Sully v Englisch

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2021 0124

MELISSA SULLY	Applicant
v
PAUL ENGLISCH T/A ALPINE PROPERTY (ABN 65 281 213 249)	Respondent

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JUDGES:	NIALL, SIFRIS and WALKER JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	29 July 2022
DATE OF JUDGMENT:	31 August 2022
MEDIUM NEUTRAL CITATION:	[2022] VSCA 184
JUDGMENT APPEALED FROM:	[2021] VSC 434 (Matthews AsJ)

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CONTRACT – Settlement – Whether binding agreement to settle made at mediation – Parties reached oral agreement on key terms – Mediation ‘left open’ by mediator – No written terms executed – Subsequent correspondence referred to settlement ‘in principle’ – Trial judge held insufficient evidence that parties intended to be immediately bound – Whether judge erred in so holding – Reasonable observer of mediation would have concluded parties intended to be immediately bound – Leave to appeal granted – Appeal allowed.

Masters v Cameron (1954) 91 CLR 353, Delaney v Delaney [2022] VSCA 48, Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 14,551, Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, MX v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2020] NSWSC 961, Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605, Cacace v Bayside Operations Pty Ltd [2006] NSWSC 572, discussed.

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Counsel
Applicant:		Mr G Lubofsky
Respondent:		Mr S Clement
Solicitors
Applicant:	SGM Legal
Respondent:	DSA Law

NIALL JA:

I have had the advantage of reading in draft form the reasons for judgment of Walker JA. I agree that the appeal must be allowed for the reasons her Honour gives.
At the conclusion of the mediation, the respondent had obtained that which was of most concern to him, namely agreement to have the VCAT decision set aside. The agreement also allowed for Ms Sully to retain the payment that had been made to her and for a relatively modest additional amount to be paid to her, representing either the balance of the amount owing under the VCAT order or partial payment of her costs. The fact that the settlement appears to have achieved a favourable outcome for both sides does not necessarily mean that the terms which were agreed were immediately binding, but it does support the contention that whatever further steps or documentation were contemplated, they were to be procedural or facultative in nature.
Viewed objectively, each party plainly intended that the dispute between them was irrevocably resolved and the agreement reached was binding. Nothing further was to be achieved by making the terms conditional or the agreement provisional. The fact that thereafter the parties appear to have found things to argue about does not change what had already occurred.
The orders proposed by Walker JA should be made.

SIFRIS JA

I have had the advantage of reading in draft form the reasons for judgment of Walker JA. I agree that the appeal must be allowed for the reasons her Honour gives.

WALKER JA:

The applicant in this matter, Ms Sully, brought proceedings in the Victorian Civil and Administrative Tribunal (‘VCAT’) against the respondent, Mr Englisch for misleading and deceptive conduct. VCAT made an order in favour of Ms Sully. Mr Englisch then filed a notice of appeal against the VCAT decision. The parties attended a mediation in relation to Mr Englisch’s appeal in September 2020. The question that arises in the present proceeding is whether the parties reached a binding settlement agreement at the mediation.
The parties reached an agreement to settle, but did not prepare any written terms of settlement on the day of the mediation. The mediation was left ‘open’ by the Judicial Registrar at its conclusion and the proceeding was listed for a directions hearing at the

end of the month. There was further correspondence between the parties after the mediation concerning the terms of settlement. Ultimately, no written terms were signed by the parties.

Ms Sully contends that she and Mr Englisch reached a binding settlement agreement at the mediation, which resulted in the disposition of Mr Englisch’s appeal. In contrast Mr Englisch contends that no binding settlement agreement was reached on the day of the mediation.
The question whether a binding settlement had been reached was determined as a preliminary question by the trial judge, in the following terms:
Did the Appellant and Respondent enter into a binding agreement at the Mediation on 3 September 2020 on terms that:
(i) The Appellant pay to the Respondent the sum of $6,250 within 90 days;
(ii)The Respondent retain the $35,771.45 paid to her by the Appellant on 10 April 2020 pursuant to orders made by the Victorian Civil and Administrative Tribunal on 23 March 2020 in proceeding C5845/2015; and
(iii)The parties agree to allow the appeal in proceeding S ECI 2020 01848 setting aside the Orders.[1]
[1]Englisch v Sully [2021] VSC 434, [8] (‘Reasons’).
The trial judge found that the answer to the Question was ‘No’.[2]
[2]Reasons, [11].
Ms Sully now seeks leave to appeal from that decision, on the following grounds of appeal:[3]
[3]For convenience, proposed grounds of appeal are referred to as grounds of appeal.
1 The learned Associate Justice erred in finding at [102], [104] and [119] of the judgment of 23 July 2021 that there was insufficient evidence that the Alleged Terms were intended by the parties to be legally binding, and in doing so:
(a)     relied on a “common practice” (at [107]):
(i) which was vague and not clearly defined;
(ii) in respect of the existence of which reasons were not given;
(iii) in respect of which there was no evidence before the Court; and
(iv) without applying that “common practice” to the particular facts of the case;
(b) insofar as the learned Associate Justice held that the “common practice” was “recognised by Mr Fuller in his affidavit and forms an important contextual feature of the current case” (at [107]):
(i) misapplied the evidence of Mr Fuller regarding the “common practice”; and
(ii) failed to have regard to Mr Fuller’s evidence regarding the reason why Mr Fuller’s “usual practice” did not apply in the particular circumstances of the case;
(c)     failed to give sufficient weight to the Appellant’s subjective and objective understanding that an agreement had been concluded and the “consensus of opinion” of that fact (at [106]);
(d)    improperly conflated the submission that “because there was no statement that the parties would not be immediately bound by the agreement, the parties did not intend to be bound” with a reversal of the onus of proof (at [107]);
(e)     despite properly accepting them as principles to be applied, failed to apply the principles that (at [107]):
(i) the authorities do not express a statement of law that it is more typical to expect written terms or a clear indication that an oral agreement is binding; and
(ii) whether parties intend to be bound is a question of fact which does not always depend on express statements,
and required the adducing of evidence by the Respondent which was not necessary for the formation of a binding agreement;
(f)     insofar as the learned Associate Justice relied on the fact that both parties used the expression ‘in principle’ “freely and without objection until 24 February 2021” (at [117]):
(i)misapplied the evidence exhibited to the affidavit of Giulio Marra affirmed 9 April 2021 with respect to the parties’ post-contractual conduct; and
(ii)failed to have regard to the evidence of the parties having used contrary expressions such as “reaching an agreement” and “agreed to settle”, which support the existence of an earlier binding agreement.
For the reasons that follow, I would grant leave to appeal and allow the appeal. In short, I respectfully disagree with the trial judge’s conclusion. Having undertaken a review of the evidence, in my opinion a reasonable person observing the mediation would have concluded that, by the end of the mediation, the parties had made a binding agreement.

Factual background

The underlying dispute

Mr Englisch was a licensed estate agent. In about August 2015, he acted as estate agent for a vendor of land in Mount Hotham, Victoria. Ms Sully dealt with Mr Englisch in respect of the purchase of that land. On around 27 August 2015 she entered into a contract to purchase the land. Ultimately, however, Ms Sully was unable to complete the contract. She contends that this was because of her inability to obtain finance; in contrast, Mr Englisch contends that Ms Sully could not complete the contract because she refused to accept finance offers that were available to her.
In September 2015, the vendor served a rescission notice on Ms Sully for failure to settle. The rescission notice was allowed to expire. The vendor sold the property at public auction with no reserve for $18,000. The vendor then brought proceedings against Ms Sully in the Magistrates’ Court of Victoria and obtained judgment for $58,000 arising from the termination by Ms Sully of the contract of sale. Ms Sully subsequently reached an agreement with the vendor for a reduced sum of $28,000 to be paid by Ms Sully.
Ms Sully then commenced a proceeding in VCAT seeking damages against Mr Englisch under the Australian Consumer Law[4] and the Australian Consumer Law and Fair Trading Act 2012 for misleading or deceptive conduct. She alleged that Mr Englisch had made representations to her concerning her ability to obtain finance and/or her ability to end the contract of sale if finance could not be obtained. The damages sought reflected the damages payable by Ms Sully to the vendor of the land.
[4]Competition and Consumer Act 2010 (Cth) sch 2.
The VCAT proceeding was heard by Member Johnson in April 2019. In March 2020 VCAT found in favour of Ms Sully and ordered Mr Englisch to pay to her damages of $38,271.45. $35,771.45 was paid to Ms Sully by Mr Englisch’s professional indemnity insurer in April 2020.[5]
[5]For convenience, this sum will be referred to in round terms as $35,000 in the remainder of the judgment.
On 20 April 2020, Mr Englisch filed a Notice of Appeal in the Supreme Court of Victoria pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998, seeking leave to appeal against, and to set aside, the VCAT orders.

