Zabusky v Tucker and Cowen Solicitors
[2021] QSC 71
•3 March 2021
SUPREME COURT OF QUEENSLAND
CITATION:
Zabusky v Tucker & Cowen Solicitors [2021] QSC 71
PARTIES:
HARVEY ZABUSKY
(applicant)
v
TUCKER & COWEN SOLICITORS
(respondent)
FILE NO/S:
BS 5288 of 2015
DIVISION:
Trial Division
PROCEEDING:
Hearing
ORIGINATING COURT:
Supreme Court of Queensland
DELIVERED EX TEMPORE ON:
3 March 2021
DELIVERED AT:
Brisbane
HEARING DATE:
1 March 2021
JUDGE:
Ryan J
ORDERS:
1. I declare that the applicant and respondent did not, between 12 July 2016 and 6 September 2016, enter into a binding agreement.
2. The applicant is to pay the costs of the respondent of, and incidental to, the hearing on the standard basis.
3. The matter is to be listed for further review either before the Caseflow Review Judge or in the alternative, on the Supervised Case List.
4. Liberty to apply.
CATCHWORDS:
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – OTHER – where the respondent acted for the applicant – where the parties fell into dispute over costs agreements – where the applicant contends that the parties reached a binding agreement to settle legal proceedings – whether the parties entered into a binding agreement
Uniform Civil Procedure Rules 1999 (Qld), r 658(1)
ABC v The XIVTH Commonwealth Games Limited (1988) 18 NSWLR 540
Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310
Masters v Cameron (1954) 91 CLR 353
COUNSEL:
The applicant appeared for himself.
G Dietz appeared for the respondent.
SOLICITORS:
The applicant appeared for himself.
Tucker & Cowen Solicitors appeared for the respondent.
The question for me at this hearing was whether a binding contract (to settle legal proceedings) existed between the parties after an exchange of the emails in August and September of 2016.[1]
[1] That question was referred to the Court for hearing by his Honour Justice Boddice without an application or initiating document from either of the parties.
After making my finding, I discussed with the parties the need for an application or equivalent so as to formalise my finding in such a way as to allow it to be acted upon or appealed – otherwise it was just my opinion.
After that discussion, the respondent prepared an application for a declaration to the effect that there was no binding agreement between the parties. Ultimately, I made such a declaration (and other orders).
Background
Mr Tucker, of Tucker & Cowen Solicitors, acted for Mr Zabusky and interests associated with him in protracted commercial litigation which commenced in the mid-2000s. I’ll refer to that litigation as the substantive action.
Ultimately, Mr Zabusky and Mr Tucker’s firm fell into dispute over the firm’s fees.
By 2016, there were three actions on foot arising out of that dispute: one in the Supreme Court, an appeal in the District Court and another in the Magistrates Court.
The Supreme Court action, file number 5288 of 15, was originally an application by Mr Zabusky for an assessment of his legal costs (the “fee dispute”).
It was amended and became, additionally, an application for the setting aside of costs agreements (known as the First and Second Costs Agreements); and amended further by way of including an application for damages for negligence or breach of the Cost Agreements.
The Magistrates Court proceedings were instituted by the respondent firm, seeking to recover outstanding invoices from Mr Zabusky.
Mr Zabusky filed an application in the Magistrates Court proceedings for certain itemised bills which was unsuccessful. He appealed from that decision to the District Court, and the District Court proceedings to which I’ve referred are appeal proceedings.
On 15 June 2016, Mr Zabusky was required to give security for costs in those proceedings, which was not provided. I understand that the appeal proceedings have now been dismissed.
In the Supreme Court action 5288 of 15, in a document filed on 15 July 2016, the respondent firm sought, among other things, directions that Mr Zabusky provide points of claim for his several claims in his further amended application.
Settlement Negotiations Initiated
At around the same time in July 2016, Mr Zabusky raised the prospect of the parties settling their disputes. Mr Zabusky believed that the substantive action could settle, and that certain monies held in a bank account, under the control of Mr Tucker and another, could be applied in settlement of his fee dispute with Mr Tucker’s firm.
Monies were paid into that bank account by an order of the Supreme Court in 2010 in proceeding 4405 of 2010.
The parties to proceeding 4405 of 2010 were Mr Zabusky and Virgtel Limited on the one hand, and Henrick Van Leeuwen (or HVL) and James Conomos Lawyers on the other. In accordance with the order, Mr Zabusky was to pay into a bank account a sum of $326,000-odd, and once that sum was paid, the second respondent, James Conomos Lawyers, would instruct the Sherriff of Queensland to take no further step to enforce the sale of property pursuant to an enforcement warrant.
The bank account was to be in the names of Coyne & Associates as solicitors for the second respondent, James Conomos Lawyers; and Tucker & Cowen as solicitors for Mr Zabusky and Virgtel.
Discussions about the terms of settlement of the fee dispute
After Mr Zabusky and Mr Tucker discussed the prospect of settling the fee dispute, Mr Tucker sent an email to Mr Zabusky setting out in detail the terms upon which he would be prepared to settle it.
I consider the context in which the possibility of settlement arose to be significant to the question for me – that is, the possibility of settlement arose in the context of legal disputes between the parties, which included serious allegations by Mr Zabusky against the respondent firm.
