Zivkovic v Parke
[2022] VSCA 43
•31 March 2022
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S EAPCI 2021 0040
| GRADIMIR ZIVKOVIC & ORS (according to the attached Schedule) | Applicants |
| v | |
| JAMES CHRISTOPHER ANDREW PARKE | Respondent |
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| JUDGES: | BEACH, KYROU and WALKER JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 18 March 2022 |
| DATE OF JUDGMENT: | 31 March 2022 |
| MEDIUM NEUTRAL CITATION: | [2022] VSCA 43 |
| JUDGMENT APPEALED FROM: | [2021] VCC 41 (Judge Tran) |
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CONTRACTS – Agreement to settle defamation proceeding brought by respondent against applicants – Agreement made after respondent obtained judgment in default of appearance and prior to assessment of damages – Applicants breached agreement, including by failing to pay settlement sum – Respondent sought assessment of damages – Judge found that agreement did not constitute accord and satisfaction which had effect of discharging respondent’s right to have damages assessed – Appeal dismissed.
CONTRACTS – Settlement agreement – Principles for determining whether settlement agreement constitutes accord executory, accord and satisfaction or accord and conditional satisfaction.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr P G Cawthorn QC with Mr H Kirimof | Rothwell Lawyers Pty Ltd |
| For the Respondent | Mr J P Moore QC with Dr L Hilly | Parke Lawyers Pty Ltd |
BEACH JA
WALKER JA:
We have had the considerable advantage of reading the reasons of Kyrou JA, which are about to be published in this matter. We gratefully adopt his Honour’s description of the facts and procedural history, his Honour’s recitation of the principles relating to the construction of settlement agreements, his Honour’s summary of the primary judge’s reasons, and his Honour’s summary of the parties’ arguments in this Court.
The central issue in this case is whether a settlement agreement entered into in respect of a defamation proceeding was, as the primary judge found, an accord and conditional satisfaction or, as the applicants contend, an accord and satisfaction.
Justice Kyrou has concluded that the settlement agreement was an accord and satisfaction, and that leave to appeal should be granted and the appeal allowed. For the reasons which follow, we have concluded that the settlement agreement was an accord and conditional satisfaction. While we would grant leave to appeal on grounds 1 and 2 (which allege that the primary judge erred in failing to find that the settlement agreement was an accord and satisfaction and accordingly ought to have ordered a permanent stay of proceedings), we would dismiss the appeal. In view of our conclusion on this issue, it is not necessary for us to express any view about the applicants’ remaining proposed grounds of appeal (they being predicated on the proposition that the settlement agreement was an accord and satisfaction).
The settlement agreement
The primary proceeding was a claim for damages for defamation brought by the respondent against the applicants in relation to four publications referred to as the first review, the second review, the third review and the fourth review. In the proceeding below, the respondent sought a permanent injunction restraining the applicants from publishing or causing to be published any of the first, second, third, or fourth reviews, or any of the imputations contained in those reviews. He also sought damages, including aggravated damages, interest pursuant to statute, and costs.
The proceeding was compromised by the acceptance by the applicants of a Calderbank offer made by the respondent in the following terms:
1.Payment to the plaintiff [the respondent] by the defendants [the applicants] of $80,000 in full and final settlement of this matter.
2.Payment to be made by electronic funds transfer into an account nominated by the plaintiff. The payment is to be made by 29 August 2020 (and an agreement to the entry of judgment for that amount in the event of default).
3.Mr Zivkovic [the first applicant], immediately delete each of the publications the subject of the County Court proceedings that remain visible on the Internet, namely the Second Publication (as defined in the Statement of Claim) published via the ‘Google review’ facility to the Google record for Parke Lawyers Ringwood, the Third Publication (as defined in the Statement of Claim) published via the ‘Google review’ facility to the Google record for ASE [the second applicant], and the Fourth Publication (as defined in the Statement of Claim) published via the ‘Google review’ facility to the Google record for IAS [the third applicant]. (Collectively, these publications are referred to as the ‘Defamatory Publications’).
4.Mr Zivkovic, agree to publish immediately the following apology, which is to remain visible until 30 January 2021, via the ‘Google review’ facility to the Google record for ASE, and via the ‘Google review’ facility to the Google record for IAS:
‘On or about 21 December 2019, I published incorrect allegations about Mr Jim Parke through ‘Google review’. I acknowledge that the statements I made about Mr Parke were untrue. I apologise to Mr Parke for the hurt, embarrassment and distress caused by my comments. Yours sincerely, Gradimir Zivkovic.’
5.In addition to the removal of the Defamatory Publications listed above:
a) Mr Zivkovic, immediately remove the review published via the ‘Google review’ facility to the Google record for Roadside Services & Solutions Pty Ltd located at 88 Stanbel Road, Salisbury Plain SA 5109 (‘RSS SA page review’) and replace it with the following apology, in the form of a new five star ‘Google review’ on the RSS SA page, which is to remain visible until 30 January 2021:
‘On or about 21 December 2019, I published incorrect allegations about Mr Jim Parke through ‘Google review’. I acknowledge that the statements I made about Mr Parke were untrue. I apologise to Mr Parke for the hurt, embarrassment and distress caused by my comments. Yours sincerely, Gradimir Zivkovic.’
b) Impact Absorbing Systems [the third applicant] immediately remove the ‘Important Notice’ from its website that states (the RSS Important Notice):
‘Important Notice: On 19th of July 2019 a Licence Agreement between Impact Absorbing Systems Pty Ltd (Energy Absorbing Bollard – intellectual property and Patent holder) and Roadside Services and Solutions as a distributor has been terminated due to the long history of unacceptable practices by Roadside Services and Solutions that have not been corrected in due course.’
and replace it with the following apology, in the same position with the same prominence which is to remain visible until 30 January 2021:
‘Important Notice: On or about 21 December 2019, I published incorrect allegations about Mr Jim Parke through ‘Google review’. I acknowledge that the statements I made about Mr Parke were untrue. I apologise to Mr Parke for the hurt, embarrassment and distress caused by my comments. Yours sincerely, Gradimir Zivkovic.’
6.Mr Zivkovic, undertake personally and on behalf of each of ASE and IAS to desist permanently from republishing and further disseminating each of the Defamatory Publications, the RSS SA Page review and the RSS Important Notice, and any document or statement contained within them, save as expressly permitted by law.
The applicants did not pay the $80,000 settlement sum by 29 August 2020 (or at all). Nor did they comply with the obligations in paragraph 3 of the settlement agreement until sometime between 3 and 6 August 2020. The obligations in paragraphs 4 and 5 of the settlement agreement were not complied with until 6 and 7 December 2020. Worse, on 1 October 2020, the applicants’ then recently engaged legal practitioners, LGM Advisers, sent a letter to the respondent’s firm, Parke Lawyers, stating that they were instructed that the applicants’ former solicitor, Mr Furman, did not have instructions to enter into the settlement agreement.
The settlement agreement was an accord and conditional satisfaction
Considered chronologically, the settlement agreement required the first applicant:
(a) immediately to remove from the internet the defamatory publications (cl 3), as well as two other defamatory publications (cl 5);
(b) immediately to publish three apologies in agreed terms (cls 4 and 5);
(c) to undertake personally, and on behalf of the second and third applicants, to desist permanently from republishing or disseminating each of the defamatory publications and any document or statement contained within them, save as expressly permitted by law (cl 6).
The settlement agreement then required the applicants to pay $80,000 ‘in full and final settlement of this matter’ (cl 1); with payment to be made by 29 August 2020 (cl 2).
The settlement agreement must be construed as a whole, with regard to its full context and purpose. It is not to be construed piecemeal or by reference to individual terms, or individual phrases within individual terms.[1]
[1]Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [46] (French CJ, Nettle and Gordon JJ); [2015] HCA 37.
Absent the words in brackets in cl 2, we think there could be no doubt that, properly construed, the settlement agreement was not an accord and satisfaction, but rather, was an accord and conditional satisfaction. The settlement agreement, not being expressed to be a resolution of the proceeding on the basis of an exchange of promises,[2] does not contain language of the kind traditionally seen in a settlement agreement that constitutes an accord and satisfaction of an underlying proceeding.
[2]Save, perhaps, for the single word ‘agree’ in cl 4.
There was some discussion in argument as to the nature of the condition or conditions upon which the satisfaction was said to be conditional. In particular, there was some discussion as to whether her Honour had found that there was but one condition — namely the payment of the $80,000 — or whether her Honour had found that each of the matters set out in the agreement was a condition that had to be satisfied before Mr Parke’s claim against the defendants was discharged. While we accept that there are some passages in her Honour’s reasoning that, if read in isolation, could suggest the former,[3] we consider that the better reading of her Honour’s judgment is that she considered each of the specified matters to be a condition that had to be satisfied before the underlying claim was discharged. That is because her Honour did not say in terms that she considered there to be but one condition; and she explained the chronological order of the matters set out in the agreement.[4] In that context, her Honour’s statement that the discharge of Mr Parke’s claim ‘is only intended to occur upon payment of the settlement sum’ is a reflection of the fact that discharge was intended to occur after performance of the last of the several conditions she had just recited, namely the payment of the $80,000.
[3]For example, the last sentence in Parke v Zivkovic [2021] VCC 41, [142] (‘Reasons’), the last sentence in Reasons, [143] and the first sentence in Reasons, [144].
[4]Reasons, [142].
Further, some of those passages were directed to the question of whether the provision for the consequences of default, found in cl 2, was inconsistent with the agreement being one for accord and conditional satisfaction.[5] It appears to us that it was for that reason that her Honour focused in particular on the payment of the settlement sum as the condition, without necessarily concluding that it was the only condition.
[5]Reasons, [143], [144].
In any event, if we were to find error in her Honour’s reasoning, on an appeal we must consider, based on a review of the evidence, whether the agreement was one of accord and satisfaction, or accord and conditional satisfaction. We have concluded that it was the latter, for the following reasons.
Construed as a whole, in our view the chronological obligations imposed on the applicants by the settlement agreement suggest that full and final settlement (in the sense of the discharge of the respondent’s claims against the applicants) was only to occur upon the performance of each of those obligations, culminating in the payment of the settlement sum. That is, the settlement agreement is an accord and conditional satisfaction, not an accord and satisfaction. That conclusion is supported by the following matters, although we accept that none of them is determinative.
(d) First, the chapeau to the offer stated that the ‘following offer’ was to ‘resolve this matter’. The offer then set out six clauses. It is plain that, although cl 1 referred to the payment of $80,000 ‘in full and final settlement of this matter’, the offer was not one where payment of $80,000 was all that was required to perform the agreement.
