Alama Pty Limited v Jong [1999] NSWSC 713

New South Wales Supreme Court CITATION : Alama Pty Limited v Jong [1999] NSWSC 713 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 1603/99 HEARING DATE(S) : 14 July 1999 JUDGMENT DATE : 14 July 1999

Alama Pty Limited (P1) PARTIES : Attilio Marinangeli (P2) Maria Joseph Jong (D) JUDGMENT OF : Master McLaughlin

COUNSEL : Mr. W. Fitzsimmons (P) Mr. D. J. Russell (D) SOLICITORS : Abbott Tout (P) Mark Warton (D) CATCHWORDS : DECISION :

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Wednesday, 14 July 1999

1603/99 ALAMA PTY LIMITED & ANOR -v- MARIA JOSEPH JONG JUDGMENT

1 MASTER: By order made on 28 June 1999 Mr Justice Young committed the hearing of the entirety of these proceedings to a Master. 2 The proceedings were instituted by the plaintiffs, Alama Pty Limited and Attilio Marinangeli by summons filed by them on 5 March 1999. The defendant named in that summons is Maria Joseph Jong. 3 By that summons the plaintiffs claim the following substantive items of relief: 1. A declaration that a binding and enforceable agreement was entered into between the parties on 4 June 1997. 2. A declaration that the defendant be entitled to enter judgment for the plaintiff in the sum of $53,000 and each party to pay their own costs in proceedings in the District Court number 2723 of 1998 at Sydney. 4 The defendant was involved in a motor vehicle accident on 22 June 1995. Apparently the circumstances of that accident gave rise to her having entitlement to worker's compensation payments. She was off work for some weeks. She received worker's compensation payments in respect of her wages and also in respect of medical expenses. 5 Proceedings were instituted by the defendant in the Compensation Court of New South Wales, being matter 16961 of 1995. The worker's compensation insurer was the MMI Insurance Company, the insurer in respect to any common law entitlement which the defendant might have had arising out of the motor vehicle accident (that is, what has been referred to as the third party claim of the defendant) was NRMA Insurance Company (to which I shall refer as "NRMA"). The defendant retained the services of a solicitor, Mr Asheesh Kalmath, in respect of whatever entitlements she might have had arising out of her injuries. 6 Mr Kalmath acted for the defendant whilst he was employed by a firm of solicitors Delfino & Delfino. The defendant instructed Mr Kalmath in July 1995 to bring a claim for compensation for the personal injuries which she had sustained in the motor vehicle accident. When Mr Kalmath moved to another firm of solicitors, Stewart Levitt and Co the defendant became a client of that firm also. Subsequently, Mr Kalmath commenced practice on his own account and the defendant continued to be his client. 7 Mr Kalmath was aware of the fact that the defendant received payment from her worker's compensation insurers. He apparently retained Counsel concerning the worker's compensation proceedings. On the day that those proceedings were to come on for hearing, which was 1 May 1997, a decision was made by the defendant, her solicitor Mr Kalmath and her Counsel, that the workers compensation claim would not be pursued but that a third party claim arising out of the accident would be pursued by the defendant. The basis for that decision was that it was apparently believed, at least by the defendant's legal advisers that the defendant would financially be better off by pursuing the common law claim rather than the worker's compensation claim. 8 Accordingly, on 1 May 1997 the defendant, by consent of the respondent to the worker's compensation proceedings, had the worker's compensation proceedings struck out. 9 The defendant in the meantime, through her solicitors, had been negotiating with NRMA Insurance Limited concerning a possible settlement of her third party claim. A number of items of correspondence passing between NRMA and Mr Kalmath, both as an employee of Stewart Levitt and Co and practising on his own behalf, have been placed in evidence concerning those settlement negotiations. 10 An original offer was made by NRMA on 12 November 1996. The letter communicating that offer, which was in an amount inclusive of costs, contains the following: This offer includes any amounts which are properly payable by way of reimbursement to the Department of Social Security, workers compensation insurer, Health Insurance Commission or private health fund. 11 A counter-offer was communicated by Mr Kalmath on 23 May 1997 to NRMA Insurance Limited. That counter-offer was in the sum of $65,000 inclusive of costs and out of pocket expenses. Mr Kalmath's letter said: The offer includes any amounts which are payable by way of reimbursement to the Department of Social Security, Workers Compensation insurer, Health Insurance Commission or private health funds. 12 On 2 June 1997 Miss Kylie Anne Brown, a senior claims officer with NRMA who had the conduct of the matter on behalf of that insurer, telephoned Mr Kalmath's secretary. According to the evidence of Miss Brown she asked to speak to Mr Kalmath, was told that he was not in the office, and requested that a message be left for Mr Kalmath. According to Miss Brown on 4 June 1997 she telephoned Mr Kalmath's office and again spoke to his secretary, asked to speak with him and was informed that he was in court. According to Miss Brown, she said to the secretary, "Can I leave a message for him to call back in relation to a counter-offer?" Miss Brown said in her evidence that later on 4 June 1997 Mr Kalmath returned her call and he said, "Can we split the difference to $53,000 inclusive?", to which Miss Brown said, "Yes, I can do that and I will send out the agreement for release and indemnity as well as an HIC section 23 notice". 