The mediation

In June 2020, Ms Sully and Mr Englisch were ordered to attend a judicial mediation in respect of Mr Englisch’s appeal. Prior to the mediation, Mr Englisch informed Ms Sully that he intended to raise a further ground of appeal based on Ms Sully’s residence in New South Wales and the Tribunal’s lack of jurisdiction having regard to the principle identified in Burns v Corbett[6] and Meringnage v Interstate Enterprises Pty Ltd.[7]
[6](2018) 265 CLR 304; [2018] HCA 15.
[7](2020) 60 VR 361; [2020] VSCA 30.
The mediation took place on 3 September 2020 and was facilitated by Judicial Registrar Keith. Ms Sully attended with her solicitor, Mr Marra, and her counsel, Mr Fuller. Mr Englisch attended with his solicitor, Mr Alesci. There are some differences between the parties’ and their lawyers’ accounts of what occurred at the mediation, but there was also a large measure of agreement; and each of the lawyers took notes (although these were relatively brief in nature). Each of the parties and their lawyers gave evidence on affidavit; Ms Sully, Mr Marra and Mr Fuller were cross-examined on their evidence; and Mr Alesci was not cross-examined, thus his evidence was, in effect, unchallenged.
Mr Marra’s handwritten notes from the mediation were explained in his affidavit. They were as follows:
Important for OS [the other side] to have VCAT Decision gone
OC [our client] ok – but keeps money
Not happy
$15k? – worried about not paying
– walk away. $9k?
$4500?
Final 6250/90 days
MS [Melissa Sully] – how to ensure pays on time?
More costs if not pay? – No
MS keeps money
Accepted
PE [Paul Englisch] Happy deal was made / Apologised
Wants to move on
Mr Alesci’s notes of the mediation were as follows:
Englisch Mediation
(10am – 1230) 2.5hr
1.       A [Applicant] will only settle if Vcat decision’s set aside
2. A offered R [Respondent] pay $4,500.00
R offered $11,500.
A offered $5000 in 90 days
R firm $6,250;
A accepted
(a) amended grounds to inc (Burns)
3.       (b) Joint Memo to court
4.       Consent to orders being sought
5.       R won’t sign until paid
6.       T.O.S [Terms of settlement] to be finalised by 30/9 and advise Court
7.       30/9 next directions
8.       Mediation left open
At the opening of the mediation the Judicial Registrar explained the general process of the mediation. He did not say anything about whether a written agreement would or would not be necessary in order for the matter to be regarded as settled.
It was clear that in the course of the mediation both sides understood that it was important to Ms Sully that she be entitled to retain the moneys already paid to her pursuant to the VCAT orders, and that it was important to Mr Englisch that the VCAT orders be set aside, because of the effect on his reputation. After various offers being made and rejected by each side, Ms Sully made an offer of settlement based on Mr Englisch paying her $6,250 within 90 days.
Mr Englisch accepted that offer, as reflected in the notes taken by his solicitor, Mr Alesci. Mr Englisch deposed that he had asked the Judicial Registrar to tell Ms Sully that her offer ‘was accepted in good faith and as a good will gesture, to put the matter to bed’. Ms Sully, Mr Fuller and Mr Marra all deposed to a comment in similar terms, namely that Mr Englisch said that he wanted to ‘put matters behind him’, and that he was pleased that the dispute had resolved.
Understood in context, the parties had thus agreed that the proceeding was to settle on the basis that:
(a)Mr Englisch pay Ms Sully $6,250 within 90 days;
(b)Ms Sully be entitled to keep the moneys already paid to her pursuant to the VCAT proceeding; and
(c)Mr Englisch’s appeal be allowed.
Mr Alesci gave evidence that the parties had discussed whether Mr Englisch would provide an indemnity, in the event that his insurer ever demanded the return of the amount already paid to her pursuant to the VCAT orders, in addition to mutual releases. Mr Alesci, on behalf of Mr Englisch, said that Mr Englisch would not provide an indemnity.
The Judicial Registrar informed the parties that in order to obtain consent orders allowing the appeal and setting aside VCAT’s orders, they would need to submit a joint memorandum to the Court explaining the basis for the orders, as required by cl 8.1 of Practice Note SC CL9.[8]
[8]Supreme Court of Victoria, Practice Note SC CL 9: Judicial Review and Appeals List, 12 September 2018.
As noted earlier, the parties did not prepare any written terms of settlement on the day of the mediation. The parties agreed that Mr Englisch’s solicitors would draw up various documents, including:
(a)terms of settlement;
(b)an amended notice of appeal;
(c)consent orders allowing the appeal; and
(d)a joint memorandum to the Court of Appeal.
The specific content of those documents was not discussed at the mediation.
In relation to the preparation of the documents, Mr Alesci deposed as follows:
I said to the Judicial Registrar in a joint session, words to the effect that there was still a lot more we needed to do before any settlement could be finalised and documented because not all of the terms had yet been agreed, and that as the parties were required to draft and then agree to the content of the documents. … The Judicial Registrar stated words to the effect that he proposed to leave the mediation open and adjourn the matter to a directions hearing on 30 September 2020, by which time we should seek to finalise terms of settlement, as well as draft and attempt to agree to the contents of the other documentation referred to, and then advise the Court. I recall that this proposal was not opposed by our opponents.
Mr Marra’s evidence about this aspect of the joint session was as follows:
There was a discussion in the joint session about how the agreed terms would be implemented, because JR Keith informed us that in order to dismiss the VCAT appeal the Supreme Court required a joint memorandum from Counsel pursuant to a Practice Note. Mr Alesci said that his Counsel would prepare the joint memorandum and that his office would prepare consent orders and a deed of settlement. Either Mr Fuller or Mr Alesci said words to the effect that ‘the parties will agree to co-operate in preparing the joint memorandum’ and that was accepted by everybody. I recall that there was a discussion that the basis on which the joint memorandum would be prepared was because of an argument proposed to be raised by Mr Englisch in the appeal pursuant to Burns v Corbett (2018) 265 CLR 304. I also recall that Mr Alesci mentioned that Mr Englisch required a non-disparagement clause, to which Ms Sully agreed.
…
There was no discussion between the parties about reducing the agreement to writing during the Mediation. In my view, this was because JR Keith required the Mediation to conclude promptly (because of his Court commitments), as well as the complexity in the parties needing to agree to a joint memorandum. Nobody, however, said that the settlement that was agreed was contingent or conditional, nor did anybody (including JR Keith) say — as is the practice at private mediations I have attended — that the settlement would not be binding until it was signed by the parties.[9]
[9]Emphasis in original.
The mediation was left ‘open’ by the Judicial Registrar at its conclusion and the proceeding was listed for a directions hearing at the end of September.
Mr Fuller also deposed to his ‘usual practice’ in mediations, as follows:
I have participated as a legal practitioner in over 100 mediations since my admission. It is my usual practice to ensure that an agreement is documented in writing on the day a settlement agreement is reached. I did not insist on the preparation of a written record of the agreement on the day because of the modest quantum in dispute and because it was clear to me that the parties had reached a binding agreement and intended to be bound by it.
He effectively reiterated that statement in cross-examination.
In so far as any ‘common practice’ was concerned, in cross-examination Mr Fuller was asked whether, in his experience, it was ‘common for a mediator to state that no settlement is binding until there is a written settlement agreement or some signed heads of agreement’, to which he responded ‘[p]rivate mediators tend to say that, yes’.
In addition, in cross-examination Mr Marra was asked whether he agreed that ‘it’s common practice that parties record any settlement at a mediation in some sort of written document’, to which he replied ‘yep’. He also confirmed that that was his ‘usual practice to ensure that’s done on the day of the settlement’.

The parties’ communications and conduct after the mediation

On 8 September 2020, five days after the mediation, Mr Marks of DSA Law (Mr Englisch’s solicitors) emailed Mr Marra of SGM Legal (Ms Sully’s solicitors) and stated, relevantly:
We refer to the judicial mediation which took place on 3 September 2020 and note that the matter has settled in principle, on terms including that:
1.         [Mr Englisch] is to pay to [Ms Sully] the sum of $6,250 in 90 days;
2.[Ms Sully] is to consent to [Mr Englisch] filing an amended notice of appeal in the form foreshadowed;
3.[Ms Sully] is to consent to orders being made including that leave to appeal be granted and the appeal be allowed, as well as cooperating in the preparation and submission to the Court of a joint memorandum for the purposes of Clause 8.1 of Practice Note S CL9, including conceding that she did reside in New South Wales when the VCAT proceeding was issued;
4.         The parties provide full mutual releases;
5.         No order as to costs.[10]
[10]Emphasis added.