(e) Secondly, the text of cl 1 referred to ‘payment’ of the settlement sum. That supports the proposition that what the respondent was to receive in consideration for discharging the applicants from liability was the payment of the sum, not a promise to pay the sum.[6]
(f) Thirdly, cls 3, 4 and 5 require the immediate taking of certain actions. In our opinion it is inherently unlikely that a party to an agreement of this kind would accept a promise to take these actions in return for the discharge of the underlying claim, rather than agreeing to discharge the claim once the actions were taken. That is particularly so where there is a real doubt as to whether, under each of cls 3, 4 and 5, the publication of an apology might not be enforceable by an action for specific performance. We discuss this issue in greater detail below.
[6]See, eg, Fraser v Elgen Tavern Pty Ltd [1982] VR 398, 403 (Murphy J).
The applicants contended that the fact that cls 4 and 5 of the agreement went beyond the matters encompassed by the underlying proceeding indicated that the agreement was one of accord and satisfaction, although they conceded that this was not conclusive. The respondents accepted that this matter pointed towards an accord and satisfaction, but said it did so only faintly. We give this factor little weight in the present circumstances, particularly as all of the additional matters were closely connected to the subject matter of the underlying proceeding. Further, there is no reason as a matter of logic why the parties could not intend that a settlement agreement containing extraneous matters was nonetheless to be an accord and conditional satisfaction; the applicants accepted that contracting parties could do so expressly; if that is so, there is no reason why they could not do so impliedly.
The respondent contended that the context in which the agreement was made was relevant, and that this included:
(g) the fact that the first applicant had made demonstrably false statements about the respondent;
(h) the fact that a third party, brought in to try to resolve the dispute, had observed that the first applicant was irrational in relation to the issues; and
(i) more generally, that there was no real trust between the parties.
In contrast, the applicants contended that these were subjective matters that could not be taken into account in construing the settlement agreement. We have not found it necessary to rely on these matters in reaching our conclusion.
It may be accepted that, had the agreement simply contained cls 1 and 2, then it would have been an accord and satisfaction. In that context the giving up of the right to damages in an uncertain amount by one party, in exchange for a promise by the other party to pay a certain amount, enforceable by the entry of judgment in the case of default, would have made sense. In that scenario, each party gains certainty as to the amount of damages, and each avoids the costs associated with proceeding to a hearing on damages.
However, the agreement did not simply contain cls 1 and 2. It contained other clauses requiring the applicants to take certain steps. Three of those steps — in each of cls 4 and 5 — involved the publication of an apology. The applicants sought to portray this as a valuable promise, which the respondent could not have obtained in the defamation proceeding. They submitted that, if the respondent sought to enforce the settlement agreement, a court could order specific performance of these clauses, relying on the decision of Young J in Summertime Holdings Pty Ltd v Environmental Defender’s Office Ltd.[7]
[7](1998) 45 NSWLR 291, 297 (‘Summertime’).
It is true that in that case Young J held that a court could make an order of that kind. However, his Honour held that a court should do so only in exceptional circumstances; and he declined to do so in that case even though he held that the defendants were contractually obliged to give the apology, that there was no issue of the order being impossible to police, and no obstacle by reason of the principle of mutuality.[8] His Honour was reinforced in his decision by the fact that the common law does not order apologies, but merely takes the matter of whether an apology is offered or not into account when assessing damages.[9]
[8]Summertime (1998) 45 NSWLR 291, 297-8.
[9]Summertime (1998) 45 NSWLR 291, 298.
In the present matter, on the applicants’ case the respondent had given up his underlying claim in return for (amongst other things) promises of apology that, if not complied with, might never be capable of enforcement. Considered objectively, the proposition that a party to a proceeding would agree to discharge his or her cause of action in exchange for a promise that might ultimately not be enforceable has, in our opinion, an air of unreality about it. At the very least, it is a surprising construction of a settlement arrangement.
On the applicants’ case, one party could breach the settlement agreement and the other party would be left with no rights save those conferred by the terms of settlement itself, some of which may be unenforceable. In contrast, on the respondent’s case, ‘both sides have the wholesome incentive to perform the terms of settlement, in that breach of those terms may, at the election of the innocent party, result in the continuation of the pending proceedings and the ultimate enforcement of the parties’ rights and obligations, uncompromised, and strictly according to law’.[10]
[10]Blue Moon Grill Pty Ltd v Yorkey’s Knob Boating Club Inc [2006] QCA 253, [27] (Keane JA, Jerrard JA agreeing at [1], Philippides J agreeing at [35]).
In our opinion, construing the settlement agreement as an accord and satisfaction would not accord with a common sense approach to a settlement agreement of this kind. There is no apparent reason for the respondent to have given up his existing rights for a series of promises, with the attendant risk of non‑compliance, such that he was left only with an agreement which he would have to take legal action to enforce. That would place the respondent in a precarious legal position, particularly when, as we have explained above, three of the promises given might not be enforceable by specific performance. It does not accord with common sense for the respondent to have agreed to be put in that position. Thus, considered objectively, that could not have been the intention of the parties.
Thus we consider that the respondent’s construction is to be preferred over the applicants’ construction.
Additionally, compliance with cls 3, 4 and 5 of the settlement agreement would have resulted in the immediate cessation of harm and damage being caused to the respondent by the defamatory publications. The amount agreed to be paid for damages was no doubt reflective of loss or damage caused up to the date upon which such loss or damage might cease to be caused. The amount was thus related to the time at which there was to be compliance with the obligations in cls 3, 4 and 5. In such circumstances, it is difficult to see how there could be an accord and satisfaction in relation to a promise to pay the agreed sum of $80,000, notwithstanding the applicants’ failures to comply with the obligations imposed upon them by the balance of the clauses in the settlement agreement.
Clauses 3, 4 and 5 of the settlement agreement required the applicants to perform the obligations set out in them ‘immediately’. Unlike cl 2, which provided for a consequence of the applicants’ default in payment of the settlement sum, the settlement agreement did not contain any provision dealing with default by the applicants in relation to the obligations imposed upon them by cls 3, 4 and 5. In our view, it cannot be the case that, upon default of all of the terms of the settlement agreement by the applicants, the respondent’s remedy was merely to obtain judgment for the sum agreed (with, perhaps, the ability to launch fresh proceedings to seek to have a court make some additional order, noting that such an order could no longer amount to a requirement that the applicants ‘immediately’ (as in, at the time the settlement agreement was entered into) comply with the obligations imposed upon them by cls 3, 4 and 5).
The fact that cl 5 required the immediate removal of an additional defamatory publication lends further support in our view to the settlement agreement not being an accord and satisfaction. This was not a case where the respondent bargained away the cause of action he had in the underlying proceeding for only the agreed settlement sum. Objectively construed, the respondent agreed to forego the causes of action pleaded in the underlying proceeding only if he was paid the settlement sum and cls 3, 4 and 5 were complied with by the applicants.
Returning to cl 2, we agree with the primary judge that the inclusion in that clause of a date for payment, together with an agreement to the entry of judgment for that amount in default, was not inconsistent with the discharge of the respondent’s claim for relief being conditional upon payment.[11] As her Honour correctly observed:
Where there is an accord and conditional satisfaction, the plaintiff may elect to either sue on the settlement agreement or treat the agreement as at an end and proceed on the original cause of action.[12]
Thus it cannot be said — and nor was it said — that that aspect of cl 2 simply had no work to do if the agreement was one of accord and conditional satisfaction.
[11]Reasons, [143].
[12]Ibid (emphasis in original).
Further, the applicants accepted that the reference to ‘default’ in the bracketed words in cl 2 could mean only default in the payment of the settlement sum. There was no suggestion that the agreement contemplated that, if the applicants were to default in the performance of cl 3, cl 4, or cl 5, all that the respondent would be left with by way of remedy would be the payment of the settlement sum. In other words, the bracketed words in cl 2 did not purport to deal exhaustively with the consequences if the applicants were to fail to comply with the obligations to which they had agreed. In that regard, we think the bracketed words are to be given limited weight in ascertaining the nature of the agreement. They cannot be regarded as evidence of a clear intention that the entirety of the applicants’ liability was discharged upon the entry into the settlement agreement.
For these reasons, we do not think that the inclusion in cl 2 of provision for entry of judgment in the event of default in making the payment of $80,000 is sufficient to displace, or outweigh, the matters identified above that point to the agreement being one of accord and conditional satisfaction.
Conclusion
Leave to appeal should be granted on grounds 1 and 2, but the appeal should be dismissed.
KYROU JA
Introduction and summary
On 9 February 2021, a judge of the County Court decided that an agreement
to settle the defamation proceeding instituted by the respondent, James Parke, against the applicants did not constitute an accord and satisfaction which had the effect of discharging Mr Parke’s right to pursue his damages claim.[13] The key issue in this application for leave to appeal is whether the judge erred in doing so.
[13]Parke v Zivkovic [2021] VCC 41 (‘Reasons’).
For the reasons that follow, I would grant leave to appeal and allow the appeal.
Facts and procedural history
The first applicant, Gradimir Zivkovic, is an automotive engineer and the sole director of the second applicant, Automotive Safety Engineering Pty Ltd (‘ASE’), and the third applicant, Impact Absorbing Systems Pty Ltd (‘IAS’). ASE and IAS design and sell roadside safety products, including bollards.
Mr Parke is the principal of Parke Lawyers, which has offices in Ringwood, Kew and the Melbourne central business district.
On 8 August 2017, IAS entered into a licence agreement with Roadside Services and Solutions Pty Ltd (‘RSS’) in relation to the use of energy absorbing bollards. Mr Parke and his firm did not draft this agreement. Mr Parke became a director of RSS on 30 April 2018.
On approximately 21 December 2019, Mr Zivkovic caused four defamatory reviews concerning Mr Parke to be posted on the Internet. The first and second reviews were posted on the Google review facility for Parke Lawyers Ringwood; the third review was posted on the Google review facility for ASE; and the final review was posted on the Google review facility for IAS.
Ultimately, the applicants conceded that the defamatory reviews seriously defamed Mr Parke and warranted aggravated damages. Accordingly, the precise details of the reviews are not presently material. It suffices to say that the reviews contained false allegations that Mr Parke: had drafted the licence agreement referred to at [34] above, which was said to be ‘one sided and dishonest’; had acted dishonestly; had assisted RSS to deprive IAS of intellectual property and royalties; and had sold unsafe bollards.
