlement negotiations were being conducted on 26 March 2010 and knew the significant terms of the proposed settlement. She received 4 or 5 calls from Mr Zanetti on the day and agreed under cross examination that she was happy for her husband to deal with it for both of them.
G E Dal Pont in “Law of Agency” sets out the legal position as follows:
“…the parties need not have actually used the language of agency for the law to infer that they intended to create an agency relationship. The parties may not even appreciate the legal concept of agency but may nonetheless create an agency relationship if what they have done is best reflected by the legal concept of agency. This may be so even if they profess to disclaim such a relationship, whether by the terms of the contract between them or otherwise. ‘An intention to create an agency may be manifested…simply by placing another in a situation in which, according to the ordinary rules of law, or …according to the ordinary usages of mankind, that other is understood to represent and act for the person who has so placed him.’[2] It need not involve a positive act by the principal, but may be created by the principal’s acquiescence. This was explained by Jordan CJ in Bonette v Woolworths Ltd as follows:[3]
‘Evidence that a person is purporting to do acts on behalf of a principal in some capacity in such circumstances that the knowledge and approval of the principal may fairly be inferred is evidence that the principal has authorised him to act in the particular capacity. If there is evidence justifying such an inference, it justifies the further inference that the person has authority to do such acts as would be done, as a matter of ordinary business practice, by a person acting in such a capacity.’”[4]
[2] Pole v Leask (1863) 8 LT 645 at 648 per Lord Cranworth.
[3] (1937) 37 SR (NSW)142 at150.
[4] 2nd ed., at p.93.
Given that Mrs Zanetti did not participate in the proceedings over a six year period and did not attend the hearing, I find that Mr Zanetti was put in the position of acting as Mrs Zanetti’s agent for the purpose of conducting the proceedings, negotiating the terms of settlement and giving instructions to Mr Young to enable terms of settlement to be reached. I find that he had implied authority to perform these tasks as a result of the position in which he was placed by Mrs Zanetti. I consider it relevant to these findings that Mrs Zanetti did not say to Mr Zanetti, when talking to him about the proposed settlement, words to the effect of “do not act on my behalf”. She remained silent.
Was Mr Young exercising ostensible or actual authority in order to agree the terms of settlement?
The parties agree Mr Young had the ostensible authority to effect a settlement of the proceedings on behalf of both Mr and Mrs Zanetti although the First Respondents submit he exceeded his ostensible authority in relation to the terms of this settlement, insofar as he purported to agree to provisions in relation to a caveat, a mortgage and an undertaking not to affect the equity in the property.
I have found that there was an implied agency as between Mr Zanetti as agent and Mrs Zanetti as principal, and consequent implied authority on his part to give instructions on behalf of both of them with respect to the conduct of the proceedings and to give instructions with respect to settlement negotiations. That being the case, Mr Young had actual authority from Mr Zanetti on his own behalf and as agent for Mrs Zanetti to agree the terms of settlement ultimately recorded in the Settlement Agreement. This finding is however subject to the discussion of sections 11 and 59 of the Property Law Act 1974 (Qld) set out below.
I find that the terms of settlement as set out in the Settlement Agreement were agreed between the parties. Mr Zanetti agreed the terms on his own behalf and as agent for his wife. Mr Young agreed the terms exercising actual or ostensible authority on behalf of his clients.
Is there a valid and enforceable agreement?
Has Mr Young exceeded his ostensible authority by purporting to agree to collateral matters, and if so what is the impact on the agreement?
I accept the First Respondent’s submissions that Mr Young as the solicitor acting for Mrs Zanetti in the proceeding had ostensible authority to settle the proceeding on behalf of Mrs Zanetti on terms that did not involve matters collateral to the issues in dispute (See Waugh v Clifford & Sons;[5] Insbury Pty Ltd v Craig[6]). I accept the First Respondent’s submissions that clauses 1.5 (consent to a non lapsing caveat), 1.8 (agreement to confer an interest sufficient to support a caveat) and 1.18 (agreement to sign a registrable mortgage) of the Settlement Agreement were collateral to the issues in dispute.
