GEEBUNG INVESTMENTS PTY LTD and ANOR v VARGA GROUP INVESTMENTS NO 8 PTY LTD [1995] NSWCA 166

GEEBUNG INVESTMENTS PTY LID v VARGA GROUP INVESTMENTS NO 8 PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

GLEESON CJ, KIRBY P and POWELL JA 15 June 1995, 11 October 1995 [1995] NSWCA 166

CONTRACT — whether binding contract whether not binding until formal agreements signed — settlement of litigation by parties in absence of lawyers — shaking of hands — subsequent solicitors' correspondence — held: (by maj): Concluded agreement — essential terms were resolved — correspondence consistent with agreement — appeal dismissed.

CONTRACT — whether enforceable — settlement of litigation — conversation by parties in absence of lawyers — agreement on settlement figure — agreement on instalments — parties shake hands on agreement — subsequent equivocal correspondence between solicitors — need for agreement on court to give effect to settlement and to terminate court proceedings — dispute arises as to periodic payment of instalments — inconsistent assertions of achievement of settlement and entitlement to other rights — primary judge (Abadee J) holds that enforceable agreement was achieved at meeting of the parties — alternatively, that the subsequent correspondence between solicitors removed existing doubts and provided enforceable agreement — on appeal

COSTS — indemnity costs — order of — resistance of party to settlement agreement in litigation — whether conduct so unreasonable as to warrant order of indemnity costs — whether abuse of process

Held:

(Gleeson CJ and Kirby P; Powell JA dissenting): (1) The informal agreement reached at the meeting between the parties and the subsequent correspondence sufficiently evinced an intention of the parties to create binding legal obligations and a binding contract was made. Masters v Cameron (1954) 91 CLR 353; Godecke v Kirwin (1973) 129 CLR 629; Allen v Carbone (1975) 132 CLR 528; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 (CA) applied, Frombars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251; Liquorland (Australia) Pty Ltd v GYC Holdings Pty Ltd and Ors, Court of Appeal (NSW), unreported, 28 October 1994; [1994] NSWJB 110 considered; Maconachie v Harpur (1993) 79 LGERA 75 (NSWSC) and Bettison v Insurance Corporation of British Columbia (1988) 22 BCLR (2d) distinguished; (2) Discussion by the Court of the considerations relevant to the differentiation between (a) agreements contemplating formalities and discussions which would not be legally enforceable agreements until the formalities were concluded; (b) the intention of parties to achieve a concluded agreement and whether in the evidence they have been successful in doing so; and (c) agreements upon essentials with lawyers to give effect to settlement by formalities and absence of true binding agreement because the remaining issues are significant and not mere formalities.