On 24 December 2019, a business associate of Mr Parke spoke to Mr Zivkovic by telephone and requested that he remove the four defamatory reviews. On 9 January 2020, Mr Zivkovic removed the first review.
On 15 January 2020, Parke Lawyers sent a concerns notice to the applicants on behalf of Mr Parke. The concerns notice: set out the text of each of the four defamatory reviews and the imputations that were said to arise from them; explained why the contents of each review were false; invited the applicants to make an offer of amends; and informed the applicants that Mr Parke intended to commence proceedings against them if the dispute was not resolved by an acceptable offer to make amends within 28 days.
Mr Zivkovic replied to the concerns notice by letter dated 6 February 2020, stating that he was prepared to remove the defamatory reviews on certain conditions. Those conditions included that the licence agreement referred to at [34] above between IAS and RSS be terminated from 19 July 2019 and that royalties be paid from July 2019.
In their response dated 12 February 2020, Parke Lawyers stated that Mr Zivkovic’s letter of 6 February 2020 did not amount to an offer to make amends, as it required actions by a third party (RSS).
On 27 April 2020, Mr Parke commenced a defamation proceeding in the County Court against the applicants. He sought the following relief:
(a)a permanent injunction restraining the applicants ‘from publishing or causing to be published or continuing to be published’ any of the four defamatory reviews or any of the pleaded imputations ‘or any other imputations to the same purport or effect as those imputations’;
(b)damages, including aggravated damages;
(c)interest pursuant to statute; and
(d)costs.
On 26 June 2020, Mr Parke entered judgment in default of appearance against the applicants. The default judgment stated that ‘[t]here be judgment entered for the Plaintiff [namely, Mr Parke] against the 1st, 2nd and 3rd Defendants [namely, the applicants] in default of appearance, with damages to be assessed’. The default judgment listed the assessment of damages hearing for 10:30 am on 30 July 2020 and provided a timetable for affidavit evidence to be filed by the parties for the purposes of that hearing.
The applicants did not apply for the default judgment to be set aside.
On 29 July 2020, the applicants’ solicitors, Furman+Furman, filed a notice of appearance on behalf of the applicants. At 2:52 pm on the same day, Furman+Furman advised the County Court that they had recently been engaged by Mr Zivkovic and sought that the assessment of damages hearing be adjourned to a date in the next one to three weeks. Mr Parke consented to the adjournment, and the hearing was adjourned. As will be seen, the hearing was ultimately listed for 8 December 2020.
At 7:18 pm on 29 July 2020, Robert Wilson of Parke Lawyers emailed a Calderbank[14] offer of settlement to Furman+Furman. The offer was expressed to be open for acceptance until 10:00 am the next day and relevantly stated:
[14]See Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333.
We have instructions to put the following offer to your clients to resolve this matter.
1Payment to [Mr Parke] by the [applicants] of $80,000 in full and final settlement of this matter.
2Payment to be made by electronic funds transfer into an account nominated by [Mr Parke]. The payment is to be made by 29 August 2020 (and an agreement to the entry of judgment for that amount in the event of default).
3Mr Zivkovic, immediately delete each of the publications the subject of the County Court proceedings that remain visible on the Internet, namely the Second Publication …, the Third Publication …, and the Fourth Publication … (Collectively, these publications are referred to as the ‘Defamatory Publications’).
4Mr Zivkovic, agree to publish immediately the following apology, which is to remain visible until 30 January 2021, via the ‘Google review’ facility to the Google record for ASE, and via the ‘Google review’ facility to the Google record for IAS:
‘On or about 21 December 2019, I published incorrect allegations about Mr Jim Parke through ‘Google review’. I acknowledge that the statements I made about Mr Parke were untrue. I apologise to Mr Parke for the hurt, embarrassment and distress caused by my comments. Yours sincerely, Gradimir Zivkovic.’
5In addition to the removal of the Defamatory Publications listed above:
a)Mr Zivkovic, immediately remove the review published via the ‘Google review’ facility to the Google record for Roadside Services & Solutions Pty Ltd located at 88 Stanbel Road, Salisbury Plain SA 5109 (‘RSS SA page review’) and replace it with the following apology, in the form of a new five star ‘Google review’ on the RSS SA page, which is to remain visible until 30 January 2021:
‘On or about 21 December 2019, I published incorrect allegations about Mr Jim Parke through ‘Google review’. I acknowledge that the statements I made about Mr Parke were untrue. I apologise to Mr Parke for the hurt, embarrassment and distress caused by my comments. Yours sincerely, Gradimir Zivkovic.’
b)[IAS] immediately remove the ‘Important Notice’ from its website that states (the RSS Important Notice):
‘Important Notice: On 19th of July 2019 a Licence Agreement between [IAS] (Energy Absorbing Bollard — intellectual property and Patent holder) and Roadside Services and Solutions as a distributor has been terminated due to the long history of unacceptable practices by Roadside Services and Solutions that have not been corrected in due course.’
and replace it with the following apology, in the same position with the same prominence which is to remain visible until 30 January 2021:
‘Important Notice: On or about 21 December 2019, I published incorrect allegations about Mr Jim Parke through ‘Google review’. I acknowledge that the statements I made about Mr Parke were untrue. I apologise to Mr Parke for the hurt, embarrassment and distress caused by my comments. Yours sincerely, Gradimir Zivkovic.’
6Mr Zivkovic, undertake personally and on behalf of each of ASE and IAS to desist permanently from republishing and further disseminating each of the Defamatory Publications, the RSS SA Page review and the RSS Important Notice, and any document or statement contained within them, save as expressly permitted by law.
The items referred to in para 5 of the Calderbank offer were not the subject of Mr Parke’s defamation proceeding against the applicants.
At 9:56 am on 30 July 2020, Ilya Furman of Furman+Furman sent the following email to Mr Wilson:
We are instructed to accept [the Calderbank offer] on behalf of our clients. Please forward the consequent consent orders for signing at your earliest convenience.
At 9:58 am on 30 July 2020, Mr Furman emailed the County Court stating ‘the parties have now resolved the matter and we expect to forward consequent orders for his Honour’s consideration shortly’.
At 4:40 pm on 30 July 2020, Mr Wilson emailed Mr Furman stating:
Terms of settlement and the minutes of proposed consent orders are still with counsel. I did expect to get them to you today however, at this stage, that may not be possible.
As you know, our agreement required the removal of the publications ‘immediately’. Could you please let me know when your client has attended to their removal and the reposting of the apologies.
At 4:52 pm on 30 July 2020, Mr Furman replied to Mr Wilson stating ‘I am instructed that the publications have been removed’.
At 5:08 pm on 30 July 2020, Mr Wilson emailed Mr Furman noting that it appeared that the Google reviews on the IAS and Parke Lawyers Google review facilities and the ‘Important Notice’ on the IAS website were still present.
On the morning of 31 July 2020, Mr Furman informed Mr Wilson that his client was not very good with computers and requested information about the publications that needed to be removed. At 10:55 am that same morning, Mr Wilson emailed Mr Furman with links to and copies of the Google reviews on the Parke Lawyers and IAS Google review facilities and the ‘Important Notice’ on the IAS website.
At 9:47 am on 3 August 2020, Mr Furman sent an email to Mr Wilson stating:
I confirm that our client has over the weekend taken all steps in our client’s power to comply with the agreed settlement terms by either removing the publications where removal was possible, or by notifying the relevant platform administrator of our client’s demand that the relevant publication be removed as soon as possible.
I look forward to receiving the proposed minutes of consent to finalise the proceeding, at your earliest convenience.
At 10:18 am on 3 August 2020, Mr Wilson sent an email to Mr Furman with specific instructions on how to delete the Google reviews. At 11:28 am, Mr Furman responded with an email stating that Mr Zivkovic was unable to remove the publication and was liaising with Google to remove it as soon as possible.
At 9:28 am on 6 August 2020, Mr Wilson sent an email to Mr Furman proposing to adjourn the assessment of damages hearing until after 29 August 2020. Mr Furman replied at 9:05 am stating:
Could you please clarify your client’s reasons now seeking a further adjournment of the assessment of damages hearing given that the parties have reached a full and final settlement and agreed to file consent orders finalising the proceeding?
At 10:33 am on 6 August 2020, Parke Lawyers responded as follows:
As you know, to date your clients have removed the public reviews from [IAS], [ASE] and Parke Lawyers Google review facilities. It is evident that your client has access to his Google accounts although he has not posted a single apology as agreed. We are instructed that there has been amendments to the website of IAS since the agreement was reached yet the ‘Important [N]otice’ banner has not been removed and the apology has not been posted as agreed. In those circumstances, our client is concerned with the fulfilment of your clients obligations under the agreement and seeks to adjourn the matter presently listed for 20 August 2020.
Please let us know forthwith why your client has failed to perform his obligations under the agreement.
At 11:06 am on 6 August 2020, Mr Furman sent an email to Mr Wilson stating:
As you know, our client has had technical difficulties in implementing the settlement terms but has otherwise done everything in his power to remove the defamatory statements and publish apologies. He has spent considerable time and effort to comply with the terms and continues to do so.
I will seek instructions in respect of the adjournment and revert to you.
The applicants did not pay the $80,000 settlement sum by 29 August 2020, or at all. They did not comply with the obligations in para 3 of the Calderbank offer — to remove the second, third and fourth reviews — until sometime between 3 and 6 August 2020.[15] They did not comply with the obligations in paras 4 and 5 of the Calderbank offer — to publish apologies — until 6 and 7 December 2020.
[15]Reasons [60] n 24, [89].
On 31 August 2020, Mr Wilson emailed Mr Furman stating that the settlement sum had not been paid.
On 1 September 2020, Furman+Furman advised Parke Lawyers that they no longer held instructions from the applicants. Later that day, Parke Lawyers sent a letter by email directly to Mr Zivkovic which set out the emails by which the Calderbank offer was made and accepted and noted that the applicants had not paid the settlement sum, posted all of the agreed apologies or removed the ‘RSS SA Page review’ referred to in para 5(a) of the Calderbank offer. The letter stated:
In our respectful view, the breaches mentioned above constitute a repudiation of the Agreement by you, which our client accepts. In those circumstances, we have been instructed to have the matter re-listed for the hearing and determination of damages.
On 9 September 2020, a notice of change of practitioner was filed by LGM Advisors on behalf of the applicants.
On 29 September 2020, Mr Parke filed an affidavit in support of the re-listing of the assessment of damages hearing.