On 8 September 2020, Mr Marra responded by email, which stated:
I will seek instructions and get back to you ASAP. I don’t believe all of point 3 was agreed, but it should not be a problem as long as that occurs after payment — TBC.
On 9 September 2020, Mr Marra sent a further response by email, which stated that:
In principle the terms below are consistent with the agreement last week.
However items 2 and 3 need to be contingent on payment being received by [Ms Sully]’.[11]
[11]Emphasis added.
On 22 September 2020, Mr Marks provided to SGM Legal a draft deed of settlement and minutes of proposed consent orders. The deed reflected the terms set out in Mr Marks’ email above. The email stated that Mr Marks was preparing the joint memorandum and the amended notice of appeal, which they proposed be annexed to the deed of settlement.
Following the provision of a draft settlement deed, there was some disagreement between the parties about the timing for each party to sign consent orders giving leave to amend the notice of appeal, consent orders allowing the appeal, and the settlement deed. The parties exchanged emails about those matters between 24 and 29 September 2020.
(a)On 24 September 2020 Mr Marra stated that the orders for the filing of an amended notice of appeal could be made on 30 September and that Ms Sully was willing to sign orders allowing the appeal before payment was made to her, but on the basis that those orders be held in escrow pending the payment. That was consistent with her position at the mediation concerning timing (as reflected in Mr Alesci’s notes and in the evidence of other participants at the mediation).
(b)On 29 September Mr Marks responded via email, as follows:
We have attached draft orders to this effect, please let me know if you are agreeable to same and we will advise the Court.
We confirm that, per the draft deed of settlement previously forwarded, your client’s consent to the filing of the documents referred to above is conditional upon the payment of the settlement sum, and any such documents are to be held in escrow pending this payment.[12]
[12]Emphasis added.
(c)On 29 September 2020, Mr Marra responded via email as follows:
The proposal in my email of 24 September for consent orders to be made at tomorrow’s hearing which permit the filing of an amended notice of appeal by your client was put on the assumption that the parties would have each executed the deed of settlement.
A settlement deed has not been executed despite the parties reaching an agreement at the mediation almost four weeks ago.
Your client now seeks the consent of my client to amend his case before the Court without having to commit to the parties’ settlement agreement. I do not expect our to consent to the amendment of your client's case until he enters into the settlement agreement.
If your client can execute the settlement agreement (noting our client’s proposed amendments) today, then orders can be made tomorrow for the filing of an amended notice of appeal and an adjournment until December. This will allow time for your client to make the payment.
If your client cannot execute the settlement agreement today, then our client consents to orders being made tomorrow adjourning the matter to December. In that event, upon execution of the settlement agreement by the parties, a signed comprehensive minute will be provided to your office to be held in escrow pending the payment by your client. The comprehensive minute will permit the filing of an amended notice of appeal, grant the appeal, and make no orders as to costs.
It is a matter for your client how he wishes to proceed. It has been some time since the parties’ [sic] reached their agreement at mediation, so our client had expected to have a concluded settlement by now.
Please confirm by return how you wish to proceed.[13]
(d)On 29 September 2020, Mr Marks responded as follows:
We have drafted the proposed settlement deed provided to you previously and this has not yet been executed simply as it was our preference to exhibit to it the further documents to be filed (including the joint memorandum to be submitted by the parties pursuant to Practice note CL9), which pursuant to the terms of the settlement agreement reached, your client consents to being filed once our client has paid the settlement sum.
The proposed amendment to the appeal notice is as foreshadowed, ie. to include the jurisdictional point raised shortly prior to the mediation.
In the circumstances, we agree to adjourn the directions hearing for one month, in which time we anticipate providing the further documents and finalising the deed of settlement.
Please let us know if you are content with this and we will advise the Court.[14]
[13]Emphasis added.
[14]Emphasis added.
Following those emails, on 29 September 2020 Mr Marks sent an email to the Court seeking an adjournment of the directions hearing and attaching proposed consent orders. The email stated that ‘[t]he reason for the requested adjournment is that the parties have reached an in principle settlement and are in the process of finalising the documentation to implement this’. Mr Marra was copied to the email. The directions hearing was adjourned to 9 December 2020.
There then followed a period of delay, during which Mr Marra sought, by email and telephone, updates from Mr Marks and others at DSA Law about the progress of the settlement, but without any real success.
On 4 December 2020, Mr Marks sent to Mr Marra a proposed deed of settlement, a proposed amended notice of appeal, a draft joint memorandum, and proposed consent orders. Mr Marks observed that the deed contained a minor amendment to clause 2, because the ‘originally contemplated date of payment’ had passed.
On 7 December 2020, Mr Marra wrote to Mr Marks taking issue with certain paragraphs of the joint memorandum and proposing amendments to it. He stated that his client had no issue with the amended deed of settlement. The email then said as follows:
As for the proposed minute, there seems little point in making orders for your client to file an amended Notice of Appeal and then returning on 20 January, as is proposed by order 3, to make orders dismissing the proceeding. We proposed that the parties seek for the Court to make all of the required orders at the hearing on 9 December 2020 by way of a minute reading:
1.The applicant have leave to file and serve an amended Notice of Appeal today.
2. The order made by the Victorian Civil and Administrative Tribunal, as constituted by Member Johnston, on 23 March 2020 in proceeding number C5845/2015 (‘the VCAT Proceeding’) be set aside.
3. The VCAT Proceeding be dismissed.
4. There be no order as to costs in this Court or the VCAT Proceeding.
We therefore propose that:
1. Your office amend the memorandum and the minute in accordance with the above and return the document to our office by no later than 10am tomorrow 8 December 2020.
2. Our client will execute the deed of settlement in its current form and attach to the deed the current form of the amended Notice of Appeal (marked with the letter ‘A’), the amended form of the proposed minute (marked with the letter ‘B’), and the amended form of the joint memorandum (marked with the letter ‘C’) and return same to your office by 12pm tomorrow 8 December 2020.
3. Your client make the payment provided for in the deed and produce remittance advice of same to our office tomorrow afternoon.
4. The proposed minute can then be sent to the Court to be made at the hearing on 9 December.[15]
[15]Emphasis added.
Mr Marks responded to Mr Marra on 8 December 2020 as follows:
We refer to your e-mail and make the following comments:
1. The parties agreed to settle the proceeding on the basis that they would cooperate in the preparation of a joint memorandum to be provided to the Court, in support of the desired final orders being made. It was not agreed at any stage that the appeal grounds would be limited to a single ground. Indeed, we have already proposed to forego 2 appeal grounds for the purposes of the joint memorandum and removing the causation ground potentially and unnecessarily undermines our client's prospects of the appeal being successful .
…
3. The purpose of the joint memorandum is to explain the legal justification for the proposed orders. Your client has agreed to have the order set aside and to cooperate with our client’s efforts to do so. In our view, your client insisting upon the removal of the causation ground, or seeking to require that we state that the ground is disputed, defeats the purpose of the settlement.
4. Finally, whilst we appreciate that the provision of the joint memorandum was regrettably somewhat delayed, the matter is listed for directions on Wednesday, not a final hearing. We would not expect final orders to be made tomorrow in any event. Once the content of the documents can be agreed, the documents can then be executed and submitted to the Court, and we would expect that the directions hearing will be vacated in any event, for the matter to be determined on the papers in due course. As such, we propose that the directions hearing be vacated for a short period to allow the documents to be finalised, after which point we can liaise with the Court on your client’s behalf, on the agreed terms. We are happy to mention your client’s appearance to avoid your client incurring the costs of attendance.
For these reasons, our client is not prepared to accede to the request that the causation ground be omitted, and we invite your client to reconsider this position and respond to us as soon as possible such that we may continue taking steps to finalise the matter.[16]
[16]Emphasis added.
On 8 December Mr Marra replied, as follows:
Our client will agree to the terms (subject to the changes to the consent orders as outlined below) and to the joint memo as provided by your office.
However, our client is not prepared to consent to any orders until such time as your client has returned an executed deed.
We note furthermore, that our client is not prepared to consent to the filing of an amended notice of appeal until such time as payment has been received as per the original agreement.
We, therefore, request that you:
1. Amend the consent orders to remove Order 2; and
2. Provide us with executed terms of settlement.
Once these have been provided we hold instructions to execute the minute of consent.[17]
[17]Emphasis added.
On 9 December Mr Marks wrote to Mr Marra as follows:
We are just awaiting confirmation of instructions and the signed deed.
In the interim, we propose to seek a short adjournment of the directions to allow this to be completed.[18]
[18]Emphasis added.
The parties agreed to adjourn the directions hearing that was listed for 9 December 2020. Orders were made on 9 December 2020 adjourning a directions hearing by one week. Those orders note the following in ‘Other Matters’:
A. The parties attended mediation on 3 September 2020 and resolved the matter in principal [sic]. The parties continue to resolve issues to document that agreement.[19]
[19]Emphasis added.
Later on 9 December Mr Marra emailed Mr Marks as follows:
Given that we now have an extra week and are agreed on the terms and memo, we are of the view that payment should be able to occur by next Wednesday and that we should be able to execute minutes concluding the matter finally on Wednesday.[20]
[20]Emphasis added.
On 15 December 2020, Ms Sully executed the deed of settlement. Mr Marra sent a copy of the executed deed to Mr Marks, and asked him to have his client sign and return the deed.
Later on 15 December 2020, Mr Marks sent Mr Marra an email which stated, relevantly:
We are instructed as follows:
1.[Mr Englisch’s] professional indemnity insurer now has indicated that if [Mr Englisch] is successful in having the VCAT Order of 23 March 2020 set aside, it intends to attempt to recover from [Ms Sully] the judgment amount paid to her. We bring this to your attention in the interests of transparency as the proposed terms of settlement would prevent your client from defending the appeal in circumstances where our client’s insurer may seek to recover from her.
2.As you are aware, the terms of the proposed settlement are also conditional upon the Settlement Sum being paid to [Ms Sully] (see clause 3).
3.As a result, we are instructed to proceed with the appeal and provide the attached proposed minutes of consent orders which adjust the timetable and hearing date.[21]
[21]Emphasis added.
Following receipt of that email, on 16 December 2020 Mr Marra wrote to Mr Marks asking when his office, or his client, first learned that the insurer intended to issue recovery proceedings, and requesting various documents. Mr Alesci responded stating that he did not see the relevance of Mr Marra’s requests. Later that day, Mr Marra wrote to Mr Alesci as follows:
This matter resolved at a judicial mediation on 3 September 2020. There was no mention by your client’s representatives of the potential of recovery proceedings at the mediation.
Since that date, our office has contacted your office on at least 15 occasions, via both email and telephone, largely without response. My office has repeatedly sought updates from your office as to the progress of the settlement documents. On some occasions, your office did respond to the effect that counsel had encountered delays in drafting or settling the settlement documents. At no time between 3 September and 14 December did your office inform us of the possibility of recovery proceedings by your client’s insurer. The extent to which our office has gone to, simply elicit a response from your office is, quite frankly, extraordinary.
At 9:11 pm yesterday, the night before today’s directions hearing, your office informed us that your client has withdrawn from the settlement.[22]
[22]Emphasis added.
On 16 December 2020, the parties appeared before Judicial Registrar Keith for a directions hearing. Mr Fuller of counsel appeared for Ms Sully, and Mr Parker of counsel appeared for Mr Englisch. Orders were made for the trial listing of 13 May 2021 to remain allocated and for the making of orders in chambers amending the timetable leading to the trial date. Those orders note in ‘Other Matters’:
A. The parties informed the Court that the in principle settlement derived from the Judicial Mediation on 3 September 2020 is no longer on foot but the court expresses the view the parties could reopen the matter if they expressed such a request.[23]
[23]Emphasis added.
On 24 February 2021, Mr Marra sent an email to DSA Law, which said as follows:
This matter resolved at a judicial mediation on 3 September 2020.
On that date, the parties agreed, in summary, to the following terms:
1. That your client would pay our client the sum of $6,250 in 90 days;
2.Our client would consent to the filing of an amended Notice of Appeal upon payment by your client;
3.Our client would consent to orders allowing the appeal, setting aside the final orders of VCAT and no orders as to costs;
4. Our client would assist with the filing of joint submissions to the court on the question of the appeal;
5. Each party released the other from any further claims in relation to the dispute; and
6. Our client would retain the monies already paid to her in compliance with the final orders of VCAT.
It was represented by your client that no efforts would be made against our client to recover any monies paid to her to date.
A binding agreement was created on that day. The Court’s notes will confirm same; as will notes taken by the writer and our client’s counsel.
The matter falls within the first category of cases discussed by the High Court in Masters v Cameron (1954) 91 CLR 353. There was no suggestion that the parties’ agreement was conditional on the execution of further documents. The parties agreed upon all the terms of the contract and intended to be immediately bound to the performance of those terms but at the same time proposed to have the terms restated in a form which was to be fuller or more precise but not different in effect. Thus, the parties are bound [by] the terms of the agreement reached on 3 September.
At no stage has your office dissuaded our client of the view that a binding agreement was created on 3 September. In fact, your Mr Marks wrote to our office on 8 September 2020 setting out, in his view, the terms of the parties’ agreement.
On 15 December 2020, your office wrote to our office notifying our client of the prospect of your client’s insurer issuing recovery proceeding if the parties’ settlement proceeded. The issue of recovery proceedings has no bearing on your client’s compliance with the parties’ agreement made on 3 September. The correspondence on 15 December and your client’s subsequent actions make clear that he has no intention to be bound by the parties’ agreement. Your client is now in breach of the contract reached on 3 September.
Your client is estopped from further prosecuting the appeal by reason of the parties’ agreement.
Even if your client’s insurer did issue recovery proceedings against our client, your client would then be joined to that proceeding on the basis of breach of an implied contract term that no recovery efforts would be made against our client. Indeed, it was the parties’ intention that our client would retain the monies paid to her to date. Your client would also be liable in a claim for misleading and deceptive conduct.
We ask that you forthwith confirm by return whether or not your client intends to comply with his obligations in the parties’ agreement. We otherwise note that our client has complied with her obligations under the 3 September agreement including signing the necessary orders and joint submissions.
Our client otherwise reserves her rights to have the appeal dismissed on the basis of the estoppel arising by reason of the parties’ agreement.[24]
[24]Emphasis added.
On 16 March 2021, Mr Marks sent a letter to Mr Marra, which stated as follows:
Our client denies that a binding agreement was reached at the judicial resolution conference which occurred on 3 September 2020. No written terms of settlement were entered into at the mediation nor signed by our respective clients. In addition, your client was represented by you and counsel and our client was represented by a partner of this firm.
You assert that ‘[a] binding agreement was created on that day. The Court’s notes will confirm; as will notes taken by the writer and our client’s counsel.’ These notes taken by third parties cannot constitute a binding agreement. At their highest, these notes could only be evidence of an oral agreement (which is denied).
…
We also note that the assertion in your recent email of 24 February 2021 is the first time that you have suggested that there is a binding agreement between the parties. At recent directions hearings in the proceeding, we and/or our client’s counsel referred to an ‘in principle’ agreement having been reached. At no time during the directions hearings, or afterwards, did your client assert that the agreement was binding. Indeed, your client agreed to the matter being listed for trial with a timetable for interlocutory processes being set out.
Please advise whether your client still contends that there is a binding agreement on foot as this will no doubt affect the future conduct of the matter.[25]
[25]Emphasis added.
It may be observed that the statement that the email of 24 February 2021 was the first time Mr Marra had suggested that there was a ‘binding’ agreement on foot was accurate in so far as Mr Marra had not previously used the term ‘binding’. However, in his email dated 16 December 2020 he had stated that the matter had ‘resolved’ at the mediation, which implicitly conveys that the agreement reached that day was binding.

