Supreme Court New South Wales Medium Neutral Citation: Narayan v Narayan [2022] NSWSC 1685 Hearing dates: 2 December 2022 Decision date: 09 December 2022 Jurisdiction: Equity - Real Property List Before: Kunc J Decision: Binding settlement agreement had been made; order that deed recording settlement be executed Catchwords: CONTRACTS — Formation — Agreement — Intention to make concluded bargain — Calderbank offer to settle litigation Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 Jennings v Jennings [2015] NSWSC 1826 Jingalong Pty Ltd v Todd [2015] NSWCA 7 Wong v Wong [2022] FCA 78 Category: Principal judgment Parties: Latchmi Narayan (Plaintiff) Ranu Narayan (Defendant) Representation: Counsel: V M Mishra (Solicitor) (Plaintiff) M Fantin (Defendant) Solicitors: Redline Legal (Plaintiff) Bassan Lawyers and Associates (Defendant) File Number(s): 2020/28439 Publication restriction: Nil Judgment Summary 1. The plaintiff (Latchmi) is the elderly mother-in-law of the defendant (Ranu). They are in dispute over their respective alleged interests in a property at Busby. Without intending any disrespect, I shall refer to the parties by their given names. 2. At the relevant time, Latchmi, who lives in Fiji, was represented by Redline Legal and Ranu by Hunt & Hunt. By letter dated 22 March 2021 (set out in [21] below), Redline Legal made a Calderbank offer to Hunt & Hunt to settle these proceedings "on terms to be recorded in a Deed of Settlement". By letter dated 31 March 2021 (set out in [24] below), Hunt & Hunt confirmed that Ranu "agrees to accept the terms of this offer". 3. A draft deed of settlement was substantially agreed between the parties. However, before it was executed, Ranu retained her current solicitors. Ranu now contends that, in the absence of an executed deed of settlement, there is no binding settlement agreement between the parties. 4. On 12 August 2022, Latchmi filed a notice of motion which is the subject of these reasons, and which included this relief: "1. A declaration pursuant to s.73 of the Civil Procedure Act that there is a binding and enforceable contract between the Plaintiff and the Defendant for the settlement of the disputes in these proceedings on the basis that: a. the parties have settled and/or compromised the pending proceedings by virtue of the offer made by Redline Legal letter dated 22 March 2021 Solicitors for the Plaintiff containing a Terms of Settlement and the offer being accepted for the Solicitors of the Defendant Hunt & Hunt by their letter of 31 March 2021; b. the settlement or compromise by the letters dated 22 March 2021 and 31 March 2021 constitutes a new and independent agreement between the plaintiff and defendant made for good consideration; c. this action is at an end and cannot be proceeded with as the cause of action has been subsumed in the compromise by the letters dated 22 March 2021 and 31 March 2021; d. the parties are precluded from taking any further steps in the action except to apply to enforce the agreed terms; 2. The defendant within seven days sign and return the deed of settlement in the form annexed to this notice of motion as annexure "A"; 3. The defendant within seven days of being required to do so execute such other documents including transfer under the Real Property Act 1900 (NSW) as may be necessary to give effect to his (sic) obligations under the deed. 4. In the event of failure of the defendant within seven days to execute documents and return them, a Registrar of the Court is authorised to execute them, on her behalf with the defendant to pay for the additional costs incurred …" 1. At the hearing of the motion, the parties accepted that it was to be determined by reference to the correspondence between the parties. No other evidence was relied upon. Nor was there any dispute about the applicable legal principles. It was common ground that whether a binding settlement agreement had been concluded between the parties required their common intention to be objectively determined by reference to the language of the correspondence in its context. It was also accepted that what was, on Latchmi's case, post-contractual conduct could be taken into account on the question of whether a binding contract had been made. 2. For the reasons which follow, the Court has concluded that the parties intended to be immediately bound to a settlement upon Redline's receipt of Hunt & Hunt's letter dated 31 March 2021. That letter was received on 1 April 2021 and a binding agreement then came into existence. That conclusion is based on the terms of Redline's letter of 22 March 2021 when construed in the context of the letter being a Calderbank offer. For reasons more fully set out below, that context – in the absence of clear words to the contrary – is a very powerful objective indicator in this case of the parties' immediate intention to be bound. 