RSP Resources Pty Ltd v Threadgold and Co Pty Ltd
[2010] VCC 336
•6 May 2010
| IN THE COUNTY COURT OF VICTORIA | Revised |
(Not) Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST PILOT
Case No. CI-08-04707
| RSP RESOURCES PTY LTD | Plaintiff |
| v | |
| THREADGOLD & CO PTY LTD and DONALD JEREMY THREADGOLD | Defendants |
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| JUDGE: | HIS HONOUR JUDGE ANDERSON |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 28 April 2010 |
| DATE OF JUDGMENT: | 6 May 2010 |
| CASE MAY BE CITED AS: | RSP Resources Pty Ltd v Threadgold & Co Pty Ltd and Anor |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 0336 |
| REASONS FOR JUDGMENT |
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Catchwords: Contract – Settlement of litigation – Whether contact binding before formal agreement signed – Subsequent discussion and correspondence between solicitors – Whether essential terms resolved and agreement concluded.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C.G. Juebner | Wisewould Mahony |
| Second Defendant in person | ||
| HIS HONOUR: |
1 A trial was held in this proceeding to determine the preliminary question of whether the litigation had been settled during negotiations between the parties’ solicitors in March 2010.
2 The writ was issued on 5 November 2008. The claim against the first defendant was for breach of agreement. The second defendant, Mr Threadgold, was the sole director of the first defendant and was sued for in excess of $1 million damages for alleged misleading and deceptive conduct in breach of the Trade Practices Act. In about late December 2008, the first defendant was placed into voluntary liquidation. The claim proceeded against the second defendant. Initially he represented himself, although during 2009 solicitors, Nelson Partners, commenced to act on his behalf.
3 the plaintiff’s solicitor left a message with the associate to the trial judge that the
The proceeding was listed for trial commencing on 9 March 2010. On 3 March 2010, the Court. The minutes were signed by both solicitors, and recorded that the parties agreed to orders that:
“1. The proceeding be struck out with a right of reinstatement;
2. No order as to costs”.
4 Mr Robert Toth, the partner responsible for the matter at the plaintiff’s solicitors, negotiated a settlement with the defendant’s solicitor, Mr Paul Beasant, of Nelson Partners. The settlement involved the following elements:
a. Payment by Mr Threadgold to the plaintiff of $72,500; b. $15,000 was to be paid immediately, and the balance within 10 months; c. A deed of release was to be executed which was to include releases by the plaintiff to both defendants. 5 The settlement was immediately confirmed in an email from Mr Beasant to Mr Toth at 3:31 pm on 3 March 2010. The email read as follows:
“We refer to our telephone conversation of today and confirm our client’s
instructions to settle the above proceedings on the following basis:
(1) The defendant pay to the plaintiff the sum of $72,500 in full and final
settlement of the plaintiff’s claim (the settlement sum);
(2) The settlement sum be paid by way of an upfront payment of
$15,000 with the balance to be paid within 10 months.We further confirm that your office will prepare terms of settlement to this effect and forward them to our office for consideration”.
6 At 4:09 pm on 3 March 2010, Ms Danielle Sirio, the solicitor responsible for the matter under Mr Toth’s supervision, wrote to Mr Beasant as follows: “We confirm
agreement to the terms set out in your email of 3 March 2010 and we will draft terms
of settlement and forwards same to you shortly for your approval. In the meantime,
I attach minutes of consent orders for signing by you where indicated and return toour office so that we may forward same to the court”.
7 The first issue for determination is whether an enforceable agreement had been reached on 3 March 2010. The plaintiff submitted that a binding contract had been entered into between the parties, and that the circumstances fitted either the first or second class of arrangements referred to by the High Court in Masters v Cameron (1954) 91 CLR 353 at 360, where Dixon CJ, McTiernan and Kitto JJ said: “Where
parties who have been in negotiation reach agreement upon terms of a contractual
nature and also agree that the matter of their negotiation shall be dealt with by a
formal contract, the case may belong to any of three cases. It may be one in which
the parties have reached finality in arranging all the terms of their bargain and intend
to be immediately bound to the performance of 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. Or, secondly, it may be a case in which the parties have
completely agreed upon all the terms of their bargain and intend no departure from or
addition to that which their agreed terms express or imply, but nevertheless have
made performance of one or more of the terms conditional upon the execution of
a formal document. Or, thirdly, the case may be one in which the intention of the
parties is not to make a concluded bargain at all, unless and until they executea formal contract”.
8 In my view, there is no doubt that the parties intended the terms of agreement reached between the solicitors to have an immediate and binding effect of their own. It was not a case where the formal document was to introduce further or inconsistent terms or that the parties were reserving their right to withdraw from the agreement before execution of a formal document. In my view, this conclusion followed from the discussions between Mr Toth and Mr Beasant and was confirmed by the subsequent correspondence.