Findings of the trial judge[26]

[26]The trial judge was an Associate Justice of the Supreme Court. The power to determine the preliminary question had been referred to her Honour on 11 May 2021 by an order of Ginnane J, pursuant to r 77.05(1) of the Supreme Court (General Civil Procedure) Rules2015.

The trial judge considered that there were two aspects to the preliminary question:
(a)had the parties reached a certain or complete agreement as to the above terms at the mediation?
(b)if so, had the parties intended any such agreement to be binding, having regard to the principles in Masters v Cameron.[27]
[27](1954) 91 CLR 353 (‘Masters’).
The judge made detailed findings about the events that occurred at the mediation. Her Honour concluded that each of the three terms alleged by Ms Sully and encapsulated in the preliminary question had been agreed between the parties, namely that:
(a)Mr Englisch pay Ms Sully the sum of $6,250 within 90 days;
(b)Ms Sully retain the $35,771.45 paid to her by Mr Englisch on 10 April 2020 pursuant to the VCAT orders; and
(c)the parties agree to allow the appeal setting aside the VCAT orders.[28]
[28]Reasons, [8], [10].
In relation to the term concerning the setting aside of the VCAT orders, the judge rejected an argument that there was an ‘impossible uncertainty as to how the parties were to dispose of’ the VCAT orders, given the lack of agreement about the content of the further amended notice of appeal and the joint memorandum’. The judge held that the content of those documents was ‘purely ancillary’ and relevant to the mechanism selected by the parties to have the VCAT orders set aside. Her Honour held that it was not necessary for there to be agreement on the contents of these documents before it could be said that the parties had agreed on this term.[29]
[29]Reasons, [101].
There is no challenge to her Honour’s conclusion that the parties had reached an agreement on these three terms.
However, the judge found that, despite having reached agreement on the three terms, Ms Sully had not discharged her onus of proving that the parties intended to be immediately bound by those terms. Her Honour held there was insufficient evidence to indicate that the terms were intended to be immediately binding. In summary, the judge held as follows:
Most critically, there is insufficient evidence of the parties’ conduct and intention at the Mediation, being the time at which the Binding Alleged Agreement is alleged to have been made, to conclude that they intended to be bound. To the extent that the subsequent correspondence of the parties is probative of their intention at the Mediation, the evidence of that correspondence is ambivalent but generally tends against the conclusion that the parties mutually intended to be immediately bound by the Alleged Terms. Moreover, the evidence in favour is conflicted, and is insufficient to satisfy me that the parties did intend to be bound.[30]
[30]Reasons, [104].
Thus her Honour concluded that the parties did not enter into a binding agreement at the mediation and answered the preliminary question ‘no’.[31]
[31]Reasons, [120]–[121].