3. The objective intention evinced by particular language lies in the eye and ear of the beholder. Because the parties essentially pointed to the same parts of the correspondence in support of their respective positions, the least repetitive way to set out these reasons is to deal first with the legal principles and the Court's conclusions in relation to context, before going through the correspondence chronologically and making any necessary observations about each event. 4. Mr V M Mishra, solicitor, appeared for Latchmi. Mr M Fantin of Counsel appeared for Ranu. The legal principles 1. I gratefully adopt and apply this summary of the applicable principles by Halley J in the Federal Court in Wong v Wong [2022] FCA 78: "27 The principles governing whether parties have entered into a binding and enforceable agreement, where terms have been agreed and those agreed terms will be dealt with in subsequent formal documentation, are well settled. 28 The High Court in Masters v Cameron (1954) 91 CLR 353 at 360 (Dixon CJ, McTiernan and Kitto JJ) identified the following categories of cases in which parties have agreed on terms, but also agreed that those terms will be dealt with by subsequent formal documentation: (a) a case in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect; (b) a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document; and (c) a case in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. 29 In the first two categories there is a binding contract, but in the third there is not: Masters v Cameron at 360-1. 30 In Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 4 NSWLR 622, McLelland J made the following observation at 628: There is in reality a fourth class of case additional to the three mentioned in Masters v Cameron, as recognised by Knox CJ, Rich J and Dixon J, in Sinclair, Scott & Co v Naughton (1929) 43 CLR 310 at 317, namely, "…one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms". 31 The Masters v Cameron classifications are no longer, if there ever were, applied as strict categories into which such cases must fall: Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605 (Pavlovic) at [69] (Beazley P), citing Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 at 105. 32 Rather, as McHugh JA stated in G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634: … the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 638; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 ay 332-334, 337. 33 The relevant principles were recently summarised by Sackville AJA (with whom Macfarlan and Gleeson JJA agreed) in Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2015] NSWCA 1 (Mushroom Composters) at [59]-[63]: 59 First, in Australia the "objective" theory of contract has been accepted: see, most recently, Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 at [35]. Consequently, in determining whether a binding contract has been concluded, the law is concerned not with the parties' subjective intentions, but with "the outward manifestations of these intentions": Taylor v Johnson [1983] HCA 5; 151 CLR 422 at 428 (Mason ACJ, Murphy and Deane JJ). Thus what matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22] (per curiam); Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; 219 CLR 165 at [40]-[41] (per curiam). In a case where the ordinary process of offer and acceptance has taken place, the court inquires as to what a reasonable person would infer or deduce from observing the exchanges between the parties: NC Seddon, RA Bigwood and MP Ellinghaus, Cheshire & Fifoot Law of Contract (10th Aust ed 2012, LexisNexis Butterworths) at [3.4]. 60 Secondly, it is not necessary, in determining whether a contract has been formed, to identify a precise offer or acceptance; nor is it necessary to Wong v Wong [2022] FCA 78 13 identify a precise time at which an offer or acceptance can be identified: Ormwave Pty Limited v Smith [2007] NSWCA 210 at [68] and authorities cited at [68]-[75] (Beazley JA, Santow and Ipp JJA agreeing). The questions to be asked are: "in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of the [plaintiff] and a reasonable person in the position of the defendant think as to whether there was a concluded bargain?" Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153 at [81] (Heydon JA). 61 Thirdly, an agreement that is incomplete will not give rise to an enforceable contract. As was said in Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; 149 CLR 600 at 604 (Gibbs CJ, Murphy and Wilson JJ): "It is established by authority, both ancient and modern, that the courts will not lend their aid to the enforcement of an incomplete agreement, being no more than an agreement of the parties to agree at some time in the future." 