After setting out those terms, Mr Tucker’s emails said:
That does not constitute an offer, but just the broad terms upon which I would envisage a resolution. If you are prepared to do so, I can draft it up in a letter so it is more formal and send you a draft. I should also mention that I would be agreeable to waiting a period of time to get this settlement sorted out before we get paid, and at least if we sort our issues out, then we have a joint interest in trying to get the matter resolved with the executor of HVL – the party to the substantive commercial litigation.
After discussing matters relevant to the potential settlement of the substantive matter, Mr Tucker’s email concluded with this paragraph:
If we can agree broadly these terms (without there being a binding arrangement until such time as it is signed) then we can make a time to get together and go through those emails you have (relevant to the substantive matter).
Kindly come back to me when you can.
In my view, the importance to Mr Tucker of a written agreement is obvious.
In an emailed reply, Mr Zabusky indicated that “in broad terms” he agreed with the email.
At 7.16 pm on 14 July 2016, by email, Mr Tucker sent to Mr Zabusky, as he had foreshadowed, a draft letter proposing the terms of a potential settlement of their fee dispute. That draft included certain matters that required the consent of Mr Zabusky’s former wife, Amalia, and son, Erez.
Mr Tucker told Mr Zabusky to “take his time” and to give Amalia and Erez “proper opportunity to read these terms and get advice on them if they need to”.
The letter began with the following paragraph:
I am writing to you to set out proposed terms of settlement of each of the above actions – that is, the actions in the Supreme Court, District Court and Magistrates Court – as between you and Tucker & Cowen Solicitors.
It contained an “offer of resolution” in 22 numbered paragraphs, including an agreement by Mr Zabusky to pay Tucker & Cowen $180,000.
The offer also included a proposal that Mr Tucker’s firm would act for Mr Zabusky, to a limited degree, in the settlement of the substantive litigation.
The letter concluded as follows:
These terms of settlement must be consented to in writing by Amalia Zabusky, Erez Zabusky and Amalia Zabusky as trustee of the Zabusky Family Trust and Softquest Solutions Pty Ltd and each will need to sign the new retainer agreement. You may wish to obtain a limited authority from each to negotiate the settlement terms.
We also require Amalia Zabusky to warrant that she continues to be the trustee of the Zabusky Family Trust, and by signing below, she does so.
Upon written acceptance of these terms, a binding agreement will exist.
I note the reference, again, to the need for a written agreement.
The signature page of the draft letter provided for the signatures of the parties just mentioned and Amalia Zabusky’s warrant.
After further discussion with Mr Zabusky about the terms of settlement, Mr Tucker sent him a redraft on 15 July 2019, emphasising that it was a draft, and marking up certain changes in response to points raised by Mr Zabusky.
The redraft included a new paragraph 16, which read:
A condition precedent to this settlement is that you shall obtain a written authority from Amalia Zabusky (in her own capacity and as trustee of the Zabusky Family Trust) authorising:
(a)You to negotiate the terms of settlement on her behalf, which include the terms set out in paragraph 14 above.
(b)Tucker & Cowen Solicitors to be paid the sum of $180,000 from the settlement moneys.
The redraft deleted the paragraphs of the original draft which required consent to the terms of settlement by Amalia, Erez, Softquest Solutions and Amalia’s warrant.
It retained the paragraph which stated:
Upon written acceptance of these terms a binding agreement will exist.
It provided for signatures by Mr Zabusky and Softquest Solutions.
On 19 July 2016, Mr Zabusky told Mr Tucker, by email, that he did not consider the redraft to reflect their discussions on 14 July 2016.
He attached to his email his own detailed draft agreement which reflected his position and invited Mr Tucker to let him know if the draft was acceptable to Mr Tucker.
I note that Mr Zabusky’s draft did not contain a paragraph stating something to the effect that the agreement was only binding upon written acceptance of its terms, although by paragraph 2 of it, it required the written consent of the executors of the estate of HVL and others to the release of the funds in the trust account of Tucker & Cowen in pursuance of the order made in 2010 on a 50/50 basis – that is, 50 per cent the executors and the other 50 per cent to Amalia Zabusky.
It also left the settlement amount blank.
Mr Tucker then incorporated parts of Mr Zabusky’s proposed agreement into further “proposed terms of settlement” in letter form, which he sent to Mr Zabusky on 15 August 2016.
Those further terms proposed, among other things, that Mr Zabusky pay Tucker & Cowen $180,000 to settle the three legal actions from 50 per cent of the amount held in Tucker & Cowen’s trust account relating to the substantive litigation, which was payable to Amalia Zabusky.
This new proposal concluded with the sentence:
Upon written acceptance of these terms a binding existence will exist between us.
The proposal included provisions for its signing by Mr Zabusky and Softquest Solutions.
It is clear, in my view, from the various drafts of the settlement agreement sent by Mr Tucker to Mr Zabusky that reducing the terms of the agreement to writing was important to Mr Tucker.
Mr Zabusky then sent to Tucker & Cowen his points of claim in the Supreme Court litigation between them, in accordance with an earlier order of the court that he do so.
Mr Tucker took that as an indication that Mr Zabusky did not agree upon the terms of the proposed settlement contained in his August letter – as he indicated in an email to Mr Zabusky dated 24 August 2016.