Relevant legal principles

There was no dispute between the parties as to the relevant legal principles to be applied in determining whether parties have agreed to be immediately bound by an agreement they have reached. Nor was there any suggestion that the trial judge had erred in her articulation of the principles. It is convenient to adopt the articulation of the relevant principles as set out by the trial judge:
Whether an agreement is reached which is intended to be immediately binding falls to be determined objectively, having regard to the presumed or inferred intention of the parties. The parties’ objective intention is fact-based and to be determined having regard to all of the surrounding circumstances, including ‘by drawing inferences from [the parties’] words and their conduct’[32] and from the terms of the parties’ correspondence, such correspondence to be read in the light of the surrounding circumstances and having regard to the commercial context in which they were exchanged.[33] The ultimate question to be answered is what each party, by its words or conduct, would have led a reasonable person in the position of the other party to believe.[34]
[32]Sagacious Procurement Pty Ltd v Symbion Health Ltd (Formerly Mayne Group Ltd) [2008] NSWCA 149, [99] (‘Sagacious’) citing Allen v Carbone (1975) 132 CLR 528 at 532 (Stephen, Mason and Murphy JJ); Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548 (Gleeson CJ, with whom Hope and Mahoney JJA agreed) (‘Commonwealth Games’).
[33]Queensland Phosphate Pty Ltd v Korda (as joint and several liquidators of Legend International Holdings Inc (in liq) [2017] VSCA 269, [37] (‘Queensland Phosphate’).
[34]Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313 [65] (‘Pavlovic’) citing Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, [40].
The relevant intention or belief which is the subject of the Court’s assessment is that which obtained at the time an alleged agreement was made. The subjective intention or belief of a party is not determinative though it may be relevant.[35]
[35]Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, 331 (‘Air Great Lakes’).
In certain circumstances, regard may be had to the subsequent conduct of the parties.[36] In Nurisvan Investment Ltd v Anyoption Holdings Ltd (‘Nurisvan’),[37] the Victorian Court of Appeal distinguished between ‘cases involving contracts that are said to have come into existence as a result of an exchange of correspondence of other communication between the parties’, and cases involving an agreement purported to be contained in a single document, and noted that regard may be had to conduct subsequent to an alleged agreement made in the former kind of case.[38] In Queensland Phosphate Pty Ltd, a case involving an exchange of emails said to evidence a binding contract, the Victorian Court of Appeal held that regard may be had to subsequent communications between the parties: ‘(1) in order to see what was important or essential to the transaction; (2) as admissions; and (3) as probative of the parties’ contractual intention’.[39] The parties agreed that this case was one in which the Court could properly have regard to subsequent conduct of the parties for these purposes.
[36]Pavlovic, [15] (Bathurst CJ), [72] (Beazley P) and [118] (Meagher JA); see also Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd (2015) 47 WAR 547 at [110]–[111]; Sagacious, [99]–[105].
[37][2017] VSCA 141.
[38]Nurisvan, [109] (citations omitted).
[39]Queensland Phosphate, [37].
In circumstances such as the present, where the parties agreed that they would prepare a written document setting out terms of agreement, the Court may consider the three categories of contract set out by the High Court in Masters v Cameron.[40] These categories describe circumstances in which:
[40](1954) 91 CLR 353, 360.
(a) the parties intend to be bound immediately, though expressing a desire to draw up their agreement in a more formal document at a later stage;
(b) the parties intend to be bound immediately, but may wish the operation of a particular clause or term to be delayed pending the drawing up of a more formal document; or
(c) the parties intend to postpone the creation of contractual relations until a formal contract is drawn up and executed.
Since Masters v Cameron was decided, Courts have recognised a fourth category — that being where the parties intend to be bound immediately by terms which they have agreed upon, whilst expecting to make a further contract in substitution for the first contract containing, by consent, additional terms.[41]
Negotiations between parties falling within the first, second and fourth categories set out above indicate an immediately binding agreement notwithstanding a commitment to a further, more formal contract. By contrast, negotiations falling within the third category do not reflect an intention to be immediately bound and therefore no contract will be formed until the execution of the further and more formal written agreement.
The categories in Masters v Cameron — and the further fourth category — are taxonomic and should not distract from the fundamental inquiry with which the Court is engaged. That inquiry remains whether, in all the circumstances, the parties objectively intended to reach a binding agreement.[42]
For an agreement to be made with immediate binding force, notwithstanding that a written instrument may be executed at a later time, the original oral agreement must be complete, certain and enforceable on its own terms.[43] Relative completeness and certainty of contractual terms may be taken as indicators of the parties’ intention to be bound, in addition to fundamental aspects of an agreement without which the Court cannot enforce the agreement. However, and as is recognised in Masters v Cameron, parties may in their negotiations leave aspects of an agreement to be decided at a later date while agreeing to be immediately bound in respect of other, concluded terms. In distinguishing the issue of whether the parties intended to reach a concluded agreement and the issue of whether the parties’ agreement is enforceable assuming such an intention, the Victorian Court of Appeal in Nurisvan adopted the following passage from Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd:[44]
It is to be noted that the question in a case such as the present is expressed in terms of the intention of the parties to make a concluded bargain: see, eg, Masters v Cameron (at 360). That is not the same as, although in a given case it may be closely related to, the question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract. To say that the parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.[45]
[41]Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628. See also Graham Evans Pty Ltd v Stencraft Pty Ltd [1999] FCA 1670.
[42]See Tasman Capital Pty Ltd v Sinclair [2008] NSWCA 248 at [25] and the authorities cited therein.
[43]Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600, 604 (Gibbs CJ, Murphy and Wilson JJ).
[44]Commonwealth Games, 548, quoted in Nurisvan, [108].
[45]Reasons, [32]–[39] (citations in original).

The grounds of appeal

The grounds of appeal are framed by reference to an overarching ground — that the judge erred in finding that there was insufficient evidence that the alleged terms were intended by the parties to be legally binding. The notice of appeal then identifies various further specific errors by way of a series of sub-grounds.
An initial question concerns the standard of review on an appeal of this kind. That is, is the role of the appellate court in a case of this kind to undertake a review by reference to the standard identified in House v The King,[46] or is the standard one of ‘correctness’?[47] There was a suggestion in Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd that the appropriate standard of review is the House standard, which would require the applicant to identify specific error on the part of the trial judge[48] (to which grounds 1(a) to 1(f) are directed). In contrast, if the standard is one of correctness, then the question is simply that posed by the overarching proposition in the chapeau, namely did the trial judge err in concluding that there was insufficient evidence to demonstrate that the parties intended to be immediately bound?
[46](1936) 55 CLR 499, 504–5 (Dixon, Evatt and McTiernan JJ); [1936] HCA 40 (‘House’).
[47]In Minister for Immigration vSZVFW (2018) 264 CLR 541; [2018] HCA 30, Gageler J stated at 563 [48]–[49] that: ‘The course of High Court authority since Warren v Coombes has accordingly proceeded on a consistent understanding of how the line of demarcation is to be drawn between those of a primary judge’s conclusions which attract the correctness standard of appellate review reaffirmed in that case and those which attract the deferential standard applicable to appellate review of an exercise of judicial discretion. … The line is not drawn by reference to whether the primary judge’s process of reasoning to reach a conclusion can be characterised as evaluative or is on a topic on which judicial minds might reasonably differ. The line is drawn by reference to whether the legal criterion applied or purportedly applied by the primary judge to reach the conclusion demands a unique outcome, in which case the correctness standard applies, or tolerates a range of outcomes, in which case the House v The King standard applies.’
[48]See, eg, Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 14,551, 14,571 (Kirby P); [1995] NSWCA 166 (‘Geebung’).
In my opinion the appropriate standard of review is the correctness standard. That is because, although the exercise is an evaluative one, and the answer is one on which reasonable minds may differ, there is nonetheless but one correct answer. For that reason it is not strictly necessary to consider the specific grounds of appeal set out in sub-paragraphs (a) to (f). Rather, it will be sufficient to consider the overarching question, namely whether Ms Sully discharged her onus of demonstrating, on the balance of probabilities, that she and Mr Englisch intended the agreement they reached at the mediation to be immediately binding upon them.
In oral argument, each party made submissions on the conclusion this Court ought to reach in relation to whether the parties had, at the mediation, formed an intention to be immediately bound. In that regard, Ms Sully submitted that there are no real disputes as to the underlying facts; rather, there is a dispute as to what inferences ought to be drawn from the undisputed facts. She further submitted that this Court was in as good a position as the trial judge to determine what inferences ought to be drawn. Mr Englisch did not cavil with that submission, and I accept it.
Having undertaken a ‘real review’ of the evidence for myself,[49] I consider that the correct conclusion to draw from the facts is that, by the end of the mediation, the parties had agreed to enter into a legally binding settlement, albeit one that was later to be reflected in a written document. That is, I consider that Ms Sully had discharged her onus.
[49]Robinson Helicopter Co Inc v McDermott (2016) 331 ALR 550, 558 [43] (French CJ, Bell, Keane, Nettle and Gordon JJ); [2016] HCA 22.