62 An alleged contract will fail for incompleteness if, even though the parties have used clear language, a term which is regarded as essential as a matter of law has not been agreed: J W Carter, Carter on Contract (2014, LexisNexis) at [04-120]. The principle was stated by Viscount Dunedin in May and Butcher Ltd v The King [1934] 2 KB 17 n at 21: "To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties. Of course it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties." 63 If the parties have not agreed on all essential terms, for example because they have left one such term to be settled by future agreement, the contract is incomplete no matter what the parties themselves may think: G. Scammell and Nephew Ltd v H.C. and J.G. Ouston [1941] AC 251 at 260 (Lord Russell of Killowen); O'Brien v Dawson [1942] HCA 8; 66 CLR 18 at 37 (Willams J, Rich J agreeing); Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 170 (Tadgell J); Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19; 190 FCR 364 at [123]-[124] (Keane CJ); at [212] (Emmett J); at [223]-[227] (Finkelstein J) (an appeal to the High Court was allowed, but not on this point: Forrest v Australian Securities and Investments Commission [2012] HCA 39; 247 CLR 486). 34 The acceptance must correspond with the offer and must be clear and unqualified, and will fail to take effect if it attempts to vary the offer or add new terms: Lark v Outhwaite [1991] 2 Lloyd's Rep 132 (Lark) at 139 (Hirst J); Precision Pools Pty Ltd v Commissioner of Taxation (1992) 37 FCR 554 at 560 (Spender J); see also Brookfield Australia Investments Wong v Wong [2022] FCA 78 14 Ltd v Lucas Stuart Pty Ltd [2012] NSWSC 1130 at [34] (Stevenson J); Quadling v Robinson (1976) 137 CLR 192 (Quadling) at 201 (Gibbs J). 35 Whether a communication accepts the terms of an offer without modification, or instead varies its terms, is a question of construction: Quadling at 201. 36 Amendment of an offeror's offer by the offeree in a material respect is a counteroffer, not acceptance: Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA (No 4) (2009) 255 ALR 632; [2009] FCA 522 (Olivaylle) at [23] (Logan J); see also Outer Suburban Property Ltd v Clarke [1933] SASR 221 (Outer Suburban Property) at 225-6 (Angas Parsons and Napier JJ). 37 However, a variation in the alleged acceptance which favours the offeror is not treated as a material variation: Ex parte Fealey (1897) 18 LR (NSW) 282 (Ex parte Fealey) at 290 (Owen J, BG Simpson J agreeing); Boreland v Docker [2007] NSWCA 94 (Boreland) at [76]-[78] (Beazley JA, with whom Mason P and Ipp JA agreed); see also Quadling at 197 (Barwick CJ) and 201 (Gibbs J). 38 Normally an apparent variation in the acceptance of the terms in the offer, or the introduction of some additional term, will prevent the purported acceptance from being an acceptance. Instead, if it relates to the subject matter of the offer, it may be a counter-offer, operating as a rejection of the original offer, revocable at any time before its acceptance but capable of creating a contract if the original offeror accepts it: see Mulcaire v Newsgroup Newspapers Ltd [2012] Ch 435; [2012] EWHC 3469 (Mulcaire) at [27] (Sir Andrew Morritt C). 39 A reply which propounds a new term is not an acceptance: Jackson v Turquand (1869) LR 4 HL at 312; R A Brierley Investments Limited v Landmark Corporation Limited (1966) 120 CLR 224 at 233-4 (Barwick CJ, Kitto and Windeyer JJ); see also Grainger v Vindin (1865) 4 SCR (NSW) 32." 1. Mr Mishra also relied on these observations of Pembroke J in Jennings v Jennings [2015] NSWSC 1826 (leave to appeal refused in Jennings v Jennings [2016] NSWCA 29): "18 In Howe v Connell (unreported; Supreme Court of NSW, Young J, 25 September 1997), Young J (as he then was) made this observation: Generally speaking, settlements in litigation are intended to be final as soon as the barristers or solicitors involved shake hands - whether they do that physically or notionally over the telephone. The reasonable litigator on the Bondi bus would think that as soon as the legal representatives have reached an agreement as to the principle on which the matter is to be settled then the cause of action has been converted into the new contractual right. Accordingly the situation is one where the first category of Masters v Cameron applies, that is that there has been final mutual assent but the people who are to draw up the formal agreement have power to set it down but not alter its terms. However, the present case is more like the fourth category of Masters v Cameron, which was enunciated by McClelland CJ in Eq in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628, that there is an immediate binding of the parties by the terms upon which they have agreed, whilst they expect that a further contract will be made in substitution for that first contract. 19 I do not suggest that there is a general rule. Each case will depend on its own facts. But it is reasonable to say that the approach described by Young J is one which often applies. This is all the more so in this case, where the agreement has arisen out of a Court supervised mediation at which the parties were represented by lawyers and which was attended with a degree of formality and structure. The purpose of the mediation was to bring about a concluded agreement between the parties." 