[5] (1982) 1 Ch 374 at 387and 388.
[6] (1990) 1 Qd R 309.
However, I find that theses clauses could be severed from the Settlement Agreement without affecting its validity. In the decision of Gardiner v Grigg[7] Jordan CJ found that a principal will be bound by the main transaction but may refuse to be bound by an unauthorised collateral warranty given by an agent.
[7] (1938) 38 SR (NSW) 524 at 531.
Has there been a breach of sections 11 and 59 of the Property Law Act 1974 (Qld), so that any agreement is unenforceable? If so does that impact on the validity of the agreement? Can the offending provisions be severed from the agreement to leave a valid and enforceable agreement?
The First Respondents contend that:
(a) Clause 1.18 of the Settlement Agreement confers on the applicant an interest in land sufficient to support a caveat. Accordingly section 11 and section 59 of the Property Law Act 1974 (PLA) must be complied with.
(b) Clauses 1.18-1.21 require Mr and Mrs Zanetti to enter into a mortgage in registrable form. Accordingly section 11 of the PLA must be complied with.
Section 11 PLA provides:
“Instruments required to be in writing
(1)Subject to this Act with respect to the creation of interests in land by parol-
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent lawfully authorised in writing, or by will, or by operation of law…”.
Section 59 of the PLA provides:
“Contracts for sale etc of land to be in writing
No action may be brought upon any contract for the sale or other disposition of land or any interest in land unless the contract upon which such action is brought, or some memorandum or note of the contract, is in writing, and signed by the party to be charged, or by some person by the party lawfully authorised.”
The First Respondents assert that a failure to comply with sections 11 and 59 of the PLA is evidence of the Settlement Agreement being “ineffective” or “unenforceable” (as referred to by Justice Fryberg in Skaines decision). They argue that therefore this Tribunal has jurisdiction to make findings about the effect on the Settlement Agreement of a failure to comply with sections 11 and 59 of the PLA because that inquiry falls squarely within the Tribunal’s function as described by Justice Fryberg. I agree with this contention. I will consider these issues for the purpose of determining whether the Settlement Agreement has become “ineffective” in the “very general sense” referred to by Justice Fryberg.
I accept the submissions of both parties that the law is conveniently set out in Cheshire & Fifoot’s Law of Contract[8], and the result is that a failure to comply with sections 11 and 59 of the PLA does not affect the validity of the Settlement Agreement, although the failure may affect the enforceability of the Settlement Agreement.
[8] 9th ed., at (16.54)-(16.55)
It is clear that neither Mr Zanetti nor Mr Young were authorized in writing to act as Mrs Zanetti’s agent for the purpose of entering the Settlement Agreement. As a result of section 11 of the PLA, neither Mr Zanetti nor Mr Young had actual authority to create an enforceable agreement on her behalf at least with respect to clauses 1.8 and 1.18-1.21 of the Settlement Agreement to which section 11 of the PLA is relevant.
I accept the submissions of the First Respondents that clause 1.8 (creation of an interest sufficient to support a caveat) and clauses 1.18-1.21 (agreement to execute forms for a mortgage in registrable form) of the Settlement Agreement are clauses which purport to create interests in land to which section 11 of the PLA applies[9] and to which section 59 of the PLA applies.[10]
[9] Theodore v Mistford & Anor (2003) QCA 580.
[10] Duff v Blinco (No 2) (2007) 1 Qd R 407.
However, I do not accept the First Respondents’ submissions that as a result of falling within section 59 of the PLA that the entire Settlement Agreement is ineffective or unenforceable as against Mrs Zanetti.
The principal obligation under the Settlement Agreement is an agreement to pay the sum of $170,000.00 to the Applicant. The obligations in relation to provision of a caveat and granting of a mortgage are subsidiary to the principal obligation in that they are intended to merely provide security for payment. They do not represent the point and purpose of the Settlement Agreement. In this regard I note the principle in Goodinson v Goodinson[11] where it was found that whether an entire promise may be severed from a contract depends upon whether it forms the whole or only part of the consideration. If it is substantially the only return given for the promise of the other party, severance is ruled out and the contract fails in toto. If, on the other hand, it goes only to part of the consideration – it is merely subsidiary to the main purpose of the contract, severance is permissible.