9 Mr Beasant said in evidence that he had requested terms of settlement to the effect that I have referred to, and agreed that the evidence given by Mr Toth of the discussions was accurate. Whilst Mr Beasant said he was “surprised” that the proceeding was to be struck out before the terms of settlement were executed, in my view the statement was not directed to the issue of whether the agreement reached between him and Mr Toth was binding. The trial was imminent, and the lodging of consent orders was more consistent with a conclusion that a binding agreement had been reached.
10 The further discussions and negotiations between the solicitors over the following days as to certain aspects of the terms of settlement confirmed that agreement had been reached, although in relation to the formal terms of settlement “it was
contemplated that that document would be one which would meet with the approval
of the lawyers”. As Campbell J further stated in No 96 Factory Bargains Pty Ltd v
Kershel Pty Ltd [2003] NSWSC 421 at paragraph [26], “those factors are not enoughin themselves to enable the Court to choose between the first and third categories in
Masters v Cameron”.
11 On 9 March 2010, Ms Sirio sent to Mr Beasant “terms of settlement for your consideration and approval”. Mr Beasant said that Mr Threadgold was provided with a copy of this version of the terms of settlement. As a consequence of Mr Beasant and Mr Threadgold’s discussion, Mr Beasant sent a facsimile to the plaintiff’s solicitors on 11 March 2010 in the following terms:
rather than tying the payment of the sum to the execution of the terms. Ms Sirio and
Mr Beasant agreed on 19 March 2010 as the date for payment of the sum of
$15,000. Mr Beasant said in evidence that he agreed to this because Ms Sirio was
prepared to accept the proposal he made in relation to the payment of the balance by
instalments. This is confirmed by contemporaneous notes made by Ms Sirio at the
time of the conversation.13 “We refer to your letter dated 9 March 2010 enclosing proposed terms of
settlement (‘terms’).
Our client seeks the following amendments to the terms:
As to paragraph 1(a): The sum of AUS $15,000 be paid on signing; As to paragraph 1(b): The balance of the settlement sum be paid by ten monthly instalments each of not less than $3,000 payable monthly from the date of signing with any outstanding amount to be paid in full on the tenth month;
As to paragraph 5.2.3: The reference to indemnity costs be replaced with costs payable on the appropriate court scale;
Finally, we do not believe it is necessary for our firm to execute the terms and request the reference to Nelson Partners be removed. Our client’s name in the signature clause should also be amended to read Donald Jeremy Threadgold.
We await receipt of amended terms for execution by our client”.
12 Ms Sirio and Mr Beasant had a conversation about these matters. The date inserted in the original terms for payment of the $15,000 had been 10 March 2010. This date had passed. Ms Sirio insisted upon a particular date being included in the terms,
The third matter relating to indemnity costs was a matter Mr Beasant said in evidence Threadgold. Mr Beasant said that in his discussions with Ms Sirio on 11 March, Ms Sirio was insistent that the plaintiff would not agree to scale costs in the event of default, but would only accept indemnity costs. Mr Beasant said that following this conversation with Ms Sirio he had further discussions with Mr Threadgold. He told him that the plaintiff’s solicitors regarded the issue of whether the costs in the event of a default would be on an indemnity basis was not negotiable, and Mr Threadgold would have no option but to agree.
14 noting “that amendments have been made to paragraphs 1(a) and 1(b) in addition to
the removal of Nelson Partners in the signature clause”. Mr Beasant said that after
receiving the letter and the attached terms of settlement he spoke withOn 12 March 2010 at 10:11 am, Ms Sirio forwarded amended terms of settlement, the balance. Mr Beasant considered that, if the deposit of $15,000 was paid on 19 March 2010, the first instalment of the balance should be paid one month later, and the subsequent payments on the 19th day of each month.
15 Mr Beasant was not sure whether, in the discussion he had with Mr Threadgold that morning, he had again discussed the question of costs in the event of default. He said initially he did not believe costs had been discussed in the conversation, although immediately after he said in evidence that he thought he had said to Mr Threadgold that the question of indemnity costs was not negotiable. In any event, his view was, following that conversation, that the only further issue necessary to raise with the plaintiff’s solicitors was the question of the first instalment date.
16 Mr Beasant’s file notes of his discussions with Mr Threadgold on 9 March, 11 March and 12 March 2010 are in evidence. Mr Beasant’s notes of his conversation with Mr Threadgold on 11 March 2010 include the following: “PB advised reference to
indemnity costs should be replaced with costs on Court Scale. PB to raise with them”.