The parties’ submissions

Ms Sully observed that the judge had accepted that statements at the mediation to the effect that ‘offers had been “accepted”’ and ‘the matter was “put to bed”’, were imputed to Mr Englisch as an expression of his belief at the time, and that those statements revealed the communication of Mr Englisch’s subjective view to Ms Sully. Her Honour accepted that, at the time those views were communicated, there existed between the parties a ‘consensus of opinion that an agreement had been reached’. The only express qualification that the judge placed on Mr Englisch’s statements was that they fell to be considered ‘in all of the circumstances’.[50] Ms Sully submitted that those circumstances were not clearly articulated, and nor did the judge in fact consider them.
[50]Reasons, [106].
Further, Ms Sully submitted that the judge’s conclusion that Ms Sully had not discharged her onus of proving that the parties mutually intended to be immediately bound was wrong, given that the Court accepted that there was an objective and mutual consensus of opinion as to the agreement that had been reached. Short of a party making an express statement that they did intend to be bound — which her Honour had accepted was not necessary to prove intention — Ms Sully submitted that it is difficult to conceive of what more the moving party would need to do to discharge her onus of proving an objective intention to reach a concluded agreement. Ms Sully submitted that the trial judge’s finding that Ms Sully had failed to adduce any evidence of a positive intention to be bound was plainly not correct.
Ms Sully also submitted that the judge’s finding that Ms Sully failed to discharge her onus was inconsistent with decisions in which oral or informal agreements to resolve proceedings have been held to result in a concluded agreement, on the basis that such an agreement is the natural means of giving effect to what the parties intended.[51] She submitted that the principle that parties reach agreement as soon as they shake hands is one ‘which often applies’, even if it is not a ‘general rule’.[52] It is consistent, it was submitted, with the law’s flexible approach, the fact that courts strive to uphold parties’ agreements, and the policy of the law to encourage settlement rather than litigation.[53]
[51]Ms Sully referred to Blueprint Homes (WA) Pty Ltd v Samuel [2016] WASC 287; Geebung (1995) 7 BPR 14,551; [1995] NSWCA 166; Grave v Blazevic Holdings Pty Ltd [2012] NSWCA 329; Howe v Connell (Supreme Court of NSW, Young J, 25 September 1997) (‘Howe’); Jennings v Jennings [2015] NSWSC 1826 (‘Jennings’); and Petronaitis v Petronaitis [2016] NSWSC 765 (‘Petronaitis’).
[52]Howe (Supreme Court of NSW, Young J, 25 September 1997); Jennings [2015] NSWSC 1826, [19] (Pembroke J); Petronaitis v [2016] NSWSC 765, [30] (Black J).
[53]Geebung (1995) 7 BPR 14,551, 14,570 (Kirby P); [1995] NSWCA 166.
A further aspect of this part of Mr Sully’s submissions was the contention that the judge had given insufficient weight to her finding that the essential terms of the settlement had been agreed and that the matters outstanding were ‘machinery’ or ‘mechanical steps’, rather than key terms. Ms Sully relied upon a recent decision of this Court, Delaney v Delaney (decided after the trial judge’s decision), where the Court said as follows:
The greater the number and significance of the unaddressed important matters, the greater the likelihood that the parties did not intend to be immediately bound by the agreement. Conversely, where all or nearly all of the important matters are addressed, the conclusion that the parties intended to be immediately bound will be difficult to resist.[54]
[54][2022] VSCA 48, [59] (McLeish, Kennedy and Macaulay JJA) (emphasis added) (citations omitted) (‘Delaney’).
Ms Sully submitted that there were six matters that demonstrated the parties’ intention to be immediately bound by the agreement they had reached on the day of the mediation:
(a)conclusion of all of the key terms;
(b)the words used by the parties, including the words ‘offer’ and ‘accept’, and Mr Englisch’s words at the conclusion of the mediation, which Ms Sully said amounted to a ‘virtual handshake’ (given the mediation occurred using Zoom, a real handshake was not possible);
(c)the context, namely presence at a mediation designed to resolve the dispute;
(d)the size and nature of the dispute — namely, small in quantum and uncomplicated;
(e)the parties not stating that they did not intend to be bound; and
(f)the fact that one of the agreed terms was payment of the settlement sum within 90 days of the mediation, rather than within 90 days of the execution of a deed of settlement, which pointed to the obligation having arisen at the date of the mediation.

In contrast, Mr Englisch submitted that the judge’s reasons disclose a consideration of all of the circumstances, as required by the applicable principles. He submitted that the judge was correct to observe that ‘parties may conclude an agreement and yet remain of the view that they are not bound by the agreement until they have signed the foreshadowed written deed.’[55] He further submitted that Ms Sully’s submissions conflate the concept of an agreement ‘in principle’ and an agreement to be immediately bound, which was the critical distinction reached by the judge. Her Honour accepted that there can be a binding agreement between the parties based only on oral or informal agreement, but concluded that in the instant case there was insufficient evidence to conclude that the parties intended to be immediately bound (not that there was no such evidence).
[55]Reasons, [106].
Insofar as Ms Sully relied upon other judicial decisions, Mr Englisch submitted that the outcomes of such cases are not determinative (although the principles derived from them are relevant). The judge determined the present case by applying the correct principles to the facts and circumstances of the case. Her Honour had weighed up all of the circumstances relevant to whether the parties’ agreement was intended to be immediately binding.
Mr Englisch accepted that there were some indications that the parties intended to be immediately bound, such as Mr Englisch’s words at the conclusion of the settlement, but submitted that other matters more clearly indicated that the parties did not so intend, namely:
(a)the alleged contract was solely oral in nature, whereas the common practice at mediations is to document any settlement in writing;
(b)no one present at the mediation said that the agreement reached that day was to be binding — to the contrary, Mr Alesci said in the joint session that there were remaining steps to be done ‘before any settlement could be finalised and documented’;
(c)the fact that the mediation was left open (which followed on from Mr Alesci’s statement);
(d)the complex parameters of the settlement, several of which had not been resolved, including the issue of an indemnity (which had been raised and left unresolved); and
(e)the post-mediation conduct of the parties’ solicitors’, such as the use of the term ‘in principle’ to describe the agreement in correspondence, including in correspondence to the court, in Court orders and in a statement to the Court.

Consideration: Had Ms Sully discharged her onus?