On 1 October 2020, LGM Advisors sent a letter to Parke Lawyers, which included the following statements:
There have been a number of without prejudice offers made as between the parties. However, no formal settlement has been reached. …
In response, Mr Ilya Furman communicated that this offer was accepted by our clients. However, as you are undoubtedly aware, the proceedings remain on foot.
We are instructed that Mr Furman did not have instructions to accept this offer and, in essence, has caused this matter to be prolonged further than necessary.
On 5 October 2020, a consent order was made listing the assessment of damages hearing for 8 December 2020.
On 26 October 2020, LGM Advisors sent an email to Parke Lawyers attaching a letter of apology from Mr Zivkovic to Mr Parke.
On 1 December 2020, LGM Advisors filed an application for leave to cease to act for the applicants. Leave was granted on 3 December 2020.
On 4 December 2020, Mr Zivkovic sent an email to the County Court and Parke Lawyers attaching a draft summons. The email stated:
I have directly retained Mr Kirimof of counsel to appear for me and the other two [applicants] at Tuesday’s hearing of the above matter.
[T]his matter settled on 29 July 2020 following the [applicants’] acceptance of a Calderbank offer.
The [applicants] wish to argue that:
•the settlement agreement was not rescinded ab initio (indeed there is presently no suggestion that it was);
•the settlement agreement itself provided for ‘entry of judgment’ for the settlement sum in the event of default;
•accordingly, [Mr Parke] is barred, by the settlement agreement of 29 July 2020, from seeking a trial assessment in this proceeding.
I have attached a draft summons which I intend to file on Monday morning, together with an affidavit …, if there is no resolution between the parties before then.
I am sending this email and the draft summons now to provide as much notice as possible, in the circumstances, to the court and to [Mr Parke], of the [applicants’] proposed application.[16]
[16]Emphasis in original.
On 7 December 2020, the applicants filed a summons which, relevantly, sought orders vacating the assessment of damages hearing and dismissing the proceeding. Mr Zivkovic also filed an affidavit in which he deposed that he instructed Mr Furman to accept the Calderbank offer on 30 July 2020 and that he was trying to organise finance to pay the settlement sum of $80,000.
On 8 December 2020, before the commencement of the assessment of damages hearing, the judge’s associate sent an email to the parties stating:
Her Honour has reviewed the parties’ submissions in relation to the [applicants’] application by summons. She has asked me to forward the attached signed consent minutes which [led] to the re-listing of the trial assessment on 8 December 2020 by consent.
In the circumstances, her Honour’s preliminary view is that the trial assessment should proceed today and that the [applicants’] application by summons should be further addressed in written closing submissions and her Honour’s reasons for decision. She will hear further from the parties in relation to this issue at 9.30am, however the parties should be ready to proceed with the trial assessment and should ensure that any witnesses to be cross-examined are available to do so via Zoom.[17]
[17]Emphasis in original.
Neither party objected to the proposed course.
The assessment of damages hearing took place on 8 December 2020. At the conclusion of the hearing, the judge invited the parties to file further submissions in relation to the assessment and the applicants’ summons. The parties did so.
On 22 January 2021, the judge’s associate sent the following email to the parties:
Her Honour Judge Tran has asked that I inform the parties as follows:
1Default judgment for damages to be assessed was entered against the [applicants] on 26 June 2020.
2That judgment is final as to the entitlement of [Mr Parke] to damages for the cause of action in the statement of claim, but interlocutory as to the assessment of damages (Victorian Economic Development v Clovervale Pty Ltd [1992] 1 VR 596 at 598 and 605).
3In this context, Her Honour’s preliminary view is that the [applicants’] application by summons for the proceeding to be ‘dismissed’ may, at best, be viewed as an application to set aside the default judgment, to be determined in accordance with the principles set out by Warren CJ in Nezirevic v Lubura [2013] 42 VR 43.
4Her Honour also proposes to consider the decision of Scaffidi v Perpetual Trustees Victoria Ltd [2011] WASCA 159 in her reasons for decision on the summons.
Her Honour will consider any submissions (of no more than 5 pages) specifically in relation to the above matters which are filed by return email by 29 January 2020 at 3pm. If no submissions are to be filed, a courtesy email indicating that no submissions will be filed would be appreciated.
On 1 February 2021, the parties filed further written submissions addressing the matters raised in the associate’s email.
On 9 February 2021, the judge decided that: the applicants’ summons be dismissed; Mr Parke be awarded damages assessed at $160,000 and interest; and the permanent injunctions sought by Mr Parke against the applicants be granted. She published her reasons for decision on that day and made orders to give effect to the decision on 3 March 2021. She also ordered the applicants to pay Mr Parke’s costs on an indemnity basis.
Principles relating to the construction of settlement agreements
Before considering the judge’s reasons for her decision, it is convenient to summarise the principles relating to the construction of settlement agreements.
Proceedings are often settled on a basis that involves the plaintiff receiving relief that is different from that claimed by him or her in the proceeding. It is not unusual for the relief provided for by the settlement to be less favourable than that claimed in the proceeding. That is because the settlement involves a compromise of the plaintiff’s claim.
A settlement agreement may take various forms, including a formal written agreement which is signed by both parties, and an exchange of correspondence which results in a party accepting an offer of settlement made by another party. At common law, the settlement agreement is known as an ‘accord’ and the discharge of the plaintiff’s claim by the provision of the consideration set out in the accord is known as ‘satisfaction’.[18]
[18]Osborn v McDermott [1998] 3 VR 1, 7–8, 10 (‘Osborn’).
If the parties fully comply with their settlement obligations under their accord, the relief the plaintiff receives under the settlement replaces the relief he or she claimed in the proceeding and the cause of action being pursued is discharged or satisfied.[19] Commonly, consent orders are made which have the effect of terminating the proceeding. Unless the consent orders incorporate, and give effect to, the terms of settlement, the plaintiff’s cause of action is resolved by the settlement agreement rather than by a judgment of the court. The settlement agreement becomes the repository of the parties’ rights, which are enforceable in contract.
[19]McDermott v Black (1940) 63 CLR 161, 183–5 (‘McDermott’); Osborn [1998] 3 VR 1, 7–8, 10–11; Scaffidi v Perpetual Trustees Victoria Ltd (2011) 42 WAR 59, 65 [18] (‘Scaffidi’); Jingalong Pty Ltd v Todd [2015] NSWCA 7, [63] (‘Jingalong’).
Sometimes, one or both parties do not fully comply with their obligations under their settlement agreement. In those cases, a difficult question may arise as to whether the settlement agreement has discharged the plaintiff’s original cause of action and constitutes the only repository of rights available to the parties. That question is resolved in accordance with conventional principles of construction of commercial contracts.[20] Those principles require the court to assess the intention of the parties objectively, having regard to the terms of the settlement agreement, its context and the objects it is intended to secure.[21]
[20]Jingalong [2015] NSWCA 7, [69].
[21]Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [46] (‘Mount Bruce’); Jingalong [2015] NSWCA 7, [69].
In order to assist in resolving the question of construction, the common law has recognised three categories of settlement agreement: an accord executory; an accord and satisfaction; and an accord and conditional satisfaction.[22]
[22]Osborn [1998] 3 VR 1, 10–11; Scaffidi (2011) 42 WAR 59, 67–9 [29]–[33]; Jingalong [2015] NSWCA 7, [68].
An accord executory describes a settlement agreement under which no binding contract arises until there is compliance with the obligations it sets out. Until then, the plaintiff’s cause of action subsists and can be pursued. Thus, if the plaintiff claims $1,000 and under the settlement agreement the defendant promises to pay $100 within 30 days, a binding contract does not arise until the defendant makes that payment. If the defendant fails to comply with his or her obligations under the settlement agreement, neither party can enforce it because it is not a binding contract. In that situation, the settlement agreement does not preclude the plaintiff from pursuing his or her claim for $1,000. If the defendant complies with his or her obligations under the settlement agreement, it becomes a binding contract and the plaintiff’s cause of action is discharged.[23]
[23]See McDermott (1940) 63 CLR 161, 183–5; Osborn [1998] 3 VR 1, 7–8, 10–11; Scaffidi (2011) 42 WAR 59, 68–9 [32].
An accord and satisfaction describes a settlement agreement which becomes a binding contract when it is made and has the effect of discharging the plaintiff’s cause of action at that time, irrespective of whether the defendant complies with his or her obligations under the agreement. Thus, in the above example, the plaintiff is treated as accepting the defendant’s promise to pay $100 within 30 days, rather than the actual payment of that amount, as the consideration for settling his or her claim for $1,000. That promise has the effect of discharging the plaintiff’s claim for $1,000 as soon as the settlement agreement is made. From that time, the only right the plaintiff has against the defendant is to receive the amount of $100. If the defendant does not pay that amount in accordance with the settlement agreement, the only remedy available to the plaintiff is to enforce the defendant’s contractual obligation to pay $100. The plaintiff can no longer pursue his or her claim for $1,000 against the defendant.[24]
[24]See McDermott (1940) 63 CLR 161, 183–5; Osborn [1998] 3 VR 1, 7–8, 10–11; Scaffidi (2011) 42 WAR 59, 68–9 [32].
An accord and conditional satisfaction describes a settlement agreement which becomes a binding contract when it is made but it does not have the effect of discharging the plaintiff’s cause of action unless and until the defendant complies with his or her obligations under the agreement. If the defendant’s failure to do so constitutes a repudiation of the contract, the plaintiff may bring the contract to an end by accepting the repudiation, and pursue his or her original cause of action. Alternatively, the plaintiff may treat the contract as subsisting and seek specific performance of the defendant’s obligations under it. Thus, in the above example, where the defendant has promised to pay the amount of $100 within 30 days, if that amount is tendered within that period, the plaintiff is bound to accept it and cannot pursue his or her original claim for $1,000. However, if the defendant does not pay the amount of $100 within 30 days and his or her failure constitutes a repudiation of the settlement agreement, the plaintiff has two options. The plaintiff may bring the agreement to an end and pursue the original claim for $1,000 or, alternatively, the plaintiff may seek specific performance of the defendant’s obligation to pay $100.[25]
[25]Osborn [1998] 3 VR 1, 9–11; Scaffidi (2011) 42 WAR 59, 68–9 [32].
Earlier cases focused on the distinction between an accord executory and an accord and satisfaction. In Osborn v McDermott, Phillips JA (with whom Winneke P and Charles JA agreed) described that distinction as follows:
The fundamental distinction between the effect of a compromise by way of mere accord executory and the effect of a compromise by way of accord and satisfaction is that the former does not operate to discharge existing rights and duties unless and until the accord is performed, whereas the latter operates as a discharge immediately the accord (or agreement) is achieved. The reason for the difference in effect flows from their different nature. The first, the mere accord executory, is the compromise of an existing cause of action if and when something is done (usually to the direct advantage of the plaintiff) whereas the second, the accord and satisfaction, is the compromise of an existing cause of action in return for the promise that something be done. To put it more shortly, in return for abandoning his cause of action the plaintiff accepts, in the case of the former, an act, and in the case of the latter, a promise.