[11] (1954) 2 QB 118.
I find that a valid compromise at least to the extent of requiring a payment of $170,000.00 by the First Respondents to the Applicant could be enforced by a court, such that this Tribunal would have no further jurisdiction to deal with the matter. In other words a breach of sections 11 and 59 of the PLA would not affect the validity and enforceability of the Settlement Agreement insofar as the obligation to pay the settlement sum is concerned.
This finding is subject to the discussion and findings set out in the succeeding paragraphs.
Was there an intention by the parties not to be bound by any agreement until all parties had signed the Settlement Agreement, or did the parties intend to be immediately bound by the agreement they had reached? Is Mr Zanetti bound by the agreement even if Mrs Zanetti is not bound?
·Does the Settlement Agreement fall within the 3rd category discussed in Masters v Cameron, or does it fall within the 1st category?
·What is revealed of the intention of the parties, when the evidence is examined, the language of the agreement scrutinised, the conduct of the parties examined and the subject matter of the agreement considered?
These questions are the most significant of the matters so far discussed.
The Law
Masters v Cameron
The High Court in Masters v Cameron has addressed the issue of whether before a formal contract is entered into and executed, the parties are contractually bound. The High Court concluded that the case may fall into one of three categories.
The first category is that the parties have reached finality in arranging all terms and intend to be immediately bound to perform those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. The High Court cited Lord Blackburn in Rossiter v Miller (1878) 3 App Cas 1124 at 1151 when he said that “...as soon as the fact is established of the final mutual assent of the parties so that those who draw up the formal agreement have not the power to vary the terms already settled, I think the contract is completed.” That is, a binding contract has been formed, even without execution of the written document.[12]
[12] Ibid., p.360.
This is the category of case the Applicant and Second Respondent contend arises on the facts of this matter.
The third category is that the parties do not intend to make a concluded bargain at all, unless and until they execute a formal contract. Again the High Court cited Lord Blackburn in Rossiter v Miller at 1152 when he said “parties often do enter into a negotiation meaning that, when they have (or think they have) come to one mind, the result shall be put into formal shape, and then (if on seeing the result in that shape they find they are agreed) signed and made binding; but that each party is to reserve to himself the right to retire from the contract, if, on looking at the formal contract, he finds that though it may represent what he said, it does not represent what he meant to say. Whenever, on the true construction of the evidence, this appears to be the intention, I think that the parties ought not be held bound till they have executed the formal agreement”. That is, no binding contract has been formed unless all the parties execute the written document.[13]
[13] Ibid., p.360 and 361.
This is the category of case the First Respondents contend arises on the facts of this matter.
The key difference between the first category in Masters v Cameron and the third category is that a condition is imposed that the agreement is not immediately binding and will not bind the parties until the terms are written up and executed by the parties. In both categories one finds mutual assent to the terms of the agreement and a later document written up more fully and precisely. So much would appear to be the case on the facts before the Tribunal.
No evidence was given that the Settlement Agreement was not a full and precise record of what Mr Zanetti and the Applicant and Second Respondent had been discussing on 26 March 2010. It is therefore at least a restatement in fuller and more precise terms of the settlement discussions held by the parties and referred to in the description of the first category of contract in Masters v Cameron[14]. What this Tribunal has to determine is whether the parties went further than the first category scenario and effectively said: “We have agreed to a settlement of this matter, subject to the parties entering into a fully drafted and signed Settlement Agreement”. There is no evidence before me of such a statement. If there were such clear evidence the cases provide that these words create an overriding condition[15], so that what has been agreed upon must be regarded as the intended basis for a future contract and not as constituting a contract until that future contract is drawn up and executed by the parties. The lack of such clear evidence is not, however, the end of the matter. The intention of the parties to impose a condition that the settlement is not binding until the agreement has been executed by all the parties, may be discerned from the evidence, the language used in the agreement[16], the conduct of the parties[17] and the subject matter of the agreement[18].
What was the intention of the parties?
[14] op.cit.