In my opinion, Ms Sully had discharged her onus and the trial judge erred in concluding otherwise. The matter was finely balanced and, as the arguments reveal, there were factors pointing in both directions. But, having undertaken a review of the evidence, in my opinion a reasonable person observing the mediation would have concluded that, by the end of the mediation, the parties had made a binding agreement. My reasons for so concluding are as follows.
Events at the mediation
It is not in dispute that the parties had reached an agreement as to the three terms, as found by the trial judge.[56] It is also not disputed that that agreement was oral in nature, and that the parties had agreed that it was to be reduced to writing by way of a deed of settlement, and that other documents would need to be drafted. Mr Englisch placed some weight on the oral nature of the agreement, which he described as ‘informal’. In Geebung Kirby P observed that ‘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’.[57] I accept that the oral nature of the agreement means it was less formal than a written agreement. However, as Kirby P observed, this factor falls to be assessed in light of the size, importance and complexity of the subject matter. In the present case the quantum of the agreement was small and the settlement terms were uncomplicated. Thus I consider the oral nature of the agreement to be of limited weight.
[56]Reasons, [10].
[57]Geebung (1995) 7 BPR 14,551, 14,569; [1995] NSWCA 166.
Of considerably greater weight is the fact that, as the judge found, the parties had reached agreement on the key terms of their settlement, leaving only the machinery for implementation of those terms to be worked out.[58] As this Court observed in Delaney, ‘where all or nearly all of the important matters are addressed, the conclusion that the parties intended to be immediately bound will be difficult to resist’.[59] In this case the parties had agreed all or nearly all of the important terms; thus the starting point for the analysis of the question whether they intended to be immediately bound is that it is likely that they did so intend; although of course that is not the end of the inquiry.
[58]Reasons, [87]–[88], [99]–[100].
[59][2022] VSCA 48, [59] (McLeish, Kennedy and Macaulay JJA).
As observed above, a key question in the objective analysis of whether the parties intended to be immediately bound by their agreement is ‘what each party by words and conduct would have led a reasonable person in the position of the other party to believe’.[60] This points to the importance of what was said and done by each party at the mediation. In that regard, the evidence is that the parties agreed reasonably early in the mediation that Ms Sully was to retain the moneys already paid to her pursuant to the VCAT orders, and that Mr Englisch was to obtain the benefit of having the VCAT decision set aside. The parties then spent some time negotiating an amount to be paid towards Ms Sully’s costs. Eventually Ms Sully made an offer of $6,250, which was accepted by Mr Alesci.[61] It is clear from the parties’ evidence — in particular, the affidavit evidence of Ms Sully and Mr Englisch, and the contemporaneous notes taken by the lawyers at the mediation — that the words ‘offer’ and ‘accept’ were used by the parties. Those words are words generally associated with the conclusion of a binding agreement.
[60]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); [2004] HCA 52.
[61]This sum could be understood as partly directed to Ms Sully’s costs of the appeal and partly directed to the $2,500 that remained outstanding in relation to the fulfilment of the VCAT orders, or as entirely directed to her costs. The characterisation of the sum is not material to the analysis.
I accept that, after the ‘offer’ had been ‘accepted’, Mr Alesci’s unchallenged evidence was that in a joint session he said words to the effect that ‘there was still a lot more we needed to do before any settlement could be finalised and documented because not all of the terms had yet been agreed, and that as the parties were required to draft and then agree to the content of the documents’. I also accept that this statement tends against a conclusion that the parties intended to be immediately bound. However, in my opinion this statement was not inconsistent with the proposition that the parties had reached a binding agreement, albeit one that remained to be formally documented (and in that sense finalised). As Mr Englisch accepted, the word ‘finalised’ is ambiguous.
It is also relevant that the trial judge found that, contrary to Mr Alesci’s statement, the key terms had been agreed, and all that remained to be worked out after the mediation were the ‘machinery terms’ necessary to give effect to what had been agreed.[62] Mr Englisch submitted that the question of an indemnity had not been resolved at the mediation. That is not consistent with the trial judge’s findings.[63] In any event, however, I do not consider that the evidence supports the proposition that the possibility of an indemnity was left open. Mr Alesci had said at the mediation, in unequivocal terms, that Mr Englisch would not provide an indemnity.[64] Ms Sully never later requested that an indemnity be included in the deed of settlement, and nor was an indemnity ever included in the draft deed (which Ms Sully eventually executed). Thus, contrary to Mr Englisch’s submission, it cannot be said that this was a matter that ‘needed to be addressed in a deed of settlement’.
[62]Reasons, [85], [99], [109]–[110].
[63]Reasons, [96].
[64]Although Mr Alesci deposed that he considered that the issue whether Mr Sully would press for an indemnity had been ‘left open’ at the mediation, Mr Englisch accepted in oral argument that Mr Alesci’s subjective view of that matter was irrelevant to, or at least of limited relevance to, the objective analysis that is required.
In relation to the indemnity issue, Mr Englisch also pointed to the fact that, after his solicitors had, on 16 December 2020, raised the possibility that the insurer might seek to recover the funds from Ms Sully, Mr Marra observed that Mr Englisch would be joined to such a proceeding on the basis of an implied term of the contract that no recovery efforts would be made against Ms Sully, and that it was the parties’ intention that Ms Sully retain the moneys paid to her. The latter proposition was reflected in the agreed term found by the trial judge. It may be that, by reason of that term, there was an implied term that no recovery efforts would be made (a matter which this Court need not resolve). The fact that a term might be implied from the parties’ express terms is no barrier to concluding that the parties intended to be immediately bound by those express terms.[65]
[65]See, eg, Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 548 (Gleeson CJ); GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 634 (McHugh JA, Kirby P and Glass JA agreeing at 632); Delaney [2022] VSCA 48, [56] (McLeish, Kennedy and Macaulay JJA).
Even accepting that Mr Alesci’s statement about the need for documentation tends against a conclusion that the parties intended to be immediately bound, it is relevant to observe that that statement did not come at the conclusion of the mediation. Rather, the final communication from Mr Englisch to Ms Sully, at the conclusion of the mediation, was that he was pleased that they had settled and wished to ‘put the matter to bed’. Considered objectively, that conveys the proposition that the matter was resolved in a binding manner, as counsel for Mr Englisch accepted in oral argument.
It is also appropriate to place that statement by Mr Englisch to Ms Sully in context. It occurred at the conclusion of a formal mediation, which the parties had attended for the express purpose of seeking to resolve their dispute. Evaluated in that context, Mr Englisch’s statement is strongly probative of an intention to be immediately bound. And it would have led a reasonable person in the position of Ms Sully to believe that she and Mr Englisch had reached a binding settlement.
As to the fact that the mediator left the mediation ‘open’, I give limited weight to that in light of the parties’ direct communications with each other. As Mr Englisch accepted, it is unclear precisely what was meant by the mediation being left open; there was no further mediation session scheduled, rather the next step was a directions hearing scheduled for 30 September 2020. I do not consider that the mediator stating that the mediation was left ‘open’ requires a conclusion that the parties did not intend to be immediately bound.
Finally, each side relied upon what was not said at the mediation. Ms Sully submitted that it was significant that, although agreement had been reached, no one said expressly that the agreement was not binding. In contrast, Mr Englisch submitted that no one had said that the agreement was to be immediately binding. Ultimately, I give little weight to either of these matters. What is more important is what was said at the mediation, not what was not said.
‘Common practice’ at mediations
I accept that, as Ms Sully conceded, it is the common practice of lawyers attending mediations to reduce any agreement reached to writing on the day of the mediation.[66] That concession is supported by statements in two authorities, although I note that those statements did not concern the conduct of parties at a formal mediation.
[66]As noted above, Mr Fuller, counsel for Ms Sully, accepted a common practice in these terms in his oral evidence.
(a)In MX v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme, one party had made a written offer of settlement and the other party had sent an email that ‘contained words capable of being construed as an acceptance’ of the offer.[67] Robb J said as follows:
[A]lthough there is no reason why parties should not agree to be bound immediately by terms of settlement, when they also agree that they will enter into a formal deed of settlement, it is my experience that, unless there is some relatively clear indication, from the wording or the circumstances, that the parties intend to be bound immediately, the general practice and expectation of lawyers is that the settlement will not become final until all of the terms of the deed of settlement are agreed and the deed entered into. The strength of that proposition, if it is accepted, may perhaps depend upon the relative simplicity of the points that need to be settled in order to resolve the dispute entirely. However, experience suggests that, even in relatively simple disputes, there are issues that need to be addressed in the settlement that go beyond matters of quantum, interest and costs.[68]
(b)In Pavlovic v Universal Music Australia Pty Ltd the parties were negotiating, over email and telephone, a deed of release to terminate an earlier written deed of agreement. They appeared to have reached agreement and the solicitor for one party sent an email indicating that their client would sign. However, the client did not go on to execute the deed of release. Beazley P observed as follows:
[I]t is probable, as a matter of commercial reality, that if the parties had intended to be bound without signing the documents, one or both of the solicitors would have said so. I consider that ‘sophisticated’ solicitors, as his Honour described the legal representatives of the parties, would not have left such a matter to chance. Rather, if there was to be such a significant change to the manner in which the parties hitherto had been conducting their negotiations, there would have been an express statement that that was to be the position.
…
The emails of 23 and 24 December 2014 are to be considered in light of the commercial and formal relationship between the parties, the complex dispute they were facing, and the lengthy negotiations that had culminated in the Proposed Deed. These factors indicate an intention to maintain the formalities which had characterised the relationship between the parties as until 24 December 2014.[69]
[67][2020] NSWSC 961, [20]–[21] (‘MX’).
[68]MX [2020] NSWSC 961, [109] (emphasis added).
[69](2015) 90 NSWLR 605, 620 [83], [87]; [2015] NSWCA 313 (emphasis added).
However, the existence of a common practice amongst lawyers of reducing any agreement reached at a mediation to writing does not compel a conclusion that, at a mediation where the parties do not reduce their agreement to writing, they do not intend to be immediately bound. Rather, in my opinion, the common practice is better understood as a matter of prudence, directed to avoiding the kind of dispute that has arisen in this case.
In any event, even if the common practice were to be understood as meaning that, in the absence of a written document signed at a mediation, generally parties in that context do not intend to be immediately bound, it is always necessary to consider whether that common practice was adhered to or departed from in the particular case.[70] So much is reflected in Robb J’s qualification ‘unless there is some relatively clear indication from the wording or the circumstances’.[71] In the present case I consider that, in addition to the express language adopted by the parties (discussed above), there are several objective aspects of the circumstances that support the proposition that the parties intended to be immediately bound even though they did not adhere to the common practice. Those matters are that the settlement as agreed was uncomplicated, it involved a small quantum, and there was no history of formal negotiations documented in writing that would suggest the parties would not have intended a less formal agreement to be binding. In addition, the time constraints on the mediator meant that the parties were left with no time, within the mediation, to document their agreement; that assists in explaining why the parties, having reached a binding agreement, left the documentation of that agreement to a later date.[72]

The parties’ communication and conduct after the mediation

[70]The trial judge’s treatment of the ‘common practice’ was raised by grounds 1(a), 1(b) and 1(c); but it is not necessary for present purposes to resolve those grounds.