In that email Mr Tucker explained that his last proposal cut and pasted much of the content of Mr Zabusky’s proposal. He continued:
So it seems that we are not agreed, but I get a sense that may not, in fact, have been that far apart, so perhaps you could let me know what remains in issue and we can see if we can close the gap as between us both. I might be misjudging this but, my impression was we seem to be close to an arrangement, but if there are matters that are still at issue, perhaps you could succinctly identify for me what remains an issue and we can see if we can bridge the gap.
I note the terms of this request – that is, that Mr Zabusky identify the matters which remained in issue between the parties – in the context of each party having submitted to the other their own detailed draft written agreements, which differed in certain respects.
Email said to contain the terms of the settlement agreement between the parties
Mr Zabusky, by email dated 25 August 2016 – one of the critical emails in the matter for me – told Mr Tucker that his (that is, Mr Tucker’s) most recent draft proposal, which took from Mr Tucker’s previous drafts and Mr Zabusky’s draft, was a:
Mix of oil and water, and not a mutually agreed workable framework.
In my view, in this statement, Mr Zabusky is implicitly recognising that an appropriate framework or a workable framework for the settlement agreement required something akin to the detail of the proposals put by Mr Tucker and himself in their correspondence.
In his reply Mr Zabusky said:
If you are indeed keen to see all actions between both of us dismissed and both of us sign mutual releases, I reiterate and confirm that I stand by what we discussed and covered in my draft letter dated 19 July 2016.
By that statement it is plain, in my view, that Mr Zabusky is indicating that he stood by the detailed draft terms he proposed in that letter of 19 July 2016: further recognition, in my view, that a workable framework required detail akin to that provided in his own letter of 19 July 2016.
Then he said:
In summary, the issues that remain to see if we can bridge the gap are: …
Clearly, in that sentence, Mr Zabusky was identifying the differences as he saw things between the terms proposed by him in his letter of 19 July 2016 and the oil and water mix of terms proposed by Mr Tucker on 15 August 2016.
He then listed the five matters which he saw as outstanding in five numbered paragraphs.
Paragraph 1 referred to their need to “agree the amount that I, that is, Mr Zabusky, am ready and willing to pay in order not to be detracted (sic)”.
Paragraph 2 referred to the need for there to be “acceptance and execution” of his draft letter dated 19 July 2016 - with an exception concerning a new retainer of Tucker & Cowen.
Paragraph 3 referred to the need for the agreement to indicate that the settlement amount was to be “paid from the funds released to Mr Zabusky’s former wife, pursuant to dismissal of the HVL litigation” and for the agreement to state that Mr Zabusky had no control over how long that would take.
Paragraph 4 stated that upon payment of the amount referred to in paragraph 1 – there was then no amount referred to therein – he and Tucker & Cowen would dismiss their respective actions and sign mutual releases.
Paragraph 5 stated, in effect, that they had to agree on what steps to take or not in the legal actions between them “pending the time paragraph 4 above is completed”.
In reply, Mr Tucker said, by email dated 30 August 2016 – another critical email in the series to the matter for me:
If we can agree to point 1, that is the amount, then I expect points 2 to 5 to follow.
He asked for Mr Zabusky’s best position about the amount and told him that he would simply give Mr Zabusky an answer. If they could “come to terms” then “so be it”. If not, the parties would press on in court.
On 30 August 2016, by email, Mr Zabusky told Mr Tucker that he was, in effect, willing to pay $112,000 to settle the matters between them, acknowledging that that amount would come to his former wife after settlement of the HVL Litigation.
On 1 September 2016, Mr Tucker told Mr Zabusky by email that they did not have a deal or a settlement. He would not accept $112,000.
He told Mr Zabusky that the reason he should settle was to avoid bankruptcy because Tucker & Cowen would succeed in their litigation against him.
After running through the various costs, Mr Tucker indicated that:
To resolve this once and for all, we will accept $150,000. That is our final position. We won’t negotiate beyond that. If we can agree that number then I can agree to the rest of what you have proposed.
Mr Zabusky relies particularly on that last sentence. At 7.01 am on 6 September 2016, Mr Zabusky emailed Mr Tucker as follows:
David,
I agree that the final amount, pursuant to point 1 of my email, dated 25 August 2016, would be $150,000. By now, all the points in my email dated 25 August 2016 are agreed.Mr Tucker did not acknowledge Mr Zabusky’s statement that they were agreed as to the points in his email. Instead, at 4.49 pm that same day, Mr Tucker asked Mr Zabusky by email for an update on the status of the resolution of the overall or substantive proceedings.
At 5.30 pm Mr Zabusky emailed an update to Mr Tucker. He told Mr Tucker that he envisaged no dramas, and he expected there to be a settlement, and that he would keep Mr Tucker informed.
It was clear from the correspondence that had passed between the parties to that date that Mr Zabusky wished to convey to Mr Tucker that, if Mr Zabusky was unable to settle the substantive litigation, or if it did not settle, then he had no other source of funds and would not be able to pay $150,000 as required.
Correspondence post August 2016
Mr Tucker followed up on the progress of the settlement negotiations again on 6 October 2016 by an email which said:
Would you mind giving me an update on where you are at with settlement? I haven’t done anything to progress any of these litigation matters because we tentatively seemed agreed, and I would like to keep it that way.