1. To similar effect, Sackville AJA said in Jingalong Pty Ltd v Todd [2015] NSWCA 7 at [78] (Meagher and Leeming JJA agreeing): "The context in which the Settlement Agreement came into existence suggests that the parties intended to enter into a binding and immediate agreement". The "context" to which his Honour was referring was that the settlement agreement in that case had been entered into at a mediation. The contractual context provided by Calderbank correspondence 1. To determine the parties' objective intention, the words they used are paramount. Nevertheless, those words must be understood in the context in which they were used, context referring to the text of the relevant documents as a whole, but also surrounding circumstances known to both parties. As I have already noted, each party relied on substantially the same words in support of their opposing contentions. That at least supports a conclusion that some of those words are ambiguous (a conclusion which, as appears below, I do not share), but it is now well-settled that ambiguity is not a prerequisite to considering the surrounding circumstances: Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295. 2. If, contrary to the view I have come to on construction, there is ambiguity in any of the relevant expressions, that ambiguity is resolved in favour of the conclusion that the parties intended to be immediately bound by the context that the relevant correspondence comprises the making and acceptance of a Calderbank offer to settle litigation where each party was legally represented. The nature of the correspondence as being Calderbank correspondence is both a textual matter, and extratextual in the sense that the purpose of, and legal principles, in relation to Calderbank letters must be taken as relevant surrounding circumstances known to both parties through their solicitors. 3. I have referred in [10] and [11] above to authorities which support the conclusion that the fact that an agreement has been made in the context of a mediation to settle litigation can be (not must be, given the possibility of clear textual indications otherwise) an important contextual matter favouring the finding of an intention to be contractually bound immediately. In my respectful opinion, that analysis applies with even greater force to Calderbank correspondence for at least three reasons. 4. First, Calderbank offers are well understood by the legal profession to be a flexible and less formal (than offers of compromise under the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)) means of attempting to bring litigation to an end. There is a real forensic, economic and strategic imperative in knowing with certainty whether or not litigation has been brought to an end by the acceptance of a Calderbank offer. While theoretically possible, a Calderbank offer that did not have immediate binding effect upon acceptance, but depended upon whether or not a formal document was ultimately agreed would, in the experience of the Court, be highly unusual, not least because such a thing would be inimical to how and why such offers are generally made. As the next reasons demonstrate, such a Calderbank offer makes very little sense given how they are used and the legal principles which apply to them. 5. Second, it is a hornbook proposition that an offeror obtaining a better result at trial than the offer does not have an automatic costs consequence (unlike, generally, offers of compromise), but goes to the Court's discretion as to costs. The inquiry which informs (but does not necessarily dictate) the exercise of the Court's discretion is whether the offeree's rejection (in which I include non-acceptance) of the offer was not unreasonable in all the circumstances. That inquiry can be complex even in what might be termed the usual situation of the offeree's conduct being assessed against the terms of an offer and a particular point in time when it could have been accepted. 6. A Calderbank offer which required consensus on the terms of a later deed to bring about a binding settlement would depart from the perceived advantages of such an offer in at least two respects in relation to the inquiry as to the offeree's conduct: 1. It would make it easier for the unsuccessful offeree to say their rejection of the offer was not unreasonable, because it was unknown how long it would have taken to agree the terms and what those final terms might have been. 2. Assuming parties embarked on trying to negotiate a formal deed, the inquiry would become far more complex, and less predictable in its outcome, because if they could not come to agreement, the Court would have to consider the conduct of the negotiations and the positions of the respective parties. 