…
Where there is an accord and satisfaction, the agreement for compromise may be enforced, and indeed only that agreement may be enforced, because ex hypothesi the previous cause of action has gone; it has been ‘satisfied’ by the making of the new agreement constituted by abandonment of the earlier cause of action in return for the promise of other benefit. If there be mere accord executory, there is no compromise unless and until what has been agreed upon is performed, with the consequence that not only is there no discharge of the existing cause of action pending that performance, but also there is no completed agreement which can be enforced. In that sense, the enforcement of performance under a mere accord executory is a contradiction in terms. The agreement is conditional upon performance so that until performance there is nothing to enforce; and although once performance occurs the agreement becomes unconditional, there will ordinarily then be no performance left to enforce — although the resultant discharge of existing obligations may of course be insisted upon.[26]
[26][1998] 3 VR 1, 7–8.
In Scott v English, Fullagar J made observations about the third category, accord and conditional satisfaction, pursuant to which there is an accord but the satisfaction — the discharge of the plaintiff’s cause of action — is suspended unless and until the defendant performs his or her obligations in accordance with the settlement agreement.[27] In Osborn, Phillips JA agreed with Fullagar J’s observations and stated the following:
Thus, there are three possibilities, not two. First, there is the mere accord executory which, on the authorities, does not constitute a contract and which is altogether unenforceable, giving rise to no new rights and obligations pending performance and under which, when there is performance (but only when there is performance), the plaintiff’s existing cause of action is discharged. Secondly, at the other end of the scale is the accord and satisfaction, under which there is an immediate and enforceable agreement once the compromise is agreed upon, the parties agreeing that the plaintiff takes in satisfaction of his existing claim against the defendant the new promise by the defendant in substitution for any existing obligation. Somewhere between the two, there is the accord and conditional satisfaction, which exists where the compromise amounts to an existing and enforceable agreement between the parties for performance according to its tenor but which does not operate to discharge any existing cause of action unless and until there has been performance.
Where there is a mere accord executory, no suit can be maintained upon the compromise unless and until there has been performance, and then suit is ordinarily unnecessary. Upon default in performance, the plaintiff’s existing cause of action continues unaffected. With accord and satisfaction, either party may sue upon the compromise, but only on the compromise and for nothing else: the original cause of action has gone. Where there is accord and conditional satisfaction, the plaintiff is bound to await performance and accept it if tendered, but if there be no performance, then the plaintiff may proceed according to general principles called into play when any agreement is repudiated: the plaintiff may either treat the agreement (the accord) as at an end and proceed on his original cause of action; or he may, at his option, sue on the compromise agreement, in place of the original cause of action. Thus, the consequence should there be default in performance varies according to the case and … it would be surely in the best interests of the parties if their legal advisers saw to it, when settling litigation, that the intended consequence upon default was clearly expressed and not left to implication.[28]
[27][1947] VLR 445, 453.
[28]Osborn [1998] 3 VR 1, 10–11.
Although the three categories of accord discussed above may assist the court to determine the effect of a settlement agreement in a particular case, the court’s primary task of objectively construing what the parties agreed is not constrained by predetermined categories.[29]
[29]Blue Moon Grill Pty Ltd v Yorkey’s Knob Boating Club Inc [2006] QCA 253, [20] (‘Blue Moon’); Scaffidi (2011) 42 WAR 59, 67 [27]; Jingalong [2015] NSWCA 7, [68].
Where a settlement agreement specifies the consequences of a party’s noncompliance with its obligations under the agreement, the courts will ordinarily give effect to those consequences.
A settlement agreement may provide that settlement is to occur ‘upon payment’ of a monetary amount or ‘in consideration for’ payment of such an amount. In such a case, the court may more readily conclude that the agreement does not constitute an accord and satisfaction because the parties’ intention is that the plaintiff’s original cause of action is not to be discharged by the promise to pay that is made when the agreement is entered into, but when payment is actually made.[30]
[30]Fraser v Elgen Tavern Pty Ltd [1982] VR 398, 403–4; Pollak v National Australia Bank Ltd [2002] FCA 237, [20] (‘Pollak’); Scaffidi (2011) 42 WAR 59, 63–4 [10], 69 [36], 70 [38]–[39].
The stage of the proceeding at which a settlement agreement is made is relevant to an objective assessment of the parties’ intention.[31] So are the history of dealings between the parties[32] and the surrounding circumstances known to them.[33]
[31]Jingalong [2015] NSWCA 7, [73]–[74], [78].
[32]Osborn [1998] 3 VR 1, 13.
[33]Jingalong [2015] NSWCA 7, [69].
The court will construe a settlement agreement as a whole so as to give, as far as possible, a harmonious construction to all its provisions.[34] The court will also strive to avoid a construction of a settlement agreement which is commercially absurd.[35] Where, on an objective assessment, it is highly improbable that a plaintiff would accept a promise of payment by the defendant as consideration for the discharge of his or her cause of action, the court may more readily conclude that the settlement agreement does not constitute an accord and satisfaction.[36]
[34]Scaffidi (2011) 42 WAR 59, 71 [41]; Jingalong [2015] NSWCA 7, [79].
[35]Mount Bruce (2015) 256 CLR 104, 117 [51]; Scaffidi (2011) 42 WAR 59, 70–1 [40].
[36]Osborn [1998] 3 VR 1, 13.
Judge’s reasons
The judge made the following key findings:
(a)The order dismissing the proceeding which the applicants sought in their summons dated 7 December 2020 was not apt because the Court had already entered default judgment, with damages to be assessed. For the applicants to achieve their desired end, the default judgment must be set aside or there must be a permanent stay of either the judgment or the proceeding. Irrespective of how the relief sought by the applicants is characterised, the question whether they have a meritorious defence to the assessment of damages sought by Mr Parke is the primary consideration.[37]
(b)The settlement agreement did not constitute an accord and satisfaction which had the effect of discharging Mr Parke’s right to have damages assessed. Rather, the agreement constituted an accord and conditional satisfaction, the condition being payment by the applicants of the settlement sum of $80,000. As the condition was not satisfied, Mr Parke retained his right to have damages assessed.[38]
(c)Accordingly, the applicants did not have a meritorious defence to the assessment of damages sought by Mr Parke.[39]
(d)Even if the settlement agreement had constituted an accord and satisfaction, relief would not have been granted to the applicants pursuant to their summons due to discretionary considerations.[40]
(e)An appropriate assessment of the damages to be paid by the applicants to Mr Parke, inclusive of aggravated damages, is $160,000.[41]
(f)Mr Parke should be awarded interest on the amount of damages from the date of issue of the proceeding to the date of judgment.[42]
(g)There is a real risk that the applicants’ defamatory conduct will be repeated in the absence of permanent injunctions restraining them from doing so and, accordingly, such relief was appropriate.[43]
[37]Reasons [133]–[137].
[38]Reasons [138]–[145].
[39]Reasons [145].
[40]Reasons [146]–[153].
[41]Reasons [116]–[123].
[42]Reasons [124].
[43]Reasons [125]–[128].
In resolving the application for leave to appeal, consideration of the judge’s reasons for findings (a) and (e)–(g) is unnecessary.
The judge’s reasons for finding (b) above — that the settlement agreement constituted an accord and conditional satisfaction — are as follows:
141For the reasons which follow, I have concluded that on the proper construction of [the settlement agreement, it] is best described as an accord and conditional satisfaction. In other words, the [applicants] were not to be discharged from their obligation to pay damages for defamation to Mr Parke unless and until they paid the sum of $80,000 to Mr Parke.
142Clause 1 provides that ‘Payment’ of the settlement sum is to be ‘in full and final settlement of this matter’. It does not provide that the agreement to pay is to be in full and final settlement of the matter. Although it may be accepted that this language is not as clear as words such as ‘Upon payment’ or ‘In consideration of payment’, it is sufficiently clear when clause 1 is read in the context of the remainder of the terms of the settlement agreement. In particular, the settlement agreement imposes a number of obligations on the [applicants], in addition to the obligation to pay the settlement sum. These obligations are effectively set out in reverse chronological order — undertakings are provided (clause 6); publications are removed and apologies given (clauses 3–5) and finally payment of the settlement sum is made (clauses 1–2). It is specifically the payment of the settlement sum in clause 1 which is expressed to fully and finally settle the matter, rather than entry into the settlement agreement as a whole. This indicates that full and final settlement (in the sense of the discharge of Mr Parke’s claim against the [applicants]) is only intended to occur upon payment of the settlement sum.
143The fact that clause 2 of the settlement agreement provides for a date for payment and for the consequences of default (agreement to entry of judgment) is not inconsistent with the discharge of Mr Parke’s claim for damages being conditional upon payment. Where there is an accord and conditional satisfaction, the plaintiff may elect to either sue on the settlement agreement or treat the agreement as at an end and proceed on the original cause of action. Indeed, this is the very nub of the accord and conditional satisfaction as described by Phillips JA in Osborn v McDermott. An accord and conditional satisfaction is a binding contract, but it is a contract where one of the obligations (here, to discharge the [applicants] from liability) is conditional upon performance of another obligation (here, to pay the $80,000 settlement sum).
144The [applicants] have not performed the condition (payment of the $80,000 settlement sum) necessary to obtain a discharge of Mr Parke’s claim for damages in defamation under the settlement agreement. As the settlement agreement has been terminated for repudiatory breach, it is too late for them now to do so.
145The [applicants] have not raised a meritorious defence to [Mr Parke’s] claim for damages for defamation. Accordingly, the [applicants’] summons application should be dismissed.[44]
[44]Reasons [141]–[145] (emphasis in original) (citations omitted).
In footnote 61 of her reasons, the judge stated that, in their submissions, the applicants ‘assume’ that the settlement agreement had been terminated for repudiatory breach. She then stated that, ‘[f]or completeness, I accept that it has been so terminated.’ The judge’s reference is to para 7 of the applicants’ written submissions dated 7 December 2020 in which they stated:
Nothing turns on whether the breach of the [settlement] agreement constituted a repudiation. Thus, the following submissions can assume, for the sake of argument, that it was a repudiation.[45]
[45]Emphasis in original. See Reasons [70].
