Sully v Englisch

Case [2022] VSCA 184

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:

  1. 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.

  2. 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. 

  3. 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. 

  4. The orders proposed by Walker JA should be made. 

SIFRIS JA

  1. 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…

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Sully v Englisch [2022] VSCA 184
Case
[2022] VSCA 184
Decision Date

CaseChat Overview and Summary

In the case of Sully v Englisch, the dispute centred on whether a binding agreement to settle had been reached between the parties during a mediation session. The trial judge found that while the parties had indeed agreed on key terms, there was insufficient evidence to conclude that they intended to be immediately bound by the oral agreement. The appeal to the Victorian Court of Appeal revolved around whether the trial judge erred in her assessment of the evidence and the intention of the parties.

The central legal issue was whether the trial judge had correctly applied the principles of contract law in determining whether the parties had intended to be immediately bound by the terms agreed upon during mediation. Specifically, the court had to consider whether the trial judge had given sufficient weight to the finding that the essential terms of the settlement had been agreed and whether the remaining issues were merely procedural rather than substantive.

The Court of Appeal, after reviewing the case, concluded that the trial judge had indeed applied the correct principles but had erred in her assessment of the evidence. The appellate court found that a reasonable observer of the mediation would have concluded that the parties intended to be immediately bound by the terms agreed upon. The court highlighted several factors supporting this conclusion, including the completion of all key terms, the language used by the parties, the context of the mediation, the size and nature of the dispute, the absence of any indication that the parties did not intend to be bound, and the agreed timeline for payment of the settlement sum.

The Court of Appeal allowed the appeal, setting aside the trial judge's decision and reinstating the finding that the parties had reached a binding agreement. The final orders of the court were to be determined based on the reinstatement of the agreement, which would include the execution of a deed of settlement reflecting the terms agreed upon during the mediation.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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