1. Third, one of the advantages of a Calderbank offer is its flexibility in being able to be made with a short period of time being specified for its acceptance, but recognising that the reasonableness in the circumstances of that period of time will be a factor in its efficacy. This is to be contrasted with UCPR reg 20.26(5)(a), which requires a minimum of a 28 day acceptance period for offers made two or more months before the trial date. This is another example of why it is to be expected that a Calderbank offer will be made with the intention of certainty that a binding settlement is reached upon acceptance of the offer. The sequence of events 1. On 8 March 2021, Hunt & Hunt wrote to Redline Legal making a Calderbank offer headed "without prejudice save as to costs" to settle the proceedings, including (emphasis in original): "… our client is prepared to settle her claim at a midway point between your offer and her offer ie. at 25% … In making this offer, our client is making a considerable sacrifice to avoid each party having to expend significant legal costs in preparing for hearing. The effect of this offer would be to divide the net proceeds of sale as set out in your schedule as follows: Plaintiff: 75% of the net proceeds of sale Defendant: 25% of the net proceeds of sale. The net proceeds of sale will be determined after repayment of the mortgage and all selling costs including agent's fees and legal costs as well as any marketing costs. Our client would expect that the property would be put onto the property market for sale within a period of one (1) calendar month from the date of a Deed to be entered into to confirm these arrangements. The offer is open for acceptance until 5.00 pm on Monday, 15 March 2021. If the offer is not accepted within this period then the offer will lapse …" 1. On 15 March 2021, Mr M Klooster of Counsel on behalf of Latchmi sent an email to Ms J Whitaker of Counsel who was acting on behalf of Ranu. Mr Klooster's email stated: "I can't get her to 25%, I can get her to 22.5% … Nothing in this email should be construed as an offer of any kind." 1. On 22 March 2021, Redline Legal responded with a Calderbank offer which was undoubtedly a counter-offer to Hunt & Hunt's letter of 8 March 2021 (set out in [19] above). Redline Legal's letter was headed "without prejudice save as to costs" and included (and I emphasise the language to which Mr Fantin drew attention): "… 1. We refer to your letter dated 8 March 2021 and communications between the counsels (sic). 2. We are instructed to make an offer of settlement on the following terms to be recorded in a Deed of Settlement entered between our respective clients: a. To facilitate the prospects of settlement, the terms of the proposed sale are enclosed as Annexure "A". Those terms are proposed on the basis that the following orders are made: b. Proceedings dismissed. c. All previous costs orders vacated. d. No order as to costs with the intention that each party bears their own costs. ('the offer'). 3. This offer is subject to the principles of Calderbank v Calderbank [1975] 3 All ER 333. 4. Our client may rely on this offer as to costs and this offer is open for acceptance until 5 April 2021 …" 1. There was no dispute that the defined term "the offer" referred to the entirety of sub-paragraph 2(a)-(d) of the letter. 2. Annexure "A" to that letter was headed "proposed terms of sale" and set out in considerable detail how the subject property was to be dealt with. The entirety of the annexure read (emphases added): "1. The Plaintiff on the one part and the Defendant on the other have in consideration of resolving proceedings No. 2020/0028439 agreed between themselves that they will to the extent that they are able to on behalf of all registered proprietors of the land contained in certificate of title Folio Identifier XXX/XXXXXX known as XXXX Avenue, Busby in the State of New South Wales (the property). (a) 21 days from the date of a Deed signed by the parties, the Plaintiff is to nominate 3 licensed Real Estate Agents with a view to the sale of the Property. (b) 7 days thereafter, the Defendant is to select one of the nominated Real Estate Agent. (c) 21 days thereafter, the parties are to jointly enter into an agency and selling agreement with a agreed real estate agent [sic]. (d) The Plaintiff's solicitor to act on behalf of the parties in the preparation of any Contract for Sale of Land and following an exchange of any Contract for Sale of Land for the sale of the Property with terms of such contract to be: (i) the Property be sold with vacant possession; (ii) on completion any amounts owing to Westpac in respect of its secured indebtedness against the Property be satisfied; (iii) adjustments normally incidental to the completion of any Contract for Sale of Land to be completed; (iv) any agents commission properly payable be paid together with the fair reasonable and proportionate costs charges and expenses of the solicitor/conveyancer paid; (v) balance to be distributed as follows: A. 77% to the Plaintiff; and B. 23% to the Defendant (e) The reserve price for the sale of the Property be fixed by the agent referred to in paragraph (b) after consultation with the parties or in the event of a dispute by an independent registered valuer as to market value at or about the date of the sale of the Property. (f) Absent agreement in writing between the Plaintiff and the Defendant the sale of the Property be a sale at auction to be held prior to the end of June 2021. (g) The parties be at liberty to agree unanimously to a sale of the Property by private treaty and not at auction as contemplated by paragraph (f). (h) The Plaintiff and Defendant are each entitled to bid at any auction of the Property on normal terms and if they do so negotiate an arrangement under which vacant possession is not required on completion of a sale to them notwithstanding the provisions of subparagraph (d)(i) above." 