The judge’s reasons for finding (d) — that the applicants’ summons would have been dismissed even if the settlement agreement had constituted an accord and satisfaction due to discretionary considerations — are as follows:
146Even [if] I were wrong in my conclusion that the settlement agreement was an accord and conditional satisfaction, I would nevertheless not have set aside the default judgment on the basis of the material filed in support of the application. Nor would I have been prepared to grant a stay of the proceeding, or a stay of the judgment.
147The [applicants’] summons application was made on the eve of the trial assessment. In determining whether or not to entertain such an application, I am required to seek to further the overarching purpose under the Civil Procedure Act 2010 (Vic), to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.
148Mr Parke submitted that the [applicants] had waived any entitlement to rely upon the arguments they now sought to raise and were ‘estopped’ from doing so. In my view, the [applicants’] conduct in this proceeding may be better viewed as a waiver of the kind described by Dawson J in Commonwealth v Verwayen as waiver in the ‘loose sense’ — the [applicants’] conduct raises the question of ‘whether a party, having failed to insist upon his right at an appropriate time, should later be allowed to do so’.
149As I have already noted, the [applicants’] conduct of this proceeding has been erratic and unreliable. It has included:
(a)Mr Zivkovic instructing Furman+Furman to accept the [Calderbank] offer …;
(b)the [applicants’] then lawyers, Furman+Furman, communicating that acceptance to Mr Parke;
(c)the [applicants] failing to comply with the settlement agreement;
(d)the [applicants’] then lawyers, LGM Advisors, on 1 October 2020, sending a letter to [Mr Parke] stating the [applicants’] position as being that ‘no formal settlement has been reached’, ‘the proceedings remain on foot’ and that they were ‘instructed that Mr Furman did not have instructions to accept this offer and … has caused this matter to be prolonged further than necessary’;
(e)the [applicants’] consenting to the relisting of the trial assessment on 5 October 2020;
(f)the [applicants] relying in their submissions of 16 November 2020, on the fact that they had not sought to set aside the default judgment;
(g)the [applicants] raising for the first time on 4 December 2020, the contention that Mr Parke had released his cause of action in defamation against them; and
(h) the [applicants] making [their] summons application seeking to ‘dismiss’ the proceeding on 7 [December] 2020, the day before the trial assessment.
150By this conduct, the [applicants] have caused significant costs to be incurred by Mr Parke, particularly in relation to the trial assessment. If I were to grant the orders sought by the [applicants] now, those costs would be wasted.
151It is also possible that the delay in finalising this proceeding has increased the risk that Mr Parke will not be able to successfully enforce any judgment for the settlement sum which he now obtains against the [applicants]. I note in this context that Mr Zivkovic went on oath on 7 December 2020 to say that he is ‘trying’ to organise finance to pay the $80,000 settlement sum.
152In all of the circumstances of this proceeding, even if I had been satisfied that the [applicants] had a meritorious defence arising from the settlement agreement, I would not have set aside the default judgment or granted a stay of the proceedings or stay of the judgment without, at a minimum, evidence that:
(a)the [applicants] formally consented to judgment being entered against them for $80,000 plus interest at the rate fixed under s 2 of the Penalty Interests Rates Act 1983 (Vic) from 30 August 2020 until the date of judgment; and
(b)the [applicants] had the capacity to pay Mr Parke’s costs of the trial assessment incurred since 5 October 2020, on an indemnity basis.
153No such evidence has been filed in support of the present application. I am not satisfied that the prejudice suffered by Mr Parke by reason of the delay in bringing the application is capable of being cured. The [applicants’] summons application should be dismissed.[46]
[46]Reasons [146]–[153] (citations omitted).
Grounds of appeal
The applicants seek leave to appeal against the judge’s order of 3 March 2021 on the following proposed grounds:[47]
[47]For convenience, the proposed grounds of appeal will be referred to as grounds of appeal.
1The learned trial judge erred in failing to find that the settlement agreement which arose from the applicants’ acceptance of [Mr Parke’s] Calderbank letter of 29 July 2020 (the Settlement Agreement) constituted an accord and conditional satisfaction. She should have construed the Settlement Agreement so as to find that it constituted an accord and satisfaction, and that, therefore, [Mr Parke] had abandoned his cause of action in defamation in consideration for his rights under the Settlement Agreement.
2The learned trial judge erroneously failed to dismiss or stay the proceeding below. The learned trial judge should have found that the Settlement Agreement was an accord and satisfaction and that a permanent stay was the only appropriate order to make in circumstances where [Mr Parke] had abandoned his cause of action in defamation in consideration for his rights under the Settlement Agreement.
3The learned trial judge erred in finding that, if the Settlement Agreement was an accord and satisfaction, the following matters were relevant considerations in the applicants’ application to stay the proceeding:
athe applicants’ delay in bringing the application (such as it was) and the concomitant prejudice caused to [Mr Parke];
bthe risk that [Mr Parke] will not be able to successfully enforce any judgment for the settlement sum;
cthe lack of evidence that ‘the [applicants] formally consented to judgment being entered against them for $80,000 plus interest’;
dthe lack of evidence that ‘the [applicants] had capacity to pay Mr Parke’s costs of the trial assessment incurred since 5 October 2020 on an indemnity basis’.
4The learned trial judge erred in finding or holding that, if there was an accord and satisfaction, she would not have set aside the default judgment as a matter of discretion.
5The learned trial judge erred in finding that questions of waiver were relevant. If she found that there was an accord and satisfaction, she should have found that no question of waiver arose.
6The learned trial judge erred in finding that the applicants waived their rights under the Settlement Agreement or their right to insist upon the enforcement of the Settlement Agreement.
…
9The learned trial judge erred in finding that ‘it is also possible that the delay in finalising this proceeding has increased the risk that Mr Parke will not be able to successfully enforce any judgment for the settlement sum’ as there was no evidence to support that finding and it was irrelevant in any event.[48]
[48]I have not reproduced grounds 7 and 8, as the applicants abandoned them.
The central issue in the application for leave to appeal is whether the judge erred in concluding that the settlement agreement between the parties did not constitute an accord and satisfaction. That issue is raised by grounds 1 and 2.
Grounds 1 and 2: Was the settlement agreement an accord and satisfaction?
Parties’ submissions on grounds 1 and 2
The applicants relied upon the following reasons in support of their submission that the settlement agreement constituted an accord and satisfaction and that the judge was wrong in not making a finding to that effect:
(a)Paragraph 2 of the settlement agreement set out the consequence that the parties agreed would apply if the applicants failed to pay the settlement sum of $80,000 by 29 August 2020, namely, agreement to the entry of judgment for that amount. That agreed consequence was the only one available to Mr Parke.
(b)The language in para 1 of the settlement agreement is consistent with a bargain by which Mr Parke procured a promise to be paid $80,000 in full and final settlement of the proceeding. Language of conditionality, such as ‘upon payment’, was not used and no provision was made for continuation of the proceeding in the event of non-payment.
(c)Many of the obligations in the settlement agreement had to be performed ‘immediately’ without a specific time frame.
(d)The undertaking in para 6 of the settlement agreement was intended to be immediately operative, without the need for any further step to be taken for it to take effect. This supports the construction of the settlement agreement as an accord and satisfaction, since part of the applicants’ obligation was performed automatically with no apparent mechanism for the withdrawal of the undertaking.
(e)The fact that the settlement agreement provided relief to Mr Parke which he did not seek in the defamation proceeding, namely, paras 4 and 5, supported a construction of the agreement as an accord and satisfaction. That was said to be because it indicated that the parties were agreeing to substitute their rights under the agreement for the claims made in the proceeding.
The applicants contended that, if the judge had correctly found that the settlement agreement had constituted an accord and satisfaction, the only appropriate order in the circumstances was to dismiss or stay the proceeding. That was said to be because, by virtue of the accord and satisfaction, the cause of action in defamation was discharged and replaced by the contractual rights under the settlement agreement.
Mr Parke relied upon the following reasons in support of his submission that the judge correctly found that the settlement agreement constituted an accord and conditional satisfaction:
(a)The language used in paras 1 and 2 of the settlement agreement made clear that Mr Parke was willing to accept payment of $80,000 in full and final settlement, not the mere promise of payment of that amount. The absence of the phrase ‘upon payment’ did not detract from that conclusion.
(b)The statement in the chapeau to the settlement agreement that the ‘following offer’ was ‘to resolve the matter’ indicated that performance of each of the six paragraphs that followed comprised the offer of settlement. Chronologically, those paragraphs required the applicants to: immediately remove the offending publications; immediately publish the three apologies; give the undertakings; and pay $80,000 by 29 August 2020. All of these obligations had to be performed before there was a discharge of the applicants’ obligations. The applicants failed to complete performance of their obligations in the settlement agreement in accordance with their terms.
(c)A construction of the settlement agreement as an accord and satisfaction — whereby Mr Parke would be confined to enforcement of the agreement in the event that the applicants did not comply with their obligations under it — would be at odds with the objects that the agreement was intended to secure. In the proceeding, Mr Parke sought damages for defamation and injunctive relief. It could be inferred that Mr Zivkovic understood that the removal of the offending reviews from the Internet and the making of appropriate apologies to Mr Parke were central components of any resolution of the dispute. It was the performance by the applicants of these and their other obligations under the settlement agreement which compromised Mr Parke’s cause of action, rather than the mere promise of performance. As the applicants did not completely perform their obligations under the settlement agreement, Mr Parke’s cause of action was not discharged.
(d)The requirement in the settlement agreement that certain obligations had to be performed by the applicants ‘immediately’ supports a construction of the agreement as an accord and conditional satisfaction.[49]
(e)The fact that the settlement agreement did not provide for the termination of the proceeding indicated that the parties did not intend that the entry into the agreement would immediately discharge Mr Parke’s claims in the proceeding.[50]
[49]Mr Parke relied upon Pollak [2002] FCA 237, [22].
[50]Mr Parke relied upon Blue Moon [2006] QCA 253, [22], [26]–[27].
Mr Parke submitted that the context that the court could take into account in construing the settlement agreement included the mutual distrust of the parties at the time the settlement agreement was entered into. He contended that it was objectively evident that he did not trust Mr Zivkovic because Mr Zivkovic had acted dishonestly in making deliberately false allegations against him. It was also said to be objectively evident that Mr Zivkovic did not trust Mr Parke because he had accused him of acting dishonestly and unethically. According to Mr Parke, the existence of the mutual distrust objectively indicated that it was unlikely that he would agree to forgo his claims against Mr Zivkovic in return for mere promises of performance of Mr Zivkovic’s obligations under the agreement, rather than actual performance.