Mr Zabusky did not correct Mr Tucker’s reference to the parties being “tentatively” agreed.
Instead, on or about 25 October 2016, Mr Zabusky gave Mr Tucker authority to withdraw the money held in trust.
Mr Tucker thanked him for that authority, but told him that he would need the consent of the other parties to the relevant proceeding before he did so.
The parties then exchanged emails, that is, Mr Zabusky and Mr Tucker, about Mr Tucker’s ability to withdraw the funds from his trust account. In the course of that exchange, Mr Tucker asked for the draft settlement deed which had been sent to Mr Zabusky, reflecting, in my view, Mr Tucker’s desire to investigate the viability of a settlement of the legal actions between his firm and Mr Zabusky on the strength of the settlement of the substantive action.
The email exchange also included a letter drafted by Mr Zabusky which set out why he said Mr Tucker could withdraw the $150,000.
That letter informed Mr Tucker that Mr Zabusky had spoken with his former wife, and that she authorised a payment of $150,000 from the trust account, “after execution of the settlement agreement and mutual releases”. I note Mr Zabusky’s use of the phrase “after execution of the settlement agreement and mutual releases”. I infer that, by “execution”, Mr Zabusky meant “signing”, despite his submissions to the contrary made at the oral hearing, which I found unpersuasive.
Mr Tucker told Mr Zabusky that for the purposes of the settlement between them, he would need Amalia to sign off on it – that is, by way of a signed authority.
In my view, at a time at which Mr Zabusky wished Mr Tucker to understand that, in effect, his ex-wife was his only source of funds, her agreement to hand funds over to him after the settlement of a substantive action was critical to the success of the settlement agreement between the present parties. It is, in my view, unsurprising, therefore, that Mr Tucker required something in writing from her indicating her willingness to do so.
Mr Tucker then explained to Mr Zabusky why he considered himself or the firm unable to withdraw $150,000 from the trust account, having reviewed the court order which established the trust.
He said, “Even if I wanted to withdraw the money, I could not do so without Mr Coyne’s signature, and I doubt he will agree unless he is instructed to. His instructions come from Mr Conomos, for whom he acts.”
Mr Tucker explained that there were other reasons why the funds could not be withdrawn, including that they had to be held until certain retainer issues from 2005 were determined in the Supreme Court.
He also offered Mr Zabusky suggestions about his settlement of the substantive proceedings.
By 3 December 2016, a case flow review of the Supreme Court action between the two present parties was approaching. It was to be held on 9 December 2016.
Mr Tucker suggested on 5 December 2016 that they both write to the court to inform them that the matter was close to settlement in these terms:
The parties have reached a tentative settlement of the proceedings. It is not yet documented in final binding form, but the parties are working constructively together to resolve this litigation and other related litigation. That may take another month or two to finalise. Given the impending Christmas period, may we respectfully request that the cash (sic case) flow review scheduled for this Friday, 9 December 2016, be adjourned, on the papers, for a period of three months.
Mr Zabusky was asked to let Mr Tucker know whether advising the court in those terms was “ok”.
Mr Zabusky replied at 5.40 am on 5 December 2016:
David
The email is ok.
Enjoy the holiday
Harvey.An email in the terms suggested by Mr Tucker was then sent to the Registrar of the Supreme Court on 6 December 2016.
Mr Zabusky was copied into that email. Its reference to their tentative agreement, and the fact that it was not in binding form are significant.
Mr Zabusky did not challenge either of those suggestions set out in that correspondence.
The matter was adjourned by consent until 31 March 2017.
On 29 March 2017, Tucker & Cowen sent an email to the associate of the justice in charge of case flow matters, then his Honour Justice Daubney, seeking an adjournment of the hearing to facilitate further settlement discussions. Mr Zabusky was copied into that email. I observe that the notion of “settlement discussions” is inconsistent with the notion of a finalised settlement agreement, but I will not read too much into that expression.
The Supreme Court matter was adjourned by consent from 31 March 2017 until 12 May 2017 and thereafter.
There were further adjournments of it until at least 8 December 2017, if not sometime in February 2018.
I note that it was either on the 19th of September or the 19th of October, or perhaps both, in 2017 when Mr Zabusky wrote to Mr Tucker about the possibility of pursuing a want of prosecution argument in the substantive matter, which had obviously not settled.
At a directions hearing in the Supreme Court in February 2018, the matter was placed on the Supervised Case List, and the respondents were directed to file and serve a response to the applicant’s points of claim, which they did on 18 May 2018.
Correspondence in January 2018
Meanwhile, in the material before me, there is another chain of emails between Mr Zabusky and Mr Tucker commencing in January 2018. The subject line of the first of those emails is:
Re HVL – settlement agreement and deed of release.
In it, Mr Zabusky says:
I attach herewith a draft settlement agreement and deed of release that reflects an application for want of prosecution. I activated track changes and look forward to receiving your comments once you have time to pursue the draft.
The evidence tendered at the hearing before me did not include that draft agreement, or at least I could not find it, nor was my attention drawn to it.
However, I infer from Mr Tucker’s reply, dated 5 March 2018, that the draft agreement proposed a settlement of all three actions between Mr Zabusky and Tucker & Cowen on terms that reflected an expectation that Mr Zabusky would succeed against HVL because of their want of prosecution of their claim against him.