1. On 1 April 2021, Hunt & Hunt emailed a letter dated 31 March 2021 to Redline Legal marked "without prejudice save as to costs". It was signed by the solicitor with the carriage of the matter, Mr Ian Miller. That letter stated (and again I emphasise the language to which Mr Fantin drew attention): "We refer to previous correspondence and to the offer made in your letter dated 8 March 2021. [The parties accepted that this was a legally irrelevant error and should have referred to 31 March 2021.] We confirm that our client agrees to accept the terms of this offer. We look forward to receiving a draft deed to set out these arrangements and appropriate consent orders …" 1. It is convenient to pause in the narrative at this point. 2. Mr Mishra submitted that it was clear from the language of the two letters and Annexure "A", including the words which I have emphasised, that the parties intended to be immediately bound and that this was an example of the "fourth" category of Masters v Cameron: the parties were bound but they intended their agreement would be superseded by the deed which would contain additional mutually agreed terms. 3. Mr Fantin relied on the words I have emphasised. With no disrespect to his argument, it can be reduced to this single proposition: the emphasised language, and the fact that under Annexure "A" the time for the various steps began with the execution of the deed, all pointed to a binding commitment only being intended to arise upon execution of the deed. 4. Reading the two letters (including Annexure "A") together, I accept Mr Mishra's submission and find that, in accordance with the parties' common intention, a binding agreement arose in terms of the "offer" (as defined in Redline Legal's letter of 22 March 2021) on 1 April 2021, being the date when Redline Legal received Hunt & Hunt's letter of 31 March 2021. That agreement is of the kind referred to as the "fourth" category of Masters v Cameron. The "offer" that was open for acceptance was what was contained in paragraphs 2(a) – (d) of Redline Legal's letter (including Annexure "A"), which were the terms "to be recorded in a Deed of Settlement" (my emphasis). In other words, if the offer were accepted, the terms of the agreement that would thereby have arisen would be recorded in the deed, as opposed to being effected by the deed. 5. In reaching this conclusion, I have also taken into account five additional matters: 1. The comprehensive detail of Annexure "A" (which "facilitate(d) the prospects of settlement" by leaving no room for doubt about how the property was to be sold and what was to occur). The level of detail is a clear indication of intent to be immediately bound; 2. The language in the chapeau to Annexure "A" of the parties "have…agreed" suggests that their agreement was already binding before the annexure was incorporated into a deed. 3. The provision of what might be called a terminal date in clause (f) of Annexure "A": "Absent agreement in writing between the Plaintiff and the Defendant the sale of the Property be a sale at auction to be held prior to the end of June 2021". That provision bespeaks an obligation intended to take effect on communication of acceptance of the offer in order to provide an end date irrespective of whether a deed (or anything else) was ever agreed between the parties. 4. Both as a matter going to context, and resolving any ambiguity to the extent there is any, the fact that the exchange was in Calderbank correspondence for the reasons set out in [12] to [18] above. 5. Given that the there were lawyers on both sides who it might be expected would be conscious of such things, either letter could have specified that no binding legal relations would arise until the deed had been entered into, if that was the intention of one or other party. There was no such express reservation (in contrast, for example, to Mr Klooster's email extracted in [20] above). 1. Furthermore, in reaching this conclusion I have not overlooked Mr Fantin's reliance on the language of Hunt & Hunt's letter of 31 March 2021 (see [24] above). The Court finds that letter is an unequivocal acceptance of the offer in Redfern Legal's letter. With respect to Mr Fantin's submission, to read "agrees to accept the terms of this offer" as meaning "will accept those terms at some future time when set out in the deed" would be artificial and unnatural in the context of the letter itself and the correspondence to which it replies. The reference to "receiving a draft deed to set out these arrangements" is consistent with the construction found in [28] above or, if that be wrong, is equivocal on the question of intention to be immediately bound. 