13 Miss Brown has annexed to her affidavit file notes which she recorded on 2 June 1997 and on 4 June 1997. According to Miss Brown, in the telephone conversation which she had with Mr Kalmath's secretary on 2 June 1997 she communicated the amount of an offer in a total figure of $41,266.59 and gave a break down of the components of that offer. The breakdown was as follows: an amount for general damages, described as 15 percent, $16,550; out of pocket expenses $1,608; past economic loss $500; worker's compensation $19,608.59; costs $3,000; total $41,266.59. In her file note in respect to the conversation of 2 June 1997 Miss Brown recorded that the plaintiff's solicitor was not in the office, that she left a message for him to call her. The file note then continues, "I will put forward the following offer", and there then followed the figures which I have just listed. For 4 June 1997 Miss Brown's file notes record, "I phoned the plaintiff's solicitor, was in court, left message with secretary to call me re counter offer", and then a later file note on the same date, "Plaintiff's solicitor phoned, offer split difference, agreed $53,000 matter settled". 14 Subsequently a document headed Agreement for Release and Indemnity was sent by Miss Brown to Mr Kalmath. It would appear that Mr Kalmath then communicated to Miss Brown a dissatisfaction by his client with the amount of worker's compensation which would need to be reimbursed, with the consequence that the amount which the defendant would receive in her pocket would be somewhat less than apparently Mr Kalmath had believed it would be. The agreement was never signed. 15 The defendant subsequently instituted proceedings in the District Court of New South Wales at Sydney on 24 April 1998 for damages arising out of the motor vehicle accident. 16 The present plaintiffs, for whom NRMA Insurance Limited is the third party insurer, assert that there is a binding agreement between the defendant and the insurer of those plaintiffs as to settlement of the third party claim. 17 Evidence was given by Mr Kalmath by affidavit and he was cross-examined on his affidavit, as also was Miss Brown cross-examined on her affidavit evidence. According to Mr Kalmath, he returned Miss Brown's telephone call on a date which he did not in his affidavit specify but merely described as mid-1997. In his affidavit he said: I recall that I had a telephone attendance on Ms Brown of the NRMA in Mid 1997 when she offered the sum of $41,000.00 in response to an offer of $65,000.00 which had been put in May 1997. I recall that I stated to her "can you split the difference, because I am confident that my client will accept $53,000.00?" She said, "I think I have instructions to settle on that basis". 18 The account given by Mr Kalmath of that conversation is, it will be appreciated, somewhat different from the account given by Miss Brown. Mr Kalmath, rather curiously, appears to have kept no diary notes whatsoever concerning any communications which he had either with his client or with Miss Brown of the NRMA concerning the negotiations in respect to his client's claim or even concerning the decision which had been made on 1 May 1997 to abandon his own client's worker's compensation proceedings. 19 The defendant sought to obtain some degree of benefit from the wording of the file note made by Miss Brown on 2 June 1997 after her conversation with Mr Kalmath's secretary in which Miss Brown said, "I will put forward the following offer". She was cross-examined as to the apparent inconsistency of that file note with her assertion that she had in fact already communicated the offer to Mr Kalmath's secretary. She agreed that the file note appeared to be inconsistent with her statement that she had already communicated the offer and the components of that offer and said that she could offer no explanation for the apparent inconsistency. 20 Had there been some evidence from Mr Kalmath's secretary, that apparently inconsistency might have achieved some degree of significance. There was no evidence from Mr Kalmath's secretary. There was no explanation as to the absence of any such evidence. 21 I am satisfied that Miss Brown in her conversation with Mr Kalmath's secretary on 2 June 1997 did in fact communicate the terms of her offer and the breakdown of the components of that offer. 22 To the extent that there is any material difference in the evidence given by Miss Brown and Mr Kalmath concerning the conversations which they had, I prefer the evidence of Miss Brown. The evidence of Mr Kalmath did not appear to me to be particularly reliable, and indeed on a number of instances Mr Kalmath said that he was not sure about the accuracy of his apparent recollection of certain matters. He had no supporting material, such as file notes, to assist him concerning his communications either with his client or with Miss Brown and relied upon his memory concerning the vital telephone conversation on 4 June 1997. 