GEE v REA SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MAHONEY and CLARKE JJA 4 June 1992, 4 June 1992 [1992] NSWCA 73 CONTRACT — settlement of appeal — whether binding agreement — whether conditional on form of consent orders — held: binding agreement. Masters and Another v Cameron (1954) 91 ACL 353, 361. Uther Webster and James CONTRACT — offer and acceptance — litigation of personal injuries claim against surgeon — mammaplasty performed 1974 — delayed trial heard in 1990 by Lusher AJ — dismissed claim — delay in hearing of appeal — appellant offers to withdraw appeal no order as to costs — respondent accepts consent order in such terms prepared and presented — appellant changes mind — refuses to execute consent order — respondent, on return of appal, takes preliminary point by motion that proceedings settled — Held (1) There was a binding contract. Masters and Anor vy Cameron (1954) 91 CLR 353, 361. (2) The contract was not a mere agreement to agree dependent on the terms of settlement; (3) Accordingly, the judgment to which the parties had agreed should be entered — appeal dismissed with costs; (4) Costs of motion on preliminary point awarded to respondent. ORDERS 1. Motion upheld; the opponent to pay the costs of the motion; and 2. Appeal dismissed as agreed; no order as to costs. Kirby P When this appeal was called on this morning counsel for the respondent took a preliminary point. It was to the effect that, as between the parties, there was a binding agreement for the settlement of the matters in contest in the appeal. It was therefore argued that the Court should proceed to give effect to the agreement, in effect by ordering that the appeal be dismissed. The matter arises in this way. The appellant brought proceedings for the alleged negligence of the respondent in respect of an operation performed upon her as long ago as 14 September 1974. The respondent is a medical practitioner. On that day he performed on the appellant a bilateral reduction mammaplasty for the reduction of the size of the appellant's breasts. The appellant's case, which took an enormously long time to come to trial, that the operation was performed negligently. The trial took place before Lusher AJ on 6 August 1990. There was no jury. His Honour delivered reasons in which he concluded that judgment should be entered in favour of the respondent. He ordered the appellant to pay the respondent's costs of the trial. An appeal was then brought to this Court alleging various errors on the part of his Honour. This Court has not heard the argument on the appeal. Before the appeal was brought on it did not even, have the advantage of written submissions from the appellant. We are therefore not in a position to judge the merits of the appeal. However, it is perhaps worth noting that there was a very serious contest at the trial in which it was suggested that the respondent had distorted, manipulated or added to his medical records. That dispute was resolved by Lusher AJ in favour of the respondent. It would appear to have been extremely 2 UNREPORTED JUDGMENTS difficult for the appellant to overcome the determination of his Honour in the light of the way in which he expressed his resolution of it and having regard to the recent authority of the High Court of Australia in such cases as Abalos v Australian Postal Commission (1991) 171 CLR 167, 178 ff, Dawson v Westpac Banking Corporation (1991) 66 ALJR 94, 105 (HC). Be that as it may, the Court has not embarked upon the merits of the appeal because of the preliminary point raised for the respondent. The events relevant to the determination of that point are set out in an affidavit of Ms Silvia Bastianon, solicitor in the employ of solicitors for the respondent. The affidavit, dated 2 June 1992, provides the factual background against which the preliminary point must be determined. The affidavit was read before the Court this morning without objection. Ms Bastianon was not cross-examined. No evidence was given for the appellant to contest any of the factual matters which were set out in Ms Bastianon's affidavit. Accordingly, it was agreed by both parties that it was safe for the Court to proceed to determine the preliminary question on the basis of Ms Bastianon's affidavit and the facts stated in it. If there had been any factual dispute, the Court would almost certainly have returned the matter to the Law Division for determination of the factual there. The basic facts are conveniently summarised in a letter dated 1 June 1992 which was addressed to the solicitors for the appellant. This is annexure J to Ms Bastianon's affidavit. It is appropriate to include that letter in these reasons. I now set out the relevant portions which contain the record of the history of the matter relevant to the preliminary point. "1. On 30 March 1992 we received a facsimile transmission from your office bearing the date 27 March 1992 in which you advised that the matter was listed for callover on 1 April 1992 and that 'it may well be that the appellant is unable to proceed because the question of Legal Aid has not as yet been determined.' You were to provide us with your further advices in this regard. 2. By facsimile transmission dated 31 March 1992 we noted that this was the first occasion upon which the issue of Legal Aid had been raised and we requested clarification of your client's Legal Aid application in addition to some indication of whether your client's decision to proceed with the Appeal was dependent upon the grant of Legal Aid. 3. The matter was listed for callover on 1 April 1992 and was set down for hearing in the Court of Appeal on 4 June 1992. We understand that Counsel appeared on behalf of the appellant and no indication was given in relation to the situation as regards your client's Legal Aid application. 