From Mr Tucker’s reply, the contents of the terms proposed by Mr Zabusky may be, in my view, confidently deduced.
Of course, the actual terms do not matter much. What is significant to the question whether the parties had reached a settlement agreement in October 2016 is that Mr Zabusky prepared a draft settlement agreement in January 2018. His preparation of the draft agreement in January 2018 is inconsistent with there being a finalised agreement between the parties about it in September 2016.
Mr Tucker’s response to the draft included his proposal that it would now cost Mr Zabusky $160,000 to settle all of the proceedings. As had been the case in 2016, Mr Tucker said that a condition precedent to settlement was the consent of Amalia, Erez and the corporate parties to the settlement terms. He told Mr Zabusky that he would not agree to suspend the proceedings indefinitely. He said that he had offered Mr Zabusky 12 months a long time ago, and that that had been and gone. He told Mr Zabusky that he, Mr Zabusky, needed to work out a reasonable period of time to bring things to an end because it was unreasonable to expect Tucker & Cowen to wait forever. He told Mr Zabusky that he could not consent to the dismissal of orders already made in the proceedings, and that he would not release Mr Zabusky from any claims until he was paid.
Mr Tucker noted his understanding that Mr Zabusky was about to sell property in Nigeria, and would soon be in funds to pay the settlement amount.
I will not go through the other matters raised by Mr Tucker in January 2018 but, as I mentioned, in my view, the fact that those matters were raised is inconsistent with the existence of an agreement between the parties in September of 2016.
Other evidence that the parties were still then, that is in January 2018, in negotiations may be found in Mr Zabusky’s reply to Mr Tucker’s email. Mr Zabusky said to Mr Tucker on 9 February 2018 that the technical things noted in Mr Tucker’s email were “doable”, and that his former wife and son were agreeable to the settlement which he, and I emphasise the next two words, “will sign”.
He complained that Mr Tucker’s reference to $160,000 was not part of their previous discussions, nor was it agreed that the cost of Mr Tucker’s work with Conomos could be “looked at” once settlement was done.
I am conscious that the parties did not refer me to this 2018 correspondence, and, in particular, as I understood the respondent’s argument, it did not refer to this correspondence as evidence that there was no concluded agreement reached in September 2016.
On one view of things, I could reach a conclusion that there was no binding settlement agreement in place in September 2016 on the basis that I consider the evidence to demonstrate that the parties were still in negotiations about the terms of settlement in January 2018. However, because that argument was not made by the respondent, I will consider the matter on the basis of the arguments they did make.
First suggestion that the parties had reached a binding settlement agreement in 2016
In the reply to the respondent’s response to the points of claim, Mr Zabusky claimed that he and Tucker & Cowen had reached an agreement to settle all actions between them. This was the first time Mr Zabusky had suggested that there was a binding settlement agreement between the parties reached in 2016.
In that document, which he reads at this hearing, he asserts that by email exchange between himself and Mr Tucker on 25 August 2016, 30 August 2016 and 6 September 2016, they reached an agreement to settle all the actions between them out of court. He asserts that time is not of the essence in settlement agreements.
He asserts that the respondent acted pro bono for him in an attempt to negotiate the substantive proceedings, but those negotiations did not progress for a variety of reasons which I will not detail.
He asserts that the respondent induced him to enter into the settlement agreement, and that it would be unconscionable of the respondent to depart from it.
Observation about the parties’ position
While I do not profess to be across the whole of action 5288 of 2015, and while I might be missing something significant, on its face it seems odd that Mr Zabusky, the applicant in that action, would contend that the action had been settled by his agreement to pay the respondent money and, frankly very odd, that the respondents to action 5288 of 2015 would insist that it proceed rather than pursue the settlement amount agreed.
Even if the respondents are confident of winning action 5288 of 2015, it is difficult to understand what the advantage to them might be of proceeding with it, because I assume that if it runs to its conclusion the respondents will incur not insubstantial actual costs, not all of which will be recouped from Mr Zabusky via a costs order, whatever his means. And, as I understand it, in the absence of a settlement agreement, the respondents would have to chase Mr Zabusky for other costs through the Magistrates Court, incurring further likely unrecoverable costs.
But of course, as I said, I might be missing something, and I proceed on the basis that the respondents have determined that it is in their interests for there not to be a settlement of the various proceedings.
The reason for the present hearing
Action 5288 of 2015 was reviewed by Justice Boddice on 16 July 2020, and again on 27 August 2020.
It was at that August review that his Honour made an order which triggered the hearing before me.
The upshot of that review was that his Honour made an order that, if the parties could not resolve the Supreme Court matter by 4 pm on 23 October 2020, then Mr Zabusky was to prepare a points of claim document setting out the emails that gave rise to the settlement agreement for which he contended by 30 October 2020.
Those points of claim were filed on 29 October 2020.
There were reviews of the matter in November and December at which procedural orders were made.
Amended points of claim were filed on 12 November 2020.
Essentially, Mr Zabusky claims that the “heads of agreement” contained in his email dated 25 August 2016, that is the five numbered paragraphs, were accepted by Mr Tucker (on his firm’s behalf) ultimately on 1 September 2016 when he agreed to accept $150,000 from Mr Zabusky (rather than $180,000).