[15] Masters v Cameron, op.cit., p.363
[16] Ibid., p.362.
[17]Sheehan v Zaszlos (1995) 2 Qd R 210 at 213; Marek v Australasian Conference Association Pty Ltd (1994) 2 Qd R 521.
[18]RT & YE Falls Investments Pty Ltd v State of New South Wales (2001) NSWSC 1027; Teviot Downs Estate Pty Ltd v MTAA Superannuation Fund (Flagstone Creek and Spring Mountain Park) Property Pty Ltd (2004) QCA 57.
The evidence
Mr Twigg in his affidavit, swears that following the settlement discussions he formed the view that the parties had reached finality in arranging all the essential terms of the settlement and that it was the intention of the parties to be immediately bound by the agreement. That assertion appears at paragraph 10 of his affidavit. The paragraph was objected to by Counsel for the First Respondents. I place no reliance upon that evidence as it suggests an opinion about the issue before the Tribunal.
Mr Young gave evidence that it was not his view that Mrs Zanetti had to sign the agreement as she had agreed to it. His evidence was that the signing was required by Ms Moody and he agreed to pursue that, not for the purpose of making the agreement binding. Again that opinion on the binding nature of the agreement is of little assistance to the Tribunal. Of relevance however is his evidence that Ms Moody required Mrs Zanetti to sign the agreement.
There is no evidence from Mr Zanetti or Mr Pierpoint as to whether they intended to be immediately bound or whether they intended there would be no binding agreement until the Settlement Agreement was signed by Mrs Zanetti.
Mrs Zanetti’s evidence was to the effect that although she knew the settlement was intended to end the proceedings, she was not sure whether it had done so. She was not sure whether the agreement was binding because she had not signed it. She denied that she intended to be bound on 26 March 2010, but later tried to escape being bound.
The transcript of the hearing does not reveal either Mr Young or Ms Moody stating that settlement of the proceeding is subject to the Settlement Agreement tendered as Exhibit 25 being signed and that adjourning the matter to the registry will enable that to occur. What they convey instead is that Mrs Zanetti has provided instructions to the terms of the Settlement Agreement and Consent to Judgment.
Language of the Settlement Agreement
Nothing appears on the face of the Settlement Agreement which suggests that anything further remains to be agreed or that there is likely to be some variation to the terms of settlement. The Settlement Agreement is a formal document which appears to reflect the terms previously negotiated by the parties. It provides for personal execution by all four parties.
In Geebung Investments Pty Ltd and Anor v Varga Group Investments No 8 Pty Ltd[19] Kirby P discussed the principles derived from the authorities, as to whether the parties intended to form a binding contract before a formal agreement was signed. Relevantly, he said “the mere fact that the parties contemplate the execution of a formal contract, subsequent to an informal agreement, does not mean that that informal agreement is not presently binding.” However, he also referred to authority to the effect that “the fact that the parties contemplate the drawing up and execution of a formal contract is a consideration which may point to the conclusion that no presently binding agreement was intended until that formal contract is executed.”
[19] (1995) 7BPR 14,551 (NSWCA) at p.16
The Applicant and Second Respondent submit that the terms of the Settlement Agreement are more than a mere accord executory. It is said there were obligations immediately imposed on the parties for valuable consideration, which were sufficient to characterise the agreement as enforceable in itself, even though it did not provide for the immediate disposal of the Applicant’s claim or the First Respondents’ counterclaim. No examples of those immediate obligations have been given. In my view there are no obligations set out in the Settlement Agreement which could not be effected or which would arise until after signing by all parties.
Conduct of the parties
Evidence against an intention to be immediately bound, is to be found in the evidence that it was intended, and regarded as important, that Mrs Zanetti execute the Settlement Agreement personally. That evidence includes:
(a) The evidence of Mr Young;
(i)when asked by me as to why he did not sign the Settlement Agreement on behalf of Mrs Zanetti, he said he “can’t answer that” other than to say that “Ms Moody was concerned that Mrs Zanetti sign it personally”.
