New South Wales Supreme Court CITATION : COX V. CIC INSURANCE LIMITED [2000] NSWSC 1167 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4599/00 HEARING DATE(S) : 11 December 2000 JUDGMENT DATE : 11 December 2000 PARTIES : Madeline Cox - plaintiff CIC Insurance Limited - defendant JUDGMENT OF : Hodgson CJinEq at 1 COUNSEL : Mr. R. Goodridge for plaintiff Mr. T.E.F. Hughes QC with Mr. A. Stone for defendant SOLICITORS : Firths, Sydney for plaintiff Abbott Tout, Sydney for defendant CATCHWORDS : CONTRACT - Purported agreement to settle claim - Defendant submits release for execution - Plaintiff requires amendment of release - Defendant treats this as counter-offer, and rejects it - Plaintiff seeks declaration that agreement made - Whether agreement made - Whether agreement repudiated - Whether plaintiff ready willing and able to perform agreement - Whether interest should be ordered - PRACTICE - Plaintiff alleges contract in terms different from those found by court - Whether cause of action complete at commencement of proceedings. CASES CITED : Baldry v. Jackson (1976) 2 NSWLR 415. DECISION : See end of judgment IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORAM: HODGSON, CJ in Eq. Monday 11th December 2000 NO. 4599 OF 2000 COX V. CIC INSURANCE LIMITED JUDMENT 1 These proceedings were commenced on 14 November 2000. The plaintiff claims a declaration that the plaintiff's third party claim, arising out of injures sustained in a motor vehicle accident on 2 July 1997, was settled for the sum of $20,000 plus costs of $5000 on 21 August 2000. The summons also seeks an order that the defendant pay interest on the said sum of $25,000 from 21 August 2000 and costs on an indemnity basis. 2 The settlement is claimed to arise from an exchange of correspondence, namely, an e-mail from the defendant dated 14 August 2000 and a reply from the plaintiff's solicitors dated 21 August 2000. The e-mail was in the following terms: I refer to a telephone conversation of today's date and confirm my offer of $20,000 plus $5000 inclusive of out of pockets. Please note this offer is subject to our standard release. 3 The reply was in the following terms: We refer to the telephonic conversation between your office and ours on 14 August 2000 and confirm your offer to settle for the sum of $20,000 plus costs of $5000. I confirm that I have received the plaintiff's instructions to accept this offer and the matter is, therefore, settled on that basis accordingly. Please let us have your cheque in settlement without delay. 4 That exchange seems to indicate a consensus that the matter be settled for $20,000 plus $5000 costs inclusive of out-of-pockets, and on the basis that the plaintiff execute the defendant's standard release. However, the defendant relies on a number of grounds to say that the exchange didn't give rise to a contract or, alternatively, that if it did, the plaintiff is not entitled to enforce it, or at least was not entitled to enforce it at the commencement of the proceedings. 5 One basis for these contentions arises from the ensuing correspondence between the two sides. 6 On 12 October, the defendant submitted a release for execution by the plaintiff containing an indemnification clause and also referring to the amount to be accepted by the plaintiff as $25,000. The plaintiff's solicitors returned that document on 17 October, altering $25,000 to $20,000 plus costs of $5000 and deleting the indemnity. The form returned also contained words written in, "If not paid in 28 days CIC will pay interest". The defendant treated that as a counter offer by the plaintiff, and on 27 October advised that that counter offer was rejected. 7 There was then further correspondence between the parties, including some without prejudice offers. The plaintiff's solicitor maintained the position that the matter had been settled and that the indemnity form should give the settlement amount as $20,000 plus $5000 costs, and apparently indicated continuing unwillingness to execute the indemnity. 8 After these proceedings were commenced on 14 November 2000, the plaintiff's solicitors, in a letter of 30 November 2000, did indicate willingness to execute the indemnity but, in that same letter, expressed a requirement that the document to be signed provide for interest at 10 per cent per annum from 21 August 2000. 9 Mr Hughes QC, for the defendant, submitted, firstly, that no agreement was reached in the first place. He submitted that the subsequent history indicated there was not a consensus between the parties. 10 He also submitted that it was not shown on the evidence what the defendant's standard release was. There are, in fact, in evidence two forms of release used by the defendant, one used at least up until about 27 June 2000, and the other in use at least by 14 September 2000. However, in my opinion, the submission in the 12 October letter of the later form as its standard form is an admission by the defendant that this was its standard form as at 14 and 21 August. 11 In my opinion, the exchange of correspondence to which I have referred does indicate a concluded agreement for settlement in terms of that standard form. 12 Mr Hughes next submitted that the refusal of the plaintiff to execute a release in that form and the insistence on interest amounted to a repudiation of the agreement, which was accepted by the defendant. He referred to various pieces of correspondence, including the correspondence from the defendant's side, rejecting what was described as the plaintiff's counter offer, and also to some without prejudice letters. 13 In my opinion, none of that correspondence manifests an intention by the defendant to treat the agreement made in August as at an end due to repudiation by the plaintiff. Having taken that view, it is not necessary for me to decide whether the stance taken by the plaintiff at various times as to the true effect and interpretation of that agreement could, in any event, amount to a repudiation. 