Mr Zabusky added that the source of the funds for the payment of that amount were proposed by Mr Tucker by email on 11 December 2014 and 22 May 2015.
The respondent filed its points of defence on 2 December 2020, essentially contending that there was no binding agreement between the parties.
On 3 December 2021, his Honour Justice Boddice ordered that “the matter” be listed for hearing on 1 March 2021, that is, for one day.
The matter was obviously the question whether there was a binding settlement agreement between the parties.
Now, it may have been that his Honour intended the parties to file a suitable interlocutory application reflecting his Honour’s intention that a court determine this factual issue but none was filed.
The matter has proceeded on the basis that his Honour’s orders were enough, but I will have to deal with this issue again later in my reasons.
Evidential issue
Mr Zabusky sought to rely on certain paragraphs of an affidavit of his former wife, Amalia Smiley, in support of his argument that a binding settlement agreement was reached in 2016.
The respondent objected to that evidence.
Paragraphs 7 to 39, upon which Mr Zabusky wishes to rely, complain generally about the respondent’s solicitors. Those complaints or those paragraphs are not relevant to the narrow issue for me at this hearing and are therefore inadmissible.
Paragraphs 40 to 56, upon which Mr Zabusky wishes to rely concern a compromise agreement or purported agreement reached in 2009, which is not relevant to the narrow issue for me. Those paragraphs are therefore inadmissible.
Paragraphs 57 to 67, upon which Mr Zabusky wishes to rely contain various assertions about Mr Tucker’s conduct which are not relevant to the narrow issue for me and are therefore inadmissible. They also refer to Mr Zabusky informing his former wife that he and Mr Tucker had reached a settlement agreement. Putting to one side any hearsay issues, Mr Zabusky’s opinion that an agreement was reached is not conclusive on the issue for me. Nor, for that matter, is Mr Tucker’s opinion that an agreement was not reached. I am to determine the question objectively. Those paragraphs of Ms Smiley’s affidavit are appropriate weight in those circumstances.
Relevant principles
In deciding whether the parties reached a concluded agreement on the terms set out in the five paragraphs of Mr Zabusky’s 25 August 2016 email and the later emails which agreed on $150,000 to settle the matters, I have had regard to the approach suggested by the respondent, which reflects the decision of his Honour Justice of Appeal Mahoney in Air Great Lakes, that is,
(a)Did Mr Zabusky and Mr Tucker reach a consensus by way of offer and acceptance?
(b)If so, were the terms on which they agreed sufficiently certain and complete so as to be capable of having contractual effect?
(c)If they were, did that acceptance immediately bind the parties, or was it the parties’ intention that a binding agreement would only arise when a formal document had been signed by the parties?
(d)If it did, have all the conditions precedent to the compromise of the relevant disputes between the parties been performed?
Considering the applicable principles more generally, there was no challenge by Mr Zabusky to the assertion by the respondent that the relevant legal principles were those set out in paragraphs 6, 7 and 8 of its outline, and I proceed on the basis that they are the principles to be applied by me in this matter.
Mr Zabusky asserted other principles, unsupported by authority, which included that time was not of the essence of settlement contracts, and that even if an agreement provided for execution by way of signing of a document, that requirement could be fulfilled or replaced by conduct of the party, which was otherwise consistent with the agreement.
I do not accept that those “principles” asserted by Mr Zabusky reflect the law in this context.
If a settlement agreement does not specify a time for the performance of a thing then, generally, the law will imply that that thing be done within a reasonable period of time. The determination of that reasonable period of time will take into account the reasonable time it might take for monies to satisfy the settlement terms to materialise – but would not allow for an indefinite time – that would be unreasonable.
Consistent with the statements of principle from the authorities, I am to determine whether a contract has come into existence objectively, that is, by reference to the inferences I draw from the words and conduct of the parties, including their words and conduct subsequent to the time at which the alleged agreement is said to have been made.
I do not take therefore as conclusive Mr Zabusky’s statement that he believed that an agreement had been reached or Mr Tucker’s statement that he did not.
Also, the authorities clearly explain that the answer to question (c) in the approach described above – that is, whether the parties agreed not to be bound until a document reflecting the terms of their agreement was executed – will depend on the party’s intention as objectively evaluated in the circumstances.
In ABC v The XIVTH Commonwealth Games Limited, by reference to the judgment of the majority of the High Court in Sinclair, Scott & Co Ltd v Naughton, Chief Justice Gleeson explained, in effect, that there is a difference between parties agreeing as a condition or term of their bargain that a further contract be executed, and the parties deciding that the manner in which a transaction already agreed will go through.
And, as stated in Masters v Cameron, the answer as to the choice between those options depends on the intention disclosed by the language employed by the parties. No special form of words is essential in order that there shall be no contract binding upon the parties before the execution of their agreement in its ultimate shape. I have taken all of that into account.
Signposting of ultimate conclusion
As will emerge below in my reasons, even if Mr Zabusky and Mr Tucker might be said to have reached a broad consensus by way of offer and acceptance as at 6 September 2016 – and I reach no final conclusion about that – the terms upon which they agreed were not then sufficiently certain and complete as to be capable of having contractual effect. Further, and most significantly in my view, having regard in particular to the details which each party was concerned to ensure were spelt out in an agreement, it was not their intention to be immediately bound by the terms of their broad consensus, even if they were sufficiently certain as to be capable of having contractual effect.