23 It did, however, emerge absolutely clearly from Mr Kalmath's evidence that he regarded all settlement negotiations to be in respect to a figure which would be inclusive of various amounts, including any worker's compensation liability which might have to be repaid by the defendant. Mr Kalmath said that it was his belief that there were would be no such worker's compensation amount to be repaid, but that if there was to be such an amount to be repaid then the proposed settlement figure was inclusive of that amount. He offered no reason or no explanation for his belief that there would not be an amount of worker's compensation to be repaid to the worker's compensation insurer. 24 Mr Kalmath, of all people, would have been aware that the defendant had received payment of worker's compensation by way of wages and by way of medical expenses, since he had had the carriage of the defendant's claim in the Compensation Court. 25 Curiously, in the light of his correspondence with NRMA Insurance Limited and in the light of his express evidence today that all negotiations with NRMA were on the basis that any settlement figure would include any reimbursements which the defendant must make to the worker's compensation insurer, Mr Kalmath on 4 March 1998 sent a letter to the worker's compensation insurer MMI Insurance, in which he said, "The plaintiff accepted the offer in principle and was of the belief that the offer was inclusive of the MMI workers compensation pay back figure which is $17,190.19". That statement is very difficult to reconcile with Mr Kalmath's oral evidence today and with his correspondence with NRMA Insurance Limited. 26 I consider that the evidence of Mr Kalmath where it is at variance with that of Miss Brown cannot be relied upon. But, as I have already recorded, on the essential point the evidence of Mr Kalmath was totally consistent with that of Miss Brown. Mr Kalmath agreed that, following the telephone conversation he had with Miss Brown on 4 June 1997, he believed that there had been a settlement of his client's claim because he believed that in that conversation an offer had been made by him which was to split the difference between the NRMA's previous offer and his previous offer, to come to an amount of $53,000 inclusive, and he believed that proposal, which he regarded as an offer, had been accepted by Miss Brown on behalf of NRMA. 27 It was submitted, however, on behalf of the defendant that despite that, belief on the part of Mr Kalmath, there had been no meeting of the minds in the conversation of 4 June 1999. I do not accept that submission. It is quite clear that there was a meeting of the minds. The meeting of the minds was as to an amount and that amount being inclusive of certain components. Whether or not Mr Kalmath was aware of the amount of the workers compensation component, even going so far as to accept his evidence that he believed that that component was in a nil amount, he was of the belief that the figure of $53,000 included whatever liability there might be upon his client to reimburse MMI Insurance Limited. If Mr Kalmath had been so rash as to have negotiated the settlement without satisfying himself as to how much the amount of that reimbursement was, that fact would in no way preclude there being a meeting of the minds which would result in a binding settlement. 28 It was not disputed on the part of the defendant that Mr Kalmath had ostensible authority to negotiate the settlement with the NRMA. If he negotiated such a settlement his client was bound by it. If she had not authorised him to negotiate it, either at all or in the specific terms in which it was negotiated, it might be that Mr Kalmath would find himself under some personal liability to his client. That would not have any effect upon the settlement which had been achieved. 29 It was also submitted on behalf of the defendant that the consequence of the Agreement for Release and Indemnity and the figures which had been inserted in clause 2(b) and 2(d) concerning the amounts to be deducted from the $53,000 (being the amount payable to the workers compensation insurer, and an amount which had been paid by the NRMA itself for out of pocket expenses) had the effect of introducing what might be described as a further term to the agreement which had not been agreed to by the defendant. Mr Kalmath was informed, when his offer was accepted, that there would be a document which the NRMA Insurance had in contemplation should be signed by his client. He did not demur to the suggestion that such a document of release and indemnity should be signed. But, in any event, the plaintiff in the present proceedings is not seeking to require the defendant to execute such an agreement; the plaintiff is merely seeking declaratory relief in respect to the bargain which had been struck in the telephone conversation between Mr Kalmath on behalf of the defendant and Miss Brown on behalf of the plaintiff. 30 I am satisfied that the plaintiff has fully established an entitlement to the relief which it seeks in the summons, and I propose to make the declarations which are sought. 31 I make the following orders. 1. I make declarations as sought in prayers 1 and 2 in the summons. 2. I make an order as in prayer 4 in the summons. The exhibits may be returned. **********