Geko Internet v Geko [1999] NSWSC 345

New South Wales Supreme Court CITATION : Geko Internet v Geko [1999] NSWSC 345 revised - 31/08/99 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 1291 of 1999 HEARING DATE(S) : 13 April 1999 JUDGMENT DATE : 13 April 1999

Geko Internet Pty. Limited (Plaintiff) Geko Pty. Limited (First Defendant) PARTIES : Dez Blanchfield (Second Defendant) Bright Sparcs Pty. Limited (Third Defendant) Telstra Corporation Limited (Fourth Defendant) JUDGMENT OF : Windeyer J at 1

COUNSEL : Mr. R. Dubler (Plaintiff) Mr. J.C. Drummond (Second and Third Defendants) Conway Leather Shaw (Plaintiff) SOLICITORS : Gilbert & Tobin (Second and Third Defendant) Mallesons Stephen Jaques (Fourth Defendant) CATCHWORDS : EQUITY - specific performance - agreement to settle the action - intention of parties to reach a binding agreement DECISION :

- 6 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WINDEYER J

TUESDAY 13 APRIL 1999

1291/99 GEKO INTERNET v GEKO PTY LIMITED & ORS

JUDGMENT - on notice of motion to seek specific performance of settlement agreement.

1 HIS HONOUR: This is a notice of motion under which the second and third defendants really, although in not perhaps appropriate terms, seek an order that an agreement between them and the plaintiff for the settlement of this action be specifically performed. In other words, what they say is that there was an agreement for settlement and, therefore, the action ought to be at an end and the agreement for settlement should be brought into force. 2 The matter was before the Court on 18 April 1999 when there was in the list a motion to vacate the hearing dates for this week. That motion was before me. There were indications that the parties were having discussions. 3 I made some comment which would at least have given the parties the impression that I was not keen on adjourning matters which had been fixed for hearing some time ago, that if the matter were settled or if it was necessary to proceed with the motion, then the parties should come back to court to inform me and if I was not in court they should contact my associate. As I remember it, I then said that I would come back to court, but as the parties do not seem to remember that I would not be certain that was said. 4 In any event, discussions took place between the solicitors for the plaintiff and the solicitors for the second and third defendants. There was no reason why the settlement could not have taken place between them, and negotiations with the fourth defendant continue separately. After the discussions the solicitor for the plaintiff wrote out for the second and third defendants on a piece of paper the terms of an offer upon which those defendants were prepared to settle with the plaintiff. 5 It is clear that Mr Koltai, who is, in effect, in charge of the plaintiff, was required to be a party to the proposed settlement. Those terms provided for payment of a certain sum of money for what was described as a total release of various wide-ranging claims, including a claim raised in respect of a web search engine and for transfer of certain IP and NIC numbers to Mr Blanchfield and Mr Koltai respectively. 6 Mr Leather, the solicitor for the plaintiff, left the conference room at the Court where the discussions were taking place to obtain instructions from his client, Mr Koltai. He came back and said that the offer was accepted but that some changes would need to be made as to non interference with IP numbers and informing users and past users of the settlement and a requirement that the equipment which was to be returned to the plaintiff was in working order and included passwords, all handles, transceivers, manuals and media. It is clear enough that this was in terms of a counter offer. 7 Miss Platford, the solicitor for the second and third defendants, then obtained instructions from her client and subsequently informed Mr Leather that those terms were agreed. Mr Leather said that when he came back with the counter offer he said that he would need to see the exact wording of the release proposed. Miss Platford does not deny that. She just doesn't remember those words being said. There was a conversation under which it was agreed that consent orders would be filed. Those consent orders were to include not only a dismissal of the proceedings with no order as to costs, but in addition provide for the transfer of the IP numbers and the NIC handles. The effect of that would have been that those orders would have been made and otherwise the proceedings would have been dismissed with no order as to costs. There is no dissent about that. 8 Miss Platford said that after these discussions and agreement had been reached she said to Mr Leather, "Do you want to go and tell the Judge that the matter is settled?" Mr Leather said, "Yes, I think we should do that now." At that stage they shook hands with each other. As I was not sitting they did not mention the matter in court. 