Even apart from inferences which are available on the evidence of the parties intention that their final agreement would be one reduced to detailed written form, paragraph 5 of the purported agreement was nothing more than a proposal that the parties would, at some stage in the future, agree on the steps to take pending the conclusion of the litigation and the signing of mutual releases.
Also, I am not persuaded that conditions precedent to the compromise of the relevant disputes had been performed – in particular, the need for signed authority from at least Amalia Zabusky that she would hand over her share of the trust account funds upon settlement to Mr Zabusky so that he could pay $150,000 to the respondent firm.
Whether the parties intended to be immediately bound by the terms of the agreement alleged by Mr Zabusky
As I have indicated, even if the parties agreed on the terms contained in the five numbered paragraphs of Mr Zabusky’s email, dated 25 August 2016 – and as I’ve said, I’ll make that assumption without reaching a conclusion about it – I infer that they did not agree to be bound until a written contract containing the terms of their agreement was executed by them both setting out with precision the terms upon which they agreed.
In other words, I conclude that no binding agreement was in place in 2016. At best, the parties got to the point where they were ready to prepare a contract for execution which would set out the “ultimate shape” of their agreement, not yet at the point of a binding agreement.
I have reached this conclusion for the following reasons:
· Most obviously, paragraph 5 itself contemplates the parties reaching agreement on certain matters;
· The evidence clearly reveals the importance to the parties of the reduction of their settlement agreement to writing, for signature by them both, acknowledging acceptance of detailed terms;
· Until 25 August 2016, the parties had been exchanging draft documents which provided for their execution by each of them, including those drafted by Mr Tucker, which explicitly stated that there would be no binding agreement until it was executed;
· Mr Zabusky’s email of 25 August 2016 was sent in the context of the parties being unable to settle upon the terms of a much more detailed written agreement. In that context I find it extremely unlikely that the parties would agree on the broad and imprecise terms of the five paragraphs contained in Mr Zabusky’s 25 August 2016 email when they could not reach agreement on precise terms;
· The nature of the agreement was one which called for precision in its terms and written acknowledgement by each of the parties that they agreed with those terms;
· The agreement in contemplation was one which would lead to the discontinuance of actions in three courts. It was an agreement in contemplation in the context of ongoing cost disputes between the parties, against the background of older cost disputes between the parties and allegations of negligence by Mr Zabusky against the respondent. I infer that the parties were on professional rather than collegiate terms; It is reasonable to infer that, in that context, each party wished to ensure that the other was pinned down to a written agreement;
· That the parties intended that their agreed terms be reduced to writing and signed or executed is consistent with their duelling drafts and indeed consistent with Mr Zabusky’s email of 25 August 2016 itself, which required, in paragraph 2, the execution of his letter of 19 July 2016.
Further, in his arguments, Mr Zabusky relies upon Mr Tucker’s statement in his email of 1 September 2016 that his firm would accept $150,000, and if Mr Zabusky agreed with that amount, “then I can agree to the rest of what you have proposed.”
A difficulty with Mr Zabusky’s reliance on that email as the indication of Mr Tucker’s acceptance of a contract to which he agrees to be immediately bound is the way in which it is expressed. Mr Tucker said I can agree, not I do agree. In other words, it anticipates a further step, which, in context, is the creation of a written agreement which would bind the parties upon its execution.
As I have said, that step was clearly in the contemplation of the parties during their exchange of draft written agreements, and nothing in the material before me suggests or explains why either party, and in particular the respondent, would be content to remove that step from the settlement process.
Mr Zabusky’s own letter to the respondent, dated 30 October 2016, refers to payment of money from him to the firm as being conditional upon:
… execution of the settlement agreement and mutual releases between both of us.
I completely reject Mr Zabusky’s submission that he meant, by the expression, “execution of the settlement agreement and mutual releases”, the deed of settlement which would resolve the proceedings between the parties. Such a construction strains the language, and such a construction is inconsistent with the use of the phrases “settlement agreement” and “mutual releases” in previous communications to mean execution of the settlement agreement by signing and mutual releases from the actions by way of deed or otherwise.
The parties confirmed that they contemplated being bound only upon their signing a written agreement in their email to the court in December 2016, which refers to a tentative agreement which was not then in written binding form. Mr Zabusky’s explanation at the hearing as to why he agreed to that document, notwithstanding his position that there was a binding agreement in existence, was unpersuasive.
Further, and persuasively, Mr Zabusky’s own words in his email of 25 August 2016 reflect his intention that the parties will need to sign a written agreement before they will be bound.
Before setting out the five paragraphs in his email of 25 August 2016, Mr Zabusky stated that he reiterated and stood by what was covered in his draft letter of 19 July 2016. That statement by him can be interpreted, in my view, in no other way than that he wished the parties to reach agreement on his terms as per that letter.
His understanding or desire that there be execution of the terms spelt out in his letter of 19 July 2016 is confirmed by paragraph 2 of his email.