(ii)that after the matter had been adjourned, outside the hearing room, he had a conversation with Ms Moody in which she asked Mr Young to chase up Mrs Zanetti’s signature and expressed a concern that unless it was signed Mrs Zanetti might seek to set aside the Settlement Agreement.
(iii)Mr Young’s email of 26 March 2010 to Mr and Mrs Zanetti (Exhibit 6), attaching a copy of the Settlement Agreement and stating “I recommend that you send me a fax copy of the agreement signed by both of you so I can give it to the other side and avoid any issue about signing of the document”.
(b) The evidence of Mr Twigg in his affidavit, that he was concerned Mrs Zanetti would not be bound by the agreement as she was not present.
(c) The evidence of Mrs Zanetti that she did not regard herself as bound because she had not signed the Settlement Agreement.
Other relevant conduct is that of the solicitors for the Applicant and Second Respondent, who did not forward the mortgage documents contemplated by the Settlement Agreement to the solicitors for the First Respondents until after they had been advised that the First Respondents did not consider there had been a settlement of the matter and that they were proposing to bring the matter back before the Tribunal. That was approximately 3 months after the Settlement Agreement had been allegedly concluded. It does not appear on the evidence that any caveat documentation has been delivered to the solicitors for the First Respondents or that the Applicant has delivered any certificates relevant to the property, as contemplated by the Settlement Agreement. These delays suggest to me that the Applicant did not consider there to be a concluded agreement as at 26 March 2010 with immediately binding obligations.
The Settlement Agreement was signed by each of Mr Pierpoint, Adpoint and Mr Zanetti. The fact that the Settlement Agreement required their signature and that they did sign the document indicates that execution of the document was considered to be an important part of the process of disposing of the dispute.
In favour of the argument that the parties intended to be immediately bound is the fact that the Settlement Agreement and Consent to Judgment were both made an exhibit in the proceedings. If it was not their intention to be immediately bound and there was a prospect the matter would come back before the Tribunal for a resumed hearing, it is unlikely the terms of the settlement would have been made available to the Member as an exhibit.
The fact that Mr Young signed the Consent to Judgment in his capacity as the solicitor for Mr and Mrs Zanetti, is evidence that what the parties considered to be a means of finally disposing of the proceedings was in place and that is consistent with an intention to be immediately bound. Again this is weakened by the fact that the Settlement Agreement of which the Consent Judgment formed part remained unsigned by Mrs Zanetti. The signing of the Consent to Judgment document by Mr Young, highlights that it was within his power to sign the Settlement Agreement as Solicitor for Mrs Zanetti. The fact that he did not do so suggests that the parties required Mrs Zanetti’s signature to put beyond doubt her agreement to the terms of settlement and intention to be bound from the date of signing. I also note from the Tribunal file, that a Consent Order made on 22 March 2010 is signed by Mr Zanetti for the First Respondents. Appearing under his signature on the Consent Order are the handwritten words “On behalf of Paul and Michelle Zanetti”. Equally, it would have been within Mr Zanetti's power to execute the Settlement Agreement in a similar way, as agent for and on behalf of his wife, if he considered he was able to do so. The fact that he did not suggests the parties required Mrs Zanetti’s signature on the Settlement Agreement before it was binding.
I do not think a delay of what the Applicant and Second Respondent assert is 3 months, but which is in fact just over 2 months, before Mrs Zanetti formally put her position to Mr Young that she did not consent to the terms of settlement, is evidence of her intention as at 26 March 2010 to enter an immediately binding agreement. I note her evidence as to the steps she took to take legal advice on 26 March 2010 and the closely following emails from her husband to Mr Young indicating that she did not understand or agree to the terms of settlement and was reluctant to sign it.
I do not think that the lack of any request from Mills Oakley to Winchester Young Maddern for the return of the Settlement Agreement with Mrs Zanetti’s signature is evidence of the parties intention on 26 March 2010 as to whether they were immediately bound or not.
Subject matter of the Settlement Agreement
The First Respondents submit that contextual factors may be looked at to discern the intention of the parties, such as:
(a) the value of the subject matter;
(b) the complexity of the transaction; and
(c) the nature of the transaction.