2. The parties agreed that subsequent conduct can be admissible on whether a contract had been formed and, therefore, turned their attention to what happened next. 3. On 6 April 2021, draft short minutes of order were sent by email from an administration assistant at Hunt & Hunt (not Mr Miller) to Redline Legal (the Draft Short Minutes). The email included: "If the Orders are acceptable, would you kindly sign same and we will arrange to upload on to the online Court Portal …" 1. The Draft Short Minutes set out this order: "BY CONSENT THE COURT makes the following orders and directions: 1. That the directions (Equity Registrar) listed on 12 April 2021 be adjourned for a period of four (4) weeks to allow the parties time to finalise their settlement negotiations." 1. Mr Fantin submitted this favoured his client's argument that there was no concluded agreement. However, that is not what the parties agreed. An amended copy of the Draft Short Minutes (the amended Draft Short Minutes) was sent by return email from Redline Legal to Hunt & Hunt the following day. The amended Draft Short Minutes set out these orders: "BY CONSENT THE COURT makes the following orders and directions: 1. That the directions (Equity Registrar) listed on 12 April 2021 be vacated; and 2. That this matter is listed for Directions before the Equity Registrar on 10 May 2021 9:30 AM at Supreme Court Sydney. The Court notes: 3. The parties have reached settlement and needs time to finalise the terms of the deed." 1. On 7 April 2021, solicitors for both parties signed the amended Draft Short Minutes. The orders as set out in the amended Draft Short Minutes were made by Senior Deputy Registrar Hedge on 8 April 2021. 2. The Court finds those orders are consistent with the parties accepting that they were already bound ("have reached settlement"). Mr Fantin submitted that if that were the case, the parties should have entered the orders set out in sub-paragraphs 2(b) – (d) of Redline Legal's letter of 22 March 2021 to dispose of the proceedings there and then. 3. That submission is unrealistic and contrary to what the Court regards as the well-established practice of the profession. Even where a binding settlement has come into existence, the fact that formal orders need to be made is consistently used by competent solicitors to keep the parties focussed on the need to agree the terms of any consequential deed. When I put this to both parties in the course of argument, neither advocate suggested it would be otherwise. 4. On 30 April 2021, Redline Legal wrote to Hunt & Hunt by email: "We are currently experiencing difficulties obtaining our client's approval on the proposed Deed of Release. We are informed that she does not have printer/computer at home and is required to go to internet shop in town to print the draft Deed of release and she cannot do so due to Covid-19 lockdown in Fiji islands. There is currently a 14 day lockdown which commenced on 26 April 2021 and will conclude on 9 May 2021. We anticipate to have a draft Deed for your client's review and approval by Wednesday 10 May 2021. We apologise for the delay …" 1. On 3 May 2021, Redline Legal again wrote to Hunt & Hunt, attaching a draft Deed of Release (the draft Deed of Release). The email stated that the draft Deed of Release was "subject to our client's approval". Mr Fantin again pointed to this as supporting a finding that the parties did not regard themselves as bound. I disagree. The reference to "client's approval" reflected the practical difficulties referred to in the email set out in the preceding paragraph. 2. The draft Deed of Release contained, among others, the following relevant terms which reflected what appeared in Annexure "A": "2.4 The Plaintiff's solicitor is to act on behalf of the parties in the preparation of any Contract of Sale of Land and following an exchange of any Contract of Sale of Land for the sale of the Property with the terms of such contract to be: … [2.4.5] Balance to be distributed as follows; a. 77% to the Plaintiff; and b. 23% to the Defendant (the Settlement Sum)." 1. The draft Deed of Release also confirmed that the document constituted the "whole agreement between the parties regarding the subject matter" of the draft Deed of Release unless expressly agreed in writing. 2. It is not necessary to record the balance of the draft Deed of Release. Its essential operative part was to incorporate Annexure "A". The balance can be described, with no disrespect, as a boilerplate, uncontentious deed of settlement and release. 3. The events recorded in [32] to [35] above were repeated on 5 May 2021 with minor, irrelevant variations. On 5 May 2021, the parties agreed Short Minutes of Order adjourning the proceedings for directions before the Equity Registrar for a period of six weeks (Hunt & Hunt had originally suggested four weeks) "to allow the parties time to finalise their settlement negotiations". The orders note that "[t]he parties have reached settlement and needs [sic] time to finalise the terms of the deed". To the extent it may be relevant, the Court finds those orders are consistent with the parties accepting that they were already bound ("have reached settlement"). 