Mr Parke argued that the mutual distrust in the present case was analogous to the facts in Osborn. In that case, at the time the parties entered into their settlement agreement, there had been a history of dishonoured promises by the respondents. The appellants argued that it was highly improbable that they would accept a promise of performance of the respondents’ obligations in the settlement agreement — as distinct from actual performance — as sufficient to discharge their cause of action. Phillips JA stated that there was ‘much force in this argument’ and ultimately concluded that the settlement agreement in that case was an accord executory rather than an accord and satisfaction.[51]
[51]Osborn [1998] 3 VR 1, 13, 15.
Mr Parke also relied upon Osborn for the proposition that, where a settlement agreement requires a defendant to perform physical acts, it could be inferred that the parties intended that the plaintiff’s claims would not be discharged until those acts were performed. The proceeding in that case involved a claim by the appellants for the return of a vehicle which they had left with the respondents to repair. The settlement agreement required the appellants to pay $18,000 and the respondents to simultaneously deliver up the vehicle, and provided for mutual releases. Phillips JA stated that this ‘verbiage’ indicated ‘that the parties were agreeing to compromise upon terms that certain things be done — that is, that the compromise depended upon performance’.[52]
[52]Osborn [1998] 3 VR 1, 13.
Decision on grounds 1 and 2
As required by the principles summarised at [76]–[90] above, the settlement agreement must be considered as a whole. When it is so considered, it is readily apparent that it is very detailed and seeks to provide comprehensive relief to Mr Parke. That relief includes the substance of the principal remedies he sought in the proceeding as well as relief that was not sought in the proceeding. The phrases ‘to resolve this matter’ and ‘in full and final settlement of this matter’ indicate that the settlement encompasses Mr Parke’s overall grievances against the applicants and is not confined to his claims in the proceeding.
Under the settlement agreement, in lieu of his right to have damages assessed under the default judgment, Mr Parke agreed to receive payment of the amount of $80,000 and, in lieu of an injunction, he agreed to accept an undertaking by the applicants. Mr Parke relinquished his claims for interest and costs but obtained the applicants’ agreement to remove and desist from republishing not only the reviews the subject of the proceeding but also two additional items, and to publish apologies.
The fact that the settlement agreement is comprehensive and extends beyond resolution of the claims in the proceeding suggests that it was intended to set out new rights and obligations for the parties in lieu of their existing rights and obligations. This supports a construction of the settlement agreement as an accord and satisfaction.
If para 1 of the settlement agreement is read in isolation, it might indicate — as submitted by Mr Parke — that full and final settlement would not occur until the amount of $80,000 was paid. The absence of words such as ‘upon payment’ and ‘in consideration for’ does not detract from such an indication. However, para 1 must be read in the context of the settlement agreement as a whole, particularly the words ‘and an agreement to the entry of judgment for that amount in the event of default’ in para 2. Those words set out the consequence of failure by the applicants to pay the amount of $80,000 by 29 August 2020. That consequence is inconsistent with the preservation of Mr Parke’s right to have damages assessed. It strongly indicates that the settlement agreement was intended to discharge that right and replace it with the contractual right to obtain consent judgment for the amount of $80,000. As such, it provides considerable support for construing the settlement agreement as an accord and satisfaction.
The stage of the proceeding at which the settlement agreement was made and the surrounding circumstances known to the parties also support a construction of the agreement as an accord and satisfaction. The following circumstances are particularly significant in the present case:
(a)The four offending reviews were published on approximately 21 December 2019.
(b)Mr Parke commenced the proceeding on 27 April 2020 seeking damages, an injunction, interest and costs in respect of the publication of the four offending reviews.
(c)On 26 June 2020, Mr Parke obtained default judgment against the applicants ‘with damages to be assessed’. The assessment of damages hearing was initially scheduled for 10:30 am on 30 July 2020.
(d)The Calderbank offer was made by Mr Parke at 7:18 pm on 29 July 2020 and was expressed to be open for acceptance until 10:00 am on 30 July 2020, a period of less than 15 hours.
(e)The Calderbank offer was accepted by the applicants at 9:56 am on 30 July 2020.
There are two striking features of the above chronology. First, settlement occurred after Mr Parke obtained default judgment for damages to be assessed. In many cases, settlement occurs prior to any judgment which determines any aspect of a plaintiff’s cause of action and results in the cause of action merging in the judgment. However, in the present case, the default judgment determined that Mr Parke was entitled to damages for defamation, with the only outstanding issue relating to the damages being their quantum. That means that, insofar as Mr Parke’s cause of action in defamation involved a claim for damages, that claim merged in the default judgment, such that the judgment was the exclusive repository of his rights in relation to damages. Secondly, Mr Parke made the Calderbank offer on the eve of the date initially fixed for the assessment of damages hearing and specified that it could only be accepted prior to the time initially fixed for commencement of that hearing.
These two features indicate that the parties intended that acceptance of the Calderbank offer within a very narrow timeframe would resolve the outstanding issue of quantum by agreement rather than by curial assessment. It would be consistent with that intention for Mr Parke’s right to an assessment of damages to be discharged and replaced by the applicants’ promise to pay the sum certain of $80,000, with that right being enforceable by a consent judgment for that amount in the event of non-payment by the due date.
On the other hand, it would be inconsistent with that intention for Mr Parke to have the right to put aside the settlement agreement and seek an assessment of damages in the event of non-payment by the due date. That is because the existence of such a right would fail to give effect to the remedy for breach specified by the settlement agreement, namely, the entry of judgment for the amount of $80,000. The applicants could not oppose the entry of judgment for that amount because, by accepting the Calderbank offer, they agreed to the entry of such judgment.
The intention discussed above becomes even more evident when the two features to which I have referred are considered in the context of the comprehensive nature of the settlement agreement. As I have already mentioned, the agreement includes the substance of the principal relief sought by Mr Parke in the proceeding as well as additional relief for matters falling outside the proceeding in respect of which Mr Parke felt aggrieved. The most logical inference is that, by his Calderbank offer, Mr Parke desired to fully and finally settle his claims in the proceeding and his other grievances by acquiring a new set of specifically defined rights against the applicants to replace the rights claimed in the proceeding which had a degree of uncertainty about them. By accepting the offer, the applicants agreed to this course.
There were sound commercial reasons for the parties to seek to finalise the proceeding by agreeing to a comprehensive set of specifically defined new rights and obligations to replace those that were outstanding in the proceeding.
The advantages of this course for the parties were:
(a)In the place of the right to an assessment of damages, with the uncertainty and costs of a court hearing, Mr Parke acquired the right to receive a fixed amount which was substantial and payable within 30 days.
(b)In the place of the right to seek an injunction restraining the applicants from continuing to publish the offending reviews or publishing similar reviews in the future, with the attendant risk that the Court might not grant such an injunction, Mr Parke obtained a promise by the applicants to immediately delete the second, third and fourth defamatory reviews and an undertaking by them to desist from further publication of those reviews.
(c)Mr Parke obtained agreement by the applicants that they would immediately remove two other items in respect of which he felt aggrieved, and desist from further publication of those items. That relief was not sought in the proceeding.
(d)Mr Parke obtained agreement by the applicants that they would publish apologies. That relief was not sought in the proceeding.
(e)In the place of a liability to pay damages to Mr Parke for an uncertain amount which could be well in excess of $80,000, the applicants assumed an obligation to pay that amount and thereby removed the uncertainty about their damages exposure. The applicants also limited their exposure to further costs in the proceeding and avoided any liability to pay interest and costs to Mr Parke.
In support of their respective cases, the applicants and Mr Parke relied upon the fact that a number of the obligations of the applicants under the settlement agreement had to be performed ‘immediately’. Ordinarily, a requirement that a defendant’s obligations under a settlement agreement must be performed ‘immediately’ might support an argument that the agreement is an accord and satisfaction. That is because those obligations might be said to be intended to give rise to a change in the parties’ legal rights at the time the agreement is made. However, in the present case, the presence of the word ‘immediately’ does not have a material bearing on the construction of the settlement agreement.[53]
[53]See also Pollak [2002] FCA 237, [22].
I am not persuaded by Mr Parke’s submission that the fact that the settlement agreement was silent as to the fate of the proceeding indicates that the agreement was not intended to constitute an accord and satisfaction. For the reasons previously discussed, read as a whole and in its context, the agreement provided for a new set of rights and obligations to replace the claims in the proceeding. As such, the only inference that is open is that the parties would seek consent orders to bring the proceeding to an end. This inference is supported by the statement ‘Please forward the consequent consent orders for signing at your earliest convenience’ in the email by which the Calderbank offer was accepted.[54]
[54]See [47] above.
The case of Blue Moon Grill Pty Ltd v Yorkey’s Knob Boating Club Inc,[55] upon which Mr Parke relied, does not assist him. That is because the terms of settlement in that case expressly provided that the proceeding would be dismissed with no order as to costs ‘[u]pon performance by the [defendant] and [the plaintiff] of the terms of settlement’.[56]
[55][2006] QCA 253.
[56]Blue Moon [2006] QCA 253, [12], [22].
I am also not persuaded by Mr Parke’s argument that the context showed that there was mutual distrust between him and Mr Zivkovic and therefore it could be objectively concluded that he (Mr Parke) would not forego his claims in the proceeding in consideration for mere promises by Mr Zivkovic. This argument came close to the Court being asked to impermissibly take into account Mr Parke’s subjective intentions in construing the settlement agreement. In any event, there is no substance to the argument.
Parties do not enter into a settlement agreement unless they believe that it is in their interests to do so. Ordinarily, a party would not agree to settle if he or she was of the view that there was a very strong prospect of noncompliance by the other party.
In the present case, the terms of settlement were prepared on Mr Parke’s instructions. He specified the basis upon which settlement would occur and had control over the wording of the settlement agreement. There is no foundation in ‘context’ or otherwise for any objective inference that Mr Parke believed that there was no point in imposing any promissory obligations on Mr Zivkovic because he could not be trusted to perform them. Mr Parke did contemplate that Mr Zivkovic may not pay the settlement sum by the due date, and provided a remedy for such noncompliance. Mr Parke had the opportunity to stipulate that his outstanding claims in the proceeding would only be discharged if and when the applicants performed all their obligations, but did not do so.
The present case is not analogous to Osborn. That is because, unlike that case, there is no history of dishonoured promises on the part of the applicants prior to the making of the settlement agreement. It is true that Mr Zivkovic made false allegations against Mr Parke. However, this had no logical bearing on whether Mr Zivkovic would honour a settlement agreement that was made many months later, after Mr Zivkovic was sued, default judgment was entered against him and an assessment of damages hearing was imminent.