9 Miss Platford asked Mr Leather whether he wanted her to ring my associate to let her know the matter was settled, and she said that Mr Leather said "Yes", and she said she would do that when she got back to the office. She said she would draft the deed of release setting out what had been agreed. She subsequently spoke to my associate to inform her the matter had been settled and telephoned Mr Leather to say that she had done so and that that my associate had asked that she be informed when the matter was settled with the fourth defendant so that it could be listed for mention today. 10 Insofar as there is some dispute about this, in the affidavit of Mr Leather which was sworn today and namely in paragraph 4, after hearing his oral evidence as to what happened, I accept the story of Miss Platford as to what happened and what was to be done by way of informing my associate of a settlement and the listing of the matter. 11 According to Miss Platford on the same date but later, namely about 5pm, she either telephoned or received a call from Mr Leather who said, "I have got a problem, my client wants the web search engine." She responded that it was specifically agreed as being part of the release that was in the written offer, and it was quite clear and that there was an enforceable agreement in place. Mr Leather responded that that was his client's position. He asked that he should be told of the defendants' instructions on the web search engine. 12 The following day Miss Platford telephoned Mr Leather and said that her instructions were that there was an agreed settlement and that the web search engine was specifically released and the settlement was to be enforced. There is really no dispute about any of this. Mr Leather concedes that he had informed Mr Koltai about what was to be released and had read to him what was written on the sheet of paper setting out the offer so far as the release was concerned. 13 So it is clear that the web search engine or claims in respect of it were to be released. Thus it is clear that if there were an agreement, then this was something new being raised outside the terms of the agreement. On the other hand, if there were no agreement it would not matter. 14 As happens in these matters, and luckily they do not happen very often, the only question that the Court needs to decide is whether or not it was the intention of the parties that no agreement be reached unless it were incorporated in a writing signed by the parties. 15 For instance, in this case it is not suggested that although the document with the terms refers to Mr Koltai and releases to him and from him, those were not properly part of the agreement reached or, on the other side, were not properly part of what was to be incorporated into a document which, on execution, would become binding on the parties. 16 Thus, the only question is whether or not there was an agreement reached when Miss Platford told Mr Leather that her client agreed to the additional terms which he had said were required, it being envisaged that the agreement would be set out later in a document but would, nevertheless, be binding, having been made, or whether there was no agreement until the writing came into existence and was duly executed. I have come to the conclusion that there was a binding agreement. In fact, this case is far clearer than most of this type of matter that comes before the Court. 17 There is no doubt that Mr Koltai, for the plaintiff, was aware of the proposal. There is no doubt that its terms were read to him. There is no doubt that he knew that the claims in respect of the web search engine were being released. There is no doubt that he subsequently changed his mind about that but that is not to the point. The point is that the agreement was clear. 18 I accept the evidence as to the arrangements to approach the Court to tell me that the matter had been settled and the subsequent arrangements to tell my associate that was the position. What has happened I am afraid is that the plaintiff, through Mr Koltai, changed its mind about one of the agreed terms. It is not, in my view, a question of it being part of the arrangement and that there was nothing binding until the document was signed. On the very clear and proper evidence of Mr Leather, it is perfectly clear that it was never suggested that the agreement was subject to this. 19 The furthest his evidence would go would be a requirement to see the exact wording of the release. In my view, that does not take it far enough. There was a binding agreement for settlement and that agreement ought to be enforced and the appropriate order made to that effect. 20 The defendant should have the costs of the notice of motion. (His Honour stated that he would prefer the parties to set out the precise terms of the orders and that there would be settlement in accordance with that document when it was prepared.)