4. As at 10 May 2021, the parties were in the course of negotiating the contents of the draft Deed of Release, as evidenced by a letter of that date addressed to Redline Legal from Hunt & Hunt with several "interim comments" for consideration. Those comments included: "… 3. In relation to clause 2.4 there was no agreement that your firm would act on behalf of the parties in relation to the contract for sale. We do, however, agree that there would be some advantage in relation to this. We would wish to review the contract for our client to ensure that it met her requirements and we would also need to be involved in the settlement arrangements. [The letter goes on to suggest some consequential amendments as to costs.]" 1. Mr Fantin properly accepted both that, save for the point which I have just reproduced, Hunt & Hunt's other comments were minor, and that the point which I have set out was misconceived for the reasons given by Redline Legal in their letter of 9 June 2021 (see [47] below). 2. On 11 May 2021, Redline Legal replied, including: "…3. We note your interim comments and inform you to make the proposed changes in the draft Deed [this agreed to the comments which Mr Fantin accepted could be described as minor] 4. We are currently seeking instructions from our client in relation to all interim comments and proposed changes". 1. On 9 June 2021, Redline Legal again wrote to Hunt & Hunt. That correspondence included these comments: "…3. In relation to paragraph 3 of your letter the addition of clause 2.4.5 is rejected. We draw your attention to our letter of compromise dated 22 March 2021 ('our letter') paragraph 1(d) where the terms were for each party to bear their own costs. This was accepted on 20 April 2021 by your client. It is standard practice for parties to be represented in conveyancing transactions to undertake adequate checks and safeguard the best interests of the represented parties. The choice on who a party retains for the conveyance is not a matter to which your client or our client can direct a party thus should not be an issue. 4. Furthermore, in paragraph 3 of your letter you state that "there was no agreement that your firm (Redline Legal) would act for both parties in relation to the contract of sale." We draw your attention to Annexure A, paragraph 1(g) of our letter where we had included as part of the accepted letter of compromise that we will act on behalf of both parties in the preparation of the contract of sale. Having stated that we both do agree that this would be an appropriate arrangement thus should not be a matter of contention …" 1. As I have already noted, Mr Fantin accepted that those comments were correct. When that point is understood, it is apparent from the correspondence between the solicitors that by this point the terms of the deed had in effect been agreed. However, events then appear to have overtaken what the Court is satisfied would have happened next, being consensus as to the terms of the deed being formally acknowledged between the solicitors. 2. Further adjournments were agreed by the parties because of practical difficulties in obtaining Latchmi's instructions from Fiji. The Court is satisfied for the reasons set out above that the parties' conduct after 1 April 2021 to which the Court has been referred is consistent with the parties regarding themselves as already contractually bound and does not support the case advanced for Ranu by Mr Fantin. 3. On 13 August 2021, Ranu's new legal representatives, Bassan Lawyers and Associates, wrote to Redline Legal. That letter stated (among other things): "… Acceptance of Settlement Offer Withdrawn Given the absence of any finalisation or execution of a legally binding settlement deed, we are instructed that our client (the defendant) withdraws her acceptance of the plaintiff's mediation offer to informally settle on the seventy-seven per cent (77%) and twenty-three per cent (23%) distribution split in this matter as she does not consider the distribution to be a fair and equitable settlement." 1. It will be apparent from the conclusions that I have already expressed, that the Court accepts Mr Mishra's submission that Ranu was not entitled to purport to "withdraw her acceptance". Conclusion 1. Latchmi is entitled to a declaration that an immediately binding settlement agreement arose between her and Ranu on 1 April 2021. While the Court will hear the parties as to the appropriate relief to give effect to these reasons, including as to costs, my preliminary view is that the most straightforward means of ordering the specific performance of that agreement is to require Ranu to execute the settlement deed as it appears to have been negotiated between Redline Legal and Hunt & Hunt. If that course commends itself to the parties, at least two variations will need to be considered by reason of the time and events which have intervened: 1. A date in 2023 by which time the auction must have been held will need to be specified; and 2. Whether the Court should now make orders to give effect the consent orders originally proposed by the parties to dispose of the proceedings, subject to any argument about Latchmi's costs incurred since Ranu purported to withdraw her agreement on 13 August 2021 (see [50] above). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 December 2022