The only matters recorded on 12 March 2010 by Mr Beasant are the following: “PBadvised JT about amended terms of deed. JT will not be able to make first payment
on 1 April 2010. Needs at least one month from same. Payments to be made
monthly from date of signing. If they do not agree he will allow matter to bereinstated”.
17 Mr Beasant instructed an administrative assistant in his office, Ms Lyn Claridge, to telephone Ms Sirio to request a change to Clause 1(b) of the draft terms of settlement so that instead of referring to the first day of each month it referred to the 19th day of each month. Ms Sirio agreed to the amendment and said that she would email the final version of the terms to Nelson Partners. Ms Claridge told Ms Sirio that Mr Threadgold would be coming in that afternoon to sign the terms. At 11:26 am, Ms Sirio emailed “finalised terms of settlement” to Nelson Partners.
18 On 17 March 2010, Mr Beasant telephoned Ms Sirio and told her that after having spoken to Mr Threadgold, his client would not sign the terms of settlement. Ms Sirio asked Mr Beasant whether he had been acting on instructions during their discussions. Mr Beasant agreed that he had, but said that Ms Sirio would need to take this matter up with Mr Threadgold personally, as his firm was intending later that day to file a notice of ceasing to act on behalf of Mr Threadgold. Ms Sirio indicated that an application for judgment based on the terms of settlement would be made.
19 On 19 March 2010, Mr Threadgold sent an email to Ms Sirio in the following terms:
“A. Your terms of settlement sent to Nelson Partners were not what
I offered on 3 March 2010. Indeed it was what you were proposing; Nelson Partners and I sought amendments. Hence it cannot be said that your terms of settlement was an agreement.
B. Nelson Partners:
(1) Did not advise me on the 12/3/10 that my terms requested that
day had been accepted by you.(2) Have not provided the agreement you refer in your letter of
17/2/10 point 9 sent at 11:26 am on 12 March. I have never
seen this agreement.(3) Did never advise that (a) unsigned agreement and (b) a verbal
agreement without sighting the written agreement are deemed as
a binding agreement.(4) Did not advise you that another change is required and that
being the amount. Given the costs to me and circumstances the
original amount is far too generous.C. As I have not seen this agreement you refer to in point B.(2) how am I able verbally or in writing confirm the terms of settlement? D. Without any admission of liability, like your clients, I would prefer to have settled now and send you my latest terms of settlement”.
20 Mr Threadgold followed up the matter he had raised in paragraph B(4) by an email on 30 March 2010. The email enclosed terms of settlement prepared by him, which included, as paragraph 1, “Threadgold must pay to RSP [the plaintiff] the sum of AUD
$72,500 less part of Threadgold’s costs of AUD $42,500, being AUD $30,000 (‘the
settlement sum’) inclusive of interest and legal costs in full and final settlement of the
claim as follows: (a) on or before 10 May 2010 Threadgold must pay to RSP AUD
$7,500; and (b) the balance of the settlement sum must be paid by three (3) six
monthly instalments each of not less than AUD $7,500 payable on the 10th day ofAugust 2010, 10 November 2010, and 10 February 2011”.
21 12 March 2010, an agreement was reached on all matters to be included in the terms
In my view, in the conversations between Ms Sirio and Mr Beasant between 9 and Mr Threadgold and the plaintiff was not a necessary step before the agreement became binding on the parties. The effect of the solicitors reaching agreement on 12 March 2010 was that the agreement, as set out in the unexecuted terms of settlement as sent through by Ms Sirio in amended form at 11:26 am, constituted an agreement between the parties which had the effect of supplanting the earlier agreement reached in discussions between Mr Toth and Mr Beasant and confirmed in the email correspondence on 3 March 2010.
22 I am satisfied that the later actions of Mr Threadgold, and particularly his emails dated 19 March 2010 and 30 March 2010, constituted repudiatory conduct, indicating that he had no intention of being bound by the terms of the settlement. The plaintiff accepted the repudiation. In those circumstances, the plaintiff is entitled to judgment against Mr Threadgold for damages.
23 During the course of the trial of the preliminary issue, I deferred the receipt of evidence as to the current value of the settlement sum of $72,500, if received over a period of ten months in accordance with the terms of settlement. Plaintiff’s counsel, Mr Juebner, indicated at that time that if the plaintiff were successful he would seek a judgment in the sum of $54,785, calculated on the basis that the agreed settlement sum of $57,500 would be capable of earning interest at a rate up to 6 per cent per annum until the due dates for payment.
24 If necessary, I will hear further evidence and submissions in relation to this matter, and the question of costs, before making final orders.
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Certificate
I certify that these 8 pages are a true copy of the reasons for decision of His Honour Judge
Anderson delivered on 7 May 2010.
Dated: 7 May 2010
Caroline Dawes
Associate to His Honour Judge Anderson
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