4. By letter dated 3 April 1992, received at this office on 6 April 1992, you advised, inter alia, that you had received communications from the Legal Aid Commission indicating that your client may not be granted Legal Aid and that 'if Legal Aid is not granted it is likely that our client will not pursue the Appeal.' 5. By letter dated 24 April 1992 received in this office on 28 April 1992, you advised that you were instructed that your client was prepared to discontinue the Appeal subject to each party paying their own costs. 6. By letter dated 30 April 1992 we advised you that our client was prepared to accept a discontinuance of the Appeal on the basis that each party pay their own costs in relation to the Appeal only. However this agreement was not intended to extend to the costs incurred in respect of the proceedings in the Court below which our client intended to recover from your client. URJ GEE v REA (Kirby P) 3 7. In a telephone conversation between our Silvia Bastianon and your Paul Lynch on 15 May 1992 we were advised that your client was still having difficulties with Legal Aid and that if Legal Aid had not been a problem our proposal set out in our letter of 30 April 1992 would have been accepted. Your Mr Lynch was to contact us in relation to developments. Your Mr Lynch was advised that we had instructed Counsel not to prepare the matter at this stage in view of the likelihood that the appellant would be withdrawing from the Appeal. 8. On 25 May 1992 and 27 May 1992 our Silvia Bastianon attempted to contact your Paul Lynch by telephone. Messages were left for Paul Lynch to return our telephone calls however no response was forthcoming. 9. By facsimile transmission dated 28 May 1992 received at this office on 28 May 1992 we were advised by you that the appellant had agreed to withdraw the Appeal subject to each party paying their own costs of the Appeal. We were invited to prepare appropriate Terms and forwarded them to you. 10. By letter dated 28 May 1992 and delivered by hand to your office on that date we enclosed duly executed Consent Orders providing for the withdrawal of the appeal and no order as to costs. We also notified the Court of Appeal Registry as a matter of courtesy that the matter had been settled and that the Appeal would be withdrawn in order to save time. 11. By facsimile transmission dated 29 May 1992 and received in our office at approximately 4 pm on that date, you advised that the appellant would not wish to proceed with the Appeal. In our view there is a binding and valid agreement in relation to the resolution of this matter and it is our intention to argue this as a preliminary point in the Court of Appeal proceedings to be heard on 4 June 1992. We confirm that we wish the matter to proceed on 4 June 1992 without loss of priority and advise that we not require your written submissions to be forwarded to us forthwith. We note that the appellant's written submissions were to be filed four clear days prior to the hearing date." It is also relevant to refer to the paragraphs of Ms Bastianon's affidavit in which she recounts the telephone conversations which took place between herself and Mr Paul Lynch, the solicitor for the appellant; summarised in para7 et seq of her affidavit: "9. On 15 May 1992 I had a telephone conversation with Mr Paul Lynch, the plaintiff's solicitor. It was devised that he had yet to receive instructions from the appellant in relation to our letter of 30 April 1992 due to some difficulties with the plaintiff's Legal Aid application. He advised that he would get back to me in relation to the matter. I indicated to the plaintiff's solicitor that we had requested that Counsel not make any preparations in relation to the Appeal pending their response in order to avoid additional costs. 10. On 25 May 1992 and on 27 May 1992 telephoned the offices of Messrs Geoffrey Edwards and Co and left a message for Mr Paul Lynch to contact me. I received no response to those telephone calls. 11. Annexed hereto and marked with the letter 'F' is a copy of the facsimile transmission of Messrs Geoffrey Edwards and Co dated 28 May 1992 which I am informed and verily believe was received by this office shortly after 10 am on 28 May 1992. 4 UNREPORTED JUDGMENTS 12. Annexed hereto and marked with the letters 'G' and 'H' respectively are copies of a letter from Messrs Tress Cocks and Maddox to Messrs Geoffrey Edwards and Co and an unexecuted copy of the Consent Orders which I caused to be forwarded by hand on 28 May 1992 to the offices of Messrs Geoffrey Edwards and Co. 13. Annexed hereto and marked with letter 'P is a copy of the facsimile transmission of Messrs Geoffrey Edwards and Co dated 29 May 1992, which I am informed and verily believe was received by this office at approximately 4 pm on 29 May 1992. 