14 Next, Mr Hughes submitted that the plaintiff was not entitled in these proceedings to enforce the agreement, because it was not at the commencement of the proceedings ready, willing and able to perform the agreement on its part. 15 There was at the time of commencement of the proceedings a dispute as to whether an agreement existed or not. The plaintiff's contention was that an agreement existed; the defendant's contention was that it did not. In my opinion, in those circumstances, the plaintiff was entitled to commence proceedings seeking a declaration that the agreement existed even if, in the event, the Court takes a somewhat different view as to the actual terms of the agreement from the view being taken by the plaintiff at the time of commencement of the proceedings. 16 As I have previously indicated, my view is that the agreement did require the plaintiff to execute the defendant's standard release, and as I have also indicated, that was not the plaintiff's position at the time of commencement the proceedings. Furthermore, I take the view that the agreement does not provide for interest in any direct way by implication although, in my opinion, the agreement imposes an obligation on both parties to act with due diligence to put the agreement into effect, and any breach by the defendant of that obligation could give rise to a claim for interest by way of damages, or else justify an award of interest under section 94 of the Supreme Court Act. Accordingly, in my opinion, any deficiency in the plaintiff's readiness, willingness and ability to perform the agreement on its part does not preclude the Court making a declaration as to the existence of the agreement and of its terms. 17 In my view also, Baldry and Jackson (1976) 2 NSWLR 415 does not mean that the Court cannot take a further step and make appropriate orders to put the agreement into operation, simply because there was some deficiency in the plaintiff's readiness, willingness and ability at the date of commencement of the proceedings. The Court can declare the existence of the agreement. The plaintiff now is ready, willing and able to put it into effect. In my opinion, in those circumstances, the Court can make whatever orders are required. 18 Turning to the question of interest, in my opinion, both parties are at fault in the agreement not having been put into effect shortly after 21 August. The defendant was at fault in initially not stating the amount correctly in the form. The plaintiff was at fault in, for some of this period, refusing to execute the defendant's form of release. In my opinion, it would be fair as between the parties to order that interest be paid for about half of the period between 21 August and the present, that is, from about mid-October. 19 So, for those reasons, I propose to make a declaration in terms of paragraph 1 of the summons, and to order that interest be paid on the sum of $25,000 from mid-October 2000. 20 Mr Hughes has submitted that the interest order that I have proposed would be quite wrong because until today, the plaintiff has not been ready, willing and able to perform the contract as I have found it to be. There is force in that submission, but I think I can take a broader view of the matter, and look at what appears to me to be the substantial responsibility for the delay of almost four months between the time the agreement was made and today. When one takes into account the delay of over seven weeks between the making of the agreement and the submission of the release form, the circumstance that after the plaintiff sought to have that release form amended, the defendant has consistently denied that an agreement was made, and the circumstance that even today, when the plaintiff indicated willingness to execute the release form, the case has been vigorously contested as to whether an agreement was made, it seems to me the judgment that I made that each party was at fault in the four months delay that has occurred, and that a reasonable reflection of that would be to order interest over about half that period is, to my mind, an appropriate judgment. 21 Mr Hughes did submit that the question of the seven week delay was not opened and not an issue in the case. There is force in that submission too, but this is a case that has been brought on quickly; the parties have asked for it to be decided without pleadings and on affidavit evidence. Interest was expressly sought in the summons. It seems to me that all matters relating to interest were raised by the seeking of that order, and I did give Mr Hughes an opportunity to receive instructions as to whether there was any evidence that could be submitted about that delay, and he indicated his instructions did not indicate any evidence that he would wish to lead on it. In those circumstances, I adhere to the view that I expressed that interest should be payable from halfway between 21 August and today, that is, interest for 50 days. 22 Mr Goodridge submits that the plaintiff has been substantially successful and should have an order for costs. Mr Hughes has submitted that it was only today that the plaintiff has been truly ready, willing and able, and that the fair result would be that each party bear its own costs. 23 I think there would have been more force in that last submission if the defendant had not contested the matter today on the basis that there was no agreement. On the whole, I think that the order that I tentatively advanced earlier is the correct one, and I will order that the defendant pay one half of the plaintiff's costs. 24 I make a declaration in terms of paragraph 1 of the summons. 25 I order that the defendant pay interest of $350. 26 I note that it is proposed that the form of release in indemnity be executed by the plaintiff's solicitor today so that the agreement can be put into effect today. 27 I order that the defendant pay one-half of the plaintiff's costs of the proceedings. 28 Exhibits may be returned. ********* Last Modified: 12/12/2000 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. 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