[71]MX [2020] NSWSC 961, [109].

[72]I note that I have not found it necessary to rely upon Mr Fuller’s evidence of his personal ‘usual practice’, or his explanation of why he did not apply his ‘usual practice’ in this particular case. Rather, I have relied upon the objective features of the dispute that provide a basis for giving limited weight to the common practice.

Both parties accepted that, consistently with the authorities, in determining whether parties to an agreement intended to be immediately bound by an agreement it is permissible to have regard to the parties’ conduct and communications after the agreement had been reached. Mr Englisch, in particular, relied upon the use of the term ‘in principle’ on several occasions:[73]
(a)First, that term was used on 8 September 2020, some four days after the mediation, when Mr Marks sent an email to Mr Marra stating that the matter had settled ‘in principle’, to which no objection was taken.
(b)Second, that term was used in an email from Mr Marks to the Court on 29 September 2020, to which no objection was taken (although there was no evidence that the text of the email had been discussed and agreed between the parties);
(c)Third, that term was used in the ‘Other Matters’ section of two sets of Court orders, based on what had been communicated to the Court by the parties, apparently with the acquiescence of Ms Sully’s solicitors.
[73]Ground 1(f) was directed to the trial judge’s statement that ‘parties from either side repeatedly refer to the Alleged Binding Agreement as an “in principle” agreement’. It is not necessary for present purposes to determine whether that statement involved specific error.
Mr Englisch accepted, however, that Ms Sully’s solicitors had not themselves used the term ‘in principle’ to refer to the agreement reached at the mediation.
Mr Englisch submitted that the judge was correct to hold that the expression ‘in principle’ is not a term of art, but that it typically indicates something short of a legally binding commitment.[74] He referred to Brereton J’s remarks in Cacace v Bayside Operations Pty Ltd, as follows:
Although no general rule can be stated about the phrase ‘agreed in principle’, I think it can be said that it is a phrase often used by lawyers to indicate that although consensus on a matter has apparently been reached, there is not yet a final agreement. ‘Settled in principle’ is a state of consensus somewhat short of ‘settled’.[75]
[74]Reasons, [117]; Mr Englisch also relied upon Mr Marra’s evidence that he understood the expression in that way ‘as a general rule’.
[75][2006] NSWSC 572, [18] (emphasis added).

So much may be accepted. However, the ‘typical’ use of a term does not mean that it was necessarily used in that typical manner in a particular case. In Air Great Lakes, for example, the parties had signed a written document that used the term ‘proposed agreement’, which one side argued militated against the existence of a presently binding contract. That argument was rejected on the basis that it revealed only that a more formal document would be drawn up, and did not disclose an intention that there was no binding agreement unless and until the formal agreement was executed.[76] The same may be said in the present case in relation to Mr Marks’ use of the term ‘in principle’.
[76](1985) 2 NSWLR 309, 321 (Hope JA), 327 (Mahoney JA), 339 (McHugh JA), discussed in Geebung (1995) 7 BPR 14,551, 14,566 (Kirby P); [1995] NSWCA 166.
In any event, even accepting it was used in that way by Mr Marks, the question is, what weight is to be given to the unilateral use of that term in correspondence after the mediation, without immediate objection, and to the later acquiescence in the use of that term in correspondence and statements to the Court? In my opinion, a failure to object to the use of the term ‘in principle’, and an acquiescence in that use, carries significantly less weight than would an actual use of the term.
Further, the weight to be given to the use of the term ‘in principle’ falls to be considered in light of the correspondence considered as whole, as Mr Englisch accepted. Considered as a whole the correspondence is, as the trial judge found and both parties accepted, equivocal.
Mr Englisch submitted that, in addition to the use of the term ‘in principle’, the correspondence contains various other statements that tend to support the proposition that no binding settlement had been reached. He pointed to Mr Marra’s email of 29 September 2020, in which Mr Marra stated that Mr Englisch was seeking Ms Sully’s consent to amend his case ‘without having to commit to the parties’ settlement agreement’, and that he did not expect Ms Sully to consent ‘until [Mr Englisch] enters into the settlement agreement’. Similarly, in an email from Mr Marra to Mr Marks dated 8 December 2020, Mr Marra stated that Ms Sully would not consent to any orders until Mr Englisch had returned an executed deed. I accept that these emails, considered in isolation, support the view that the parties had not agreed to be immediately bound at the mediation.
Mr Englisch also relied upon Mr Marra’s emailed dated 7 December 2020, in which he expressed disagreement with the content of the joint memorandum to the Court, as indicative of a level of complexity about the mechanics of the settlement, and as being an unresolved matter in which Ms Sully had an interest. However, I give that matter little weight because, as Mr Englisch accepted, the nature of a solicitor’s duty to the Court may mean that they would be unwilling to agree to a memorandum that they did not consider to be accurate or appropriate, the function of the memorandum being to ensure that the Court has a proper basis for setting aside orders by consent. That disagreement does not necessarily support the proposition that the parties had not, at the time of the mediation, intended to be immediately bound.
There are other aspects of the correspondence that support the proposition that the parties did consider themselves to be already bound by the agreement reached at the mediation. For example:
(a)the parties treated the obligation to pay the $6,250 as arising 90 days from the date of the mediation, not 90 days from the date of any executed deed of settlement;
(b)in Mr Marra’s email to Mr Marks dated 29 September, Mr Marra referred to the parties having reached an agreement at the mediation;
(c)in Mr Marks’ email to Mr Marra dated 29 September 2020, Mr Marks stated that the settlement deed had not been executed ‘simply’ because it was his preference that various documents be annexed to it, ‘which, pursuant to the terms of settlement reached’, Ms Sully had agreed to being filed once Mr Englisch had paid the settlement sum; and
(d)in Mr Marks’ email to Mr Marra dated 8 December 2020, in resisting Mr Marra’s earlier suggested amendments to the joint memorandum for the Court, Mr Marks stated that the parties ‘agreed to settle the proceeding on the basis that they would cooperate in the preparation of a joint memorandum’ and that ‘it was not agreed at any stage that the appeal grounds would be limited to a single ground’. By those statements, Mr Marks appears to be attempting to hold Ms Sully to what had previously been agreed. Following that communication, Ms Sully agreed to accept the joint memorandum and the amended notice of appeal as proposed by Mr Englisch. This exchange is consistent with the parties having previously reached a binding agreement.
Mr Englisch submitted that the first time, after the mediation, that Ms Sully’s solicitors referred to a ‘binding agreement’ was on 24 February 2021. That is literally true, but it is plain that Ms Sully’s solicitors intended, in earlier correspondence, to convey the proposition that a binding agreement had been reached at the mediation. That is apparent in the email from Mr Marra to Mr Marks dated 16 December 2020, which commenced with the statement that the matter had ‘resolved at a judicial mediation on 3 September 2020’. The fact that the word ‘binding’ was not used in the earlier correspondence is not to the point; it is appropriate to have regard to the substance, rather than the form, of what was contained in the correspondence.
Given the equivocal nature of the correspondence, and given that it is ‘post-contractual conduct’, I consider that the parties’ correspondence is to be given limited weight. It does not require a conclusion that, notwithstanding what occurred at the mediation, the parties did not intend to be immediately bound at the mediation.
Finally, Mr Englisch submitted that Ms Sully’s lawyers’ conduct at the directions hearing on 16 December 2020, at which they agreed to have the matter set down for trial and agreed a timetable to that end, was inconsistent with there being a binding agreement. Had there been a binding agreement on foot, he submitted, Ms Sully’s lawyers would have informed the Court of that, said that that appeared now to be in dispute, and then identified the need for a preliminary question, or the need for communications between the parties as to how to proceed. He accepted, however, that those steps had occurred later, in March 2021. Further, it is significant that the email from Mr Marks that precipitated the course of events on 16 December 2020 was sent at 9.11pm on 15 December 2020, with the directions hearing scheduled to occur the next morning. In those circumstances, I accept Ms Sully’s submission that it is not surprising that her counsel had no instructions about the position that Ms Sully might take in relation to there being a binding agreement on foot, and that agreement to a course of conduct that is arguably inconsistent with there being a binding agreement on foot needs to be evaluated in light of those temporal matters. For that reason, I give limited weight to what occurred at the directions hearing on 16 December 2020.

Conclusion

For these reasons, I consider that Ms Sully had discharged her onus of proving that the parties intended to be immediately bound by the agreement they reached on the day of the mediation; and the trial judge erred in concluding otherwise. I have not found it necessary to resolve the various sub-grounds of appeal.
I would thus grant leave to appeal and allow the appeal. The question posed for consideration by the trial judge ought to be answered ‘yes’.

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[2022] VSCA 184

31 August 2022