14. I had a telephone conversation with Paul Lynch, the plaintiff's solicitor, on the afternoon of 29 May 1992 to the following effect: I said: 'I thought we had an agreement but obviously that has changed.' He replied: 'Um, yes, well.' I then said 'I don't know what the court's attitude will be to this issue. The handling of this matter has been disgraceful. In any event we want the matter to proceed.' Mr Lynch said: 'My Counsel, Mr Toomey, has spoken to your Counsel, Mr Lonergan and was advised that Mr Lonergan would not be in a position to proceed on Thursday.' I said 'My Counsel is unavailable but we are making efforts to find alternative Counsel. If we have any difficulties we will be making the appropriate application.' He said: 'We will not be able to object to this given what has happened.' I said: 'We will be ready if possible as we do not want to lose priority and would want to get the matter over and done with. We will let you know what is happening.' I then asked him 'What do you intend to do regarding written submissions.' He said: 'I will get them to you first thing Monday morning. I will advise Counsel.'" The respondent contended that the proper influence to be drawn both from the conversations and from the correspondence was that as between the appellant and the respondent the matter had been settled. It was put that it was settled either by a letter of 30 April 1992 or by a letter of 28 May 1992. The letter of 30 April 1992 answered the letter from the solicitors for the appellant of 24 April 1992. It is appropriate to set both letters out. The letter of 24 April reads: "We write to advise that we are instructed by our client that she is prepared to discontinue the appeal subject to each party paying their own costs. We look forward to receiving your response to this." The reply of 30 April 1992 in reply reads: "We refer to your letter of 24 April 1992 and advise that our client is prepared to accept a discontinuance of the Appeal by your client on the basis that each party pay their own costs in relation to the Appeal. This agreement does not extend to the costs incurred in respect of the proceedings below which our client intends to recover from your client." The appellant contended that the letter of 30 April 1992 amounted not to an acceptance of the offer contained in the letter of 28 April 1992 but a counter-offer by reason of its reference to the provision for the costs incurred in the proceedings in the court in trial. For the present purposes, and without so deciding, I shall assume this is so. I therefore pass to the subsequent correspondence. Relevantly this is contained in the letter of 28 May 1992 addressed by the solicitors for the appellant to the solicitors for the respondent. That letter reads: URJ GEE v REA (Kirby P) 5 "We refer to previous correspondence and confirm that the Appellant agrees to withdraw the Appeal subject to each party paying their own costs of the Appeal. Please prepare appropriate terms and forward them to us." Pursuant to that letter the solicitors for the a letter in these terms respondent on the same day sent to the solicitors for the appellant: "We refer to your facsimile transmission of 28 May 1992 and enclose duly executed Consent Orders in relation to this matter. We would be obliged if you would execute the Consent Orders and arrange for them to be filed in the Registry as soon as possible. Could you please provide us with a sealed copy of the Consent Orders at your earliest convenience. We advise that we have notified the Registry that the appeal is to be withdrawn." Attached to that letter was a form of consent orders which provided: "1. The Appeal is withdrawn. 2. No order as to costs." The form contained a place for the signature of the respective solicitors and for the seal of the Court. Notwithstanding this exchange, the appellant, by her solicitors on 29 May 1992 advised the solicitors for the respondent that she would indeed proceed with the appeal. It is now contended by the respondent that this assertion was without legal effect because the matter had been settled by the previous correspondence. It was submitted for the appellant that the matter had not been settled and that the Court should proceed immediately to hear argument on the merits of the appeal. On the face of the correspondence and on the basis of the material contained in Ms Bastianon's affidavit relating to her conversations with Mr Lynch, it does appear on a first impression that as between the parties this long standing saga of litigation had finally been disposed of by the letter from the solicitors for the appellant to the solicitors for the respondent dated 28 May 1992. Indeed, the first paragraph of that letter could not be in clearer terms. It speaks in the present tense. It states: "... the Appellant agrees to withdraw the appeal subject to each party paying their own costs of the appeal." These were the only terms which were provided in the consent order then presented. That document was consented to by the solicitors for the respondent on his behalf. The acceptance was thus given to the appellant's offer. A binding contract was made. In contest to the suggestion of settlement, counsel for the appellant put two arguments. The first was the letter of 28 May 1992 amounted, in effect, to a contract of the third kind referred to in the High Court decision in Masters and Another v Cameron (1954) 91 CLR 353, 361. In effect (so it was put) it was an agreement to enter into an agreement subject to the provision of terms of settlement, upon the signing of which only would be achieved the final agreement between the parties. Secondly, he contended that if there was an agreement, it was immediately repudiated by the appellant repudiation was duly accepted by the solicitors respondent on his behalf. So far as the first argument is concerned, I would reject the contention that this was a case of an agreement of the third kind referred to in Masters v Cameron. As I have said the letter of 28 May from the solicitor for the appellant expresses agreement in the present tense. The provisions for giving effect to the settlement were purely ancillary to the announcement of the agreement. That announcement must itself be understood in the light of the background of the correspondence between the solicitors and the earlier attempts to bring the litigation to a close. 