It is not unusual for parties to a defamation proceeding to harbour strong negative emotions towards each other. That cannot mean that any settlement agreement they enter into which requires performance of obligations in the future could not be construed as an accord and satisfaction.
Finally, I reject Mr Parke’s submission that the fact that the settlement agreement required the applicants to perform physical acts indicated that it was not intended to constitute an accord and satisfaction. Many settlement agreements involve the performance of physical acts, even if it is the sole act of paying a settlement sum. The nature of the obligations in the present case does not assist in construing the settlement agreement. The reasoning in Osborn was influenced by the fact that the payment of money and the return of the vehicle had to be undertaken simultaneously. That feature is absent in the present case.
As appears from [93] above, at para 143 of her reasons, the judge stated:
The fact that clause 2 of the settlement agreement provides for a date for payment and for the consequences of default (agreement to entry of judgment) is not inconsistent with the discharge of Mr Parke’s claim for damages being conditional upon payment. Where there is an accord and conditional satisfaction, the plaintiff may elect to either sue on the settlement agreement or treat the agreement as at an end and proceed on the original cause of action.[57]
[57]Emphasis in original.
The second sentence in the above quotation sets out the legal consequence of a settlement agreement being construed as an accord and conditional satisfaction. The consequence follows once the question of construction is resolved. Obviously enough, the consequence cannot assist in resolving the construction question. To the extent that the judge used the second sentence about the consequence to support the first sentence about the construction question, she erred.
It follows that ground 1 is made out.
My conclusion that the settlement agreement constituted an accord and satisfaction means that the judge erred in not making an order vacating the assessment of damages hearing in accordance with the applicants’ summons dated 7 December 2020. For the reasons I have already given, Mr Parke’s right to seek an assessment of damages was discharged upon the making of the settlement agreement.
In their summons, the applicants also sought an order dismissing the proceeding. As I have already stated, the judge held that such an order was not apt and that, for the applicants to achieve their desired end, the default judgment must be set aside or there must be a permanent stay of either the judgment or the proceeding.[58] I agree with the judge that an order dismissing the proceeding was not apt, as it would be inconsistent with the existence of the default judgment.
[58]See [91(a)] above.
In circumstances where the settlement agreement replaced Mr Parke’s right to damages to be assessed with a promise to pay $80,000 and agreement to the entry of judgment for that amount in the event of non-payment by the due date, the judge’s alternative suggestion of a permanent stay of the default judgment had merit.
Another option, which neither the parties nor the judge considered, was amendment of the default judgment by a new order. The amendment would involve replacing the words: ‘There be judgment entered for the Plaintiff against the 1st, 2nd and 3rd Defendants in default of appearance, with damages to be assessed’, with the words: ‘There be judgment entered for the Plaintiff against the 1st, 2nd and 3rd Defendants in default of appearance, in the amount of $80,000’. The new order could include a statement in the ‘Other Matters’ section which explained the reasons for the amendment. Such an amendment in a new order would have avoided the need for Mr Parke to make a separate application for the entry of judgment for the amount of $80,000 pursuant to para 2 of the settlement agreement.
In any event, having regard to my construction of the settlement agreement as an accord and satisfaction, the default judgment could not continue in the form in which it was entered. It follows that the substance of the relief sought by the applicants in their summons dated 7 December 2020, if not the form of that relief, should have been granted by the judge. It also follows that, in substance, ground 2 is made out.
Grounds 3 and 4: Discretionary considerations
The applicants submitted that, as the settlement agreement left Mr Parke without a justiciable claim for damages pursuant to the law of defamation, the discretionary considerations upon which the judge relied to refuse them relief were irrelevant. In relation to the judge’s reliance upon the absence of evidence that the applicants formally consented to judgment in the sum of $80,000, the applicants contended that consent was given in the settlement agreement itself and that Mr Parke could have applied to enter judgment on the basis of that consent.
The applicants argued that it was not necessary for the default judgment to be set aside, as the proceeding could have been stayed. According to the applicants, if that approach had been adopted, discretionary considerations regarding the setting aside of judgments would not be relevant.
Mr Parke submitted that the judge’s exercise of her discretion to refuse the relief sought by the applicants in their summons dated 7 December 2020 could only be set aside if an error of the kind discussed in House v The King[59] was established, and no such error was made out in the present case.
[59](1936) 55 CLR 499.
Mr Parke contended that the discretionary considerations upon which the judge relied were relevant to her decision whether to grant the relief sought by the applicants in their summons dated 7 December 2020. According to Mr Parke, the applicants’ conduct — including their delay and the inconsistent statements by their lawyers as to whether the proceeding had been compromised — was a powerful discretionary consideration militating against the making of an order vacating the assessment of damages hearing or dismissing or staying the proceeding.
Mr Parke submitted that, in exercising the discretion to set aside a default judgment, a court is principally concerned with whether there is a defence on the merits. He argued that, in the present case, the applicants had not demonstrated that they had a defence to his claim for damages in defamation.
In my opinion, grounds 3 and 4 are made out.
As I have already discussed, the settlement agreement had the effect of discharging Mr Parke’s right to have damages assessed pursuant to the default judgment. That right was replaced with a contractual right to receive the amount of $80,000 and agreement by the applicants to the entry of judgment for that amount in the event of non-payment by 29 August 2020. It follows that, after the making of the settlement agreement, Mr Parke could no longer seek an assessment of damages and the judge was wrong to proceed with such an assessment. The judge should have granted the applicants’ application for an order vacating the assessment of damages hearing.
Once it is determined that, on its proper construction, the settlement agreement constituted an accord and satisfaction, its character and consequences could not be affected by the types of discretionary considerations upon which the judge relied.
As the settlement agreement had the effect of discharging Mr Parke’s right to have damages assessed pursuant to the default judgment, delay on the part of the applicants could not revive that right or deprive the applicants of their entitlement to resist an assessment of damages. Similarly, the risk that Mr Parke would not be able to successfully enforce any judgment in the settlement sum or recover his costs could not reverse the legal consequences of the settlement agreement. I agree with the applicants that a formal consent to the entry of judgment by them was not necessary, as the settlement agreement itself provided agreement to the entry of judgment. In any event, Mr Parke never sought such formal agreement.
For the reasons I have already discussed, it was not necessary in the present case for the default judgment to be set aside or for the proceeding to be dismissed. Accordingly, the principles for determining the setting aside of a default judgment were not engaged. In particular, it was not necessary for the applicants to establish that they had a defence on the merits to Mr Parke’s claim for damages in defamation.
Grounds 5 and 6: Waiver
The applicants submitted that, as the settlement agreement constituted an accord and satisfaction which discharged Mr Parke’s original cause of action, questions of waiver were irrelevant, as that cause of action could not be revived by waiver.[60] In any event, so it was said, none of the matters in para 149 of the judge’s reasons upon which she relied could constitute a waiver of the applicants’ rights.[61]
[60]The applicants relied upon El-Mir v Risk [2005] NSWCA 215, [71].
[61]Paragraph 149 of the judge’s reasons is set out at [95] above.
Mr Parke submitted that the judge did not make a finding that the applicants had waived their entitlement to rely upon the arguments raised in their summons dated 7 December 2020. According to Mr Parke, although the judge stated that the applicants’ conduct ‘may be better viewed as … waiver in the “loose sense”’, she immediately went on to describe their conduct as ‘erratic and unreliable’ and took into account that description of their conduct in the exercise of her discretion to refuse to grant the relief sought in their summons. In any event, according to Mr Parke, the facts of this case justified a conclusion of waiver in the sense of estoppel.
In my opinion, grounds 5 and 6 are misconceived because the judge did not make a finding that the applicants had waived any of their rights. A careful reading of paras 146–153 of the judge’s reasons, which are set out at [95] above, indicates that the judge did not rely upon waiver as a basis for dismissing the applicants’ summons dated 7 December 2020.
The critical paragraphs in the judge’s reasons in this context are paras 152 and 153. In para 152, the judge stated that, in all the circumstances of the proceeding, even if she had been satisfied that the settlement agreement provided a defence to the applicants (in the sense of constituting an accord and satisfaction), she would not have granted them any relief pursuant to their summons without evidence on two matters. Those matters were that the applicants formally consented to judgment being entered against them for $80,000 plus interest and that they had the capacity to pay Mr Parke’s costs on an indemnity basis. In para 153, the judge stated that, as evidence on these two matters had not been adduced by the applicants, she was not satisfied that the prejudice suffered by Mr Parke by reason of the applicants’ delay in filing their summons was capable of being cured, and therefore that summons would be dismissed.
For the reasons set out under grounds 3 and 4, the discretionary considerations upon which the judge relied did not warrant refusal of relief to the applicants pursuant to their summons dated 7 December 2020.
Ground 9: Increased risk of non-recovery of the settlement sum
Ground 9 seeks to impugn the judge’s finding in para 151 of her reasons that it was possible that the applicants’ delay in finalising the proceeding had increased the risk that Mr Parke would not be able to successfully enforce any judgment for the settlement sum he obtained against the applicants. The applicants submitted that it was not open to the judge to infer that the risk of being unable to enforce the judgment had worsened over time and, in any event, as a consequence of the delay in finalising the proceeding.
Mr Parke submitted that the matters raised by the applicants under ground 9 do not give rise to an appealable error. That was said to be because the judge referred to the possibility that the risk that Mr Parke would not be able to successfully enforce judgment had in fact worsened over time, but did not make any specific finding to that effect.
In my opinion, for the reasons set out under grounds 3 and 4, issues regarding whether there had been a worsening of the risk of non-payment of the settlement sum due to the applicants’ delay were not relevant considerations in the present case. Accordingly, insofar as these issues informed the judge’s decision to refuse to grant relief to the applicants pursuant to their summons dated 7 December 2020, the judge erred.
Conclusion
For the above reasons, I would grant leave to appeal in respect of grounds 1, 2, 3, 4 and 9, and allow the appeal. As the order of the Court will be that the appeal be dismissed, there is no utility in considering what relief would have been appropriate if the appeal had been allowed.
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SCHEDULE OF PARTIES
| Gradimir Zivkovic | First Applicant |
| Automotive Safety Engineering Pty Ltd (ACN 066 476 051) | Second Applicant |
| Impact Absorbing Systems Pty Ltd (ACN 613 768 700) | Third Applicant |
| and | |
| James Christopher Andrew Parke | Respondent |
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