Mr Zabusky’s argued that the requirement that the agreement be “executed” was satisfied by Mr Tucker taking steps consistent with it, that is, by his assisting with the settlement of the substantive proceedings, and dealing with the issue involving Mr Conomos and the joint bank account. In my view, that conduct was more explicable as Mr Tucker investigating whether an ultimate agreement to settle the matter had any point at all. In response to Mr Zabusky’s assertion in his email of 6 September 2016 that he considered the parties to have agreed to all the points in his email of 25 August 2016, Mr Tucker said nothing. Rather, he asked Mr Zabusky for an update on the status of the resolution of the substantive proceedings, consistent, in my view, with a desire to investigate further the viability of what Mr Zabusky was proposing.
I infer that Mr Tucker was prepared to be reasonably patient when it came to the settlement of the substantive proceedings involving Mr Zabusky – that is, the point at which Mr Zabusky would be in a position to pay anything to Tucker & Cowen. But, clearly, Mr Zabusky was never in that position. Proceedings did not settle as expected, and property in Nigeria was not sold.
Even without taking into account the correspondence in January and February of 2018 about a draft settlement agreement, I conclude that the parties did not agree to be bound until they executed a written agreement which set out the ultimate shape of the agreement between them in 2016, and they never got to that point.
That conclusion is enough to dispose of this matter, but I will deal briefly with some of the other arguments which lead to the same conclusion.
Was a consensus by way of offer and acceptance reached in terms of the email of 25 August 2015?
Mr Zabusky urges me to conclude that the terms of the agreement between the parties, the offer in acceptance, are those set out in the five paragraphs of his email.
But that email must be considered in context.
It was written at a time at which each of the parties had proposed to the other terms of agreement.
The terms of agreement proposed by Mr Zabusky were those set out in his letter of 19 July 2016.
The terms of agreement proposed by Mr Tucker were those set out in his letter of 15 August 2016.
Clearly, it is apparent from the correspondence between the parties recited above that the five points nominated by Mr Zabusky related to matters about which they were not agreed. They were the matters about which the parties needed to reach agreement before Mr Zabusky would commit to an agreement with Mr Tucker to settle. That’s what he said. As I have noted before listing the five paragraphs, Mr Zabusky said in his email:
I reiterate and confirm that I stand by what we discussed and covered in my draft letter dated 19 July 2016.
It is also worth noting that Mr Zabusky referred to his letter of 19 July 2016 as a draft. That is relevant to the content of paragraph 2 of his email. Further, the five paragraphs themselves were introduced with the preamble:
In summary, the issues that remained to see if we can bridge the gap are ...
Plainly, viewed objectively, Mr Zabusky was setting out the matters beyond the agreed matters which had to be settled between the parties. Thus, in my view, paragraphs 1 to 5 do not set out the entirety of any proposed contract between the parties.
Were the terms of the email of 25 August 2016 capable of having contractual effect?
In my view, the paragraphs of the email are not workable as contractual terms.
I am prepared to proceed, favourably to Mr Zabusky, that paragraph 1 became sufficiently certain because later correspondence makes it clear that the parties settled on $150,000 to settle all of the actions between them.
I am even prepared to proceed on the basis that paragraph 2 was sufficiently certain in its incorporation of the terms of Mr Zabusky’s letter of 19 July 2016 into the agreement.
But then an inconsistency arises between the letter of 19 July 2016 and paragraph 3 of the email. Both the letter of 19 July 2016 and paragraph 3 of the email (interpreted generously to Mr Zabusky) required Mr Tucker to acknowledge that he understood that the only source of funds for Mr Zabusky were those which might flow to him after the settlement of the substantive action.
I will assume for the moment that the actions referred to in paragraph 3 of the email are those discussed in detail in the letter. But there is a clear inconsistency between the letter and paragraph 3 of the email as to the time by which Mr Zabusky is to pay $150,000 to the respondents – bearing in mind that there is an action pending in the Magistrates Court initiated by them.
The letter reiterated and confirmed, in effect, in paragraph 16, that he would pay the respondent by 30 December 2016. But by paragraph 3 of the email he said, in effect, that he could not nominate a date for payment of those moneys.
Thus the purported agreement is internally inconsistent, at least in that respect, and further inconsistency is introduced by paragraph 5. So the answer to the question whether the terms were capable of contractual effect is “no”.
Non-Fulfilment of Condition Precedent
I infer from the evidence that from Mr Tucker’s point of view an obviously critical condition precedent to any settlement agreement was the agreement of Mr Zabusky’s ex-wife to give Mr Zabusky funds which would flow to her upon settlement of the substantive action to allow him to settle the proceedings concerning Tucker & Cowen.
Mr Tucker told Mr Zabusky on more than one occasion that Mr Zabusky’s assurance that his ex-wife would give him the funds was not enough.
In my view, a critical condition precedent to an agreement was not met.
Thus, for the reasons above, I have reached the conclusion that there was no binding agreement between the parties reached in August/September 2016 to settle the actions then pending between them.
…
Thank you. While there are some unusual aspects to this matter, as I’ve already noted, the parties have proceeded, and the court has proceeded, in accordance with the directions of his Honour Justice Boddice. In those circumstances, I see no reason to depart from the usual rule that costs follow the event. I order the applicant to pay the respondent’s costs of and incidental to this hearing on the standard basis.
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