6 UNREPORTED JUDGMENTS Against that background, I have no hesitation in saying that the agreement is one which was effected by the letter of 28 May 1992. It is legally binding on the parties. That leaves the second point. The argument here was that Ms Bastianon, by her subsequent conversations with Mr Lynch, acknowledged and accepted on behalf of the respondent the appellant's belated repudiation of the agreement. As I read the conversations which have not been elaborated beyond those set out in the affidavit, I see no such agreement to the repudiation. On the contrary, Ms Bastianon castigated what, in my respectful opinion was rightly described as the "disgraceful way" in which the matter had been handled. It was nearly twenty years since the events which gave rise to litigation. Similar comments had been recorded in the reasons of Lusher AJ. The conversation between Ms Bastianon and Mr Lynch merely acknowledged that the contention was then being advanced for the appellant that the matter had been settled and that the respondent would have to prepare to meet that contention when the case was ultimately listed before the Court. The last two paragraphs of Ms Bastianon's letter of 1 June 1992 made it plain that the preliminary point would be taken, that the respondent contended that a binding and valid agreement had been made and that this point would be argued, as it has been, as a preliminary point in the appeal. Counsel for the respondent then stated that the preparation of terms of settlement in the practice of the settlement of Common Law Cases normally require an elaboration of terms, such as terms relating to the disclosure of the settlement. It was suggested, although there was no evidence before the Court to this effect, that this was a case which had had publicity at trial and a term relating to non disclosure might therefore have been an appropriate term warranting future negotiation of the final form of the consent orders. The practice of the Court of Appeal is to disallow terms of settlement which purport to provide that a settlement should not be disclosed. But equally it is the practice of the Court, as I believe of Divisions of the Supreme Court, to permit parties to agree that the terms of settlement agreed between them should not be disclosed by each other. This is a common provision. If the parties had sought it in the terms in this case it is reasonable to infer that it would readily have been agreed to both by the respondent and by the Court. Similarly, although the form of the consent order repeats the agreement between the parties for the "withdrawal" of the appeal, and does not in terms provide for discontinuance or for the dismissal of the appeal (orders which would normally be made) that is likewise a very common error in the practice of the Court of Appeal. It is readily corrected by administrative steps taken by the Registry before the form is finally given effect to by the order of the Court. If the parties agree that an appeal should be "withdrawn", unless there is some reason to the contrary, the Court will normally provide its consent to the discontinuance or the dismissal of the appeal, the parties being of full age and under no disability. The present appellant is of full age. She is not under any legal disability. After a background of extensive litigation she presumably gave instructions which led to the letter of 28 May 1992 by which her solicitors announced that she had agreed to withdraw the appeal subject only to the parties paying their own costs thereof. This was her offer. It was accepted and agreed to by the solicitor for the respondent on his behalf. There has been a binding agreement. It bars the further prosecution of the appeal. URJ GEE v REA (Clarke JA) 7 The preliminary point therefore succeeds. Accordingly, it is not necessary to proceed to hear argument on the merits. However, as I have already said, in respect to the merits the appellant had very great difficulties in the light of the repeated authority of the High Court and the way in which Lusher AJ expressed his decision. The order of the Court should be that the matter having been settled by the solicitors for the parties by binding agreement the appeal should now be dismissed. Mahoney JA I agree. Clarke JA I also agree. (Discussion ensured concerning costs). KIRBY P: The orders of the Court should be that the appeal is dismissed. No order should be made as to costs of the appeal as the parties agreed. However, the motion succeeds. The claimant on the motion (the respondent to the appeal) is entitled to the costs of the motion. MAHONEY JA: J agree. CLARKE JA: I agree also. KIRBY P: They are the orders of the Court. The motion is upheld and the opponent must pay the costs of the is dismissed, no order as to costs. 1. Motion upheld; the opponent to pay the costs of the motion; and 2. Appeal dismissed as agreed; no order as to costs. Counsel for the appellant: B Toomey QC/J Baird Solicitors for the appellant: Geoffrey Edwards and Co Counsel for the respondent: P Menzies QC/T Lonergan Solicitors for the respondent: Tress, Cocks and Maddox