In Geebung Investments[20], Kirby P included the following principles in his list of principles derived from the authorities:
“...5. Depending on the size, importance and complexity of the subject matter, the less formal the initial agreement, the less likely it will be that it was intended to be legally binding and enforceable. Thus, an oral discussion which contemplates a subsequent formal written agreement is less likely to have been intended to have been immediately binding; 6. It is necessary in every case to consider the nature and importance of the transaction, which the parties contemplate. Where the agreement concerns a large sum, or concerns a significant transaction, it is less likely to have been intended to be presently binding...”.
[20] ibid. p.16.
The settlement is for the sum of $170,000.00 which is obviously a substantial amount. The security provisions of the Settlement Agreement involve transactions which affect the First Respondents’ interest in land as joint tenants, namely a mortgage and caveat. Undertakings are required which restrict the First Respondents’ ability to deal with or further encumber the land.
The First Respondents rely on the decisions of Sinclair Scott and Co Limited v Naughton[21] and Marek v Australasian Conference Association Pty Ltd[22]. Marek is authority for the proposition that with respect to the nature of the transaction, it is “exceptional” and “rare” that parties intend to make a binding agreement regarding the disposition of an interest in land before a formal contract is signed.
[21] (1929) 43 CLR 310 at 316-317.
[22] (1994) 2 Qd R 521 at 527-8.
I accept that these principles are apposite. I can find no reason why the parties to a settlement of this nature, involving detailed clauses and comprehensive security for payment provisions, would not want a formal Settlement Agreement drawn up and signed by all parties. They did indeed require a formal Settlement Agreement. It was drawn up and signed by three of the four parties. That is entirely consistent with the proposition in Marek’s case and the principles set out in Geebung Investments. It is only a short step to say that having in fact required a formal settlement agreement, and in fact required personal execution of three of the four parties, that the parties did not intend the Settlement Agreement to be binding until the fourth party signed.
That being the case, the Settlement Agreement is not binding on either Mr or Mrs Zanetti.
I accept the further submissions of the First Respondent that there is no binding or effective Settlement Agreement as against Mr Zanetti, because the consideration under the Settlement Agreement is expressed to include the “mutual promises contained in this agreement”. Without Mrs Zanetti being a party to the agreement, Mr Zanetti does not receive the consideration of a promise by Mrs Zanetti to also be jointly and severally liable to pay the settlement sum. Similarly, because Mr and Mrs Zanetti hold their property as joint tenants, the proposed dealing with the land could only be effective if both Zanetti’s are parties to the contract.
Findings
I find that:
(a) The parties drew up a formal agreement which required personal execution by all four parties. Consistent with the principles referred to in Geebung Investments and Marek, I find that no presently binding agreement was intended until the formal agreement was executed by all four parties.
(b) The conduct of the parties demonstrates that they required Mrs Zanetti to execute the Settlement Agreement personally. Mr Young’s evidence is that counsel for the Applicant and Second Respondent expressly required her personal execution. He sent the Settlement Agreement to Mrs Zanetti on 26 March 2010 requesting she execute it and return a faxed copy. Mr Young did not take the opportunity to sign the Settlement Agreement as solicitor for Mrs Zanetti, which would have given immediate effect to the Settlement Agreement. Mr Zanetti did not sign the Settlement Agreement as agent for Mrs Zanetti to give immediate effect to the Settlement Agreement. Instead the Settlement Agreement was sent to Mrs Zanetti to sign and thereby ratify its terms. On this basis no agreement was intended to be binding until the formal agreement was executed by all parties.
(c) The transaction was sufficiently complex and involved a sufficiently large sum for the parties to require execution of a formal document before the agreement became binding. In this context, that was their intention.
(d) There has been no compromise of the main proceeding and the original causes of action subsist, because the Settlement Agreement was not signed and the parties intended execution by all of them before the Agreement became binding.
Orders
I order that the matter be set down for a Directions Hearing to determine the future conduct of the matter.
I direct that the parties file and serve any application for costs they may wish to make, together with supporting submissions by 17 November 2010 and that submissions in reply be filed and served by 1 December 2010. The issue of costs to be decided on the papers.
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