New South Wales Supreme Court CITATION : Thomas v Goldsbrough [2008] NSWSC 572 HEARING DATE(S) : 06/06/08 JUDGMENT DATE : 12 June 2008 JURISDICTION : Equity Division JUDGMENT OF : Barrett J DECISION : Notice of Motion dismissed with costs CATCHWORDS : CONTRACTS - whether contract compromising litigation made - correspondence and conversations between solicitors - offers identified - whether any offer unconditionally and unequivocally accepted - turns on own facts - no matter of principle CATEGORY : Principal judgment CASES CITED : Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 PARTIES : Sharon Thomas - Plaintiff Brettnall Thomas Goldsbrough - Defendant FILE NUMBER(S) : SC 4851/07 COUNSEL : Mr M Green - Plaintiff Mr J Horowitz - Defendant SOLICITORS : Bruce Stewart Dimarco - Plaintiff Edward T Davis & Co - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J THURSDAY, 12 JUNE 2008 4851/07 SHARON THOMAS v BRETTNALL THOMAS GOLDSBROUGH JUDGMENT 1 By summons filed on 4 October 2007, the plaintiff sought an order that the defendant transfer to her the whole of his interest in a property at Paddington and take all necessary steps to obtain discharge of a mortgage affecting the property. 2 The question for immediate determination is whether the parties later reached a binding agreement to settle the proceedings. That question of contract formation is raised by the plaintiff's notice of motion filed on 18 March 2008. The plaintiff claims a declaration that a binding agreement exists and, as a consequence, orders in terms of the summons. 3 The settlement agreement propounded by the plaintiff is said to have arisen wholly from correspondence and conversations between the respective solicitors. The plaintiff's solicitor was Mr R R Bruce. The defendant's solicitor was Mr E T Davis. Affidavits of each of them were read and each was cross-examined. It is accepted that each solicitor acted and spoke at all relevant times with the authority of his client. 4 The plaintiff's primary contention is that a written offer made on her behalf by Mr Bruce was accepted orally by Mr Davis on behalf of the defendant in the course of a telephone conversation between Mr Bruce and Mr Davis. In considering whether a contract was formed, I proceed on the basis that it is permissible – indeed, appropriate – for the court to have regard to the parties' conduct after the point at which the agreement was allegedly reached: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [25]. 5 A written offer is said by the plaintiff to have been conveyed by Mr Bruce's letter of 18 January 2008 sent to Mr Davis by facsimile: " Sharon Thomas –v- Brett Goldsbrough Supreme Court No. 4851 of 2007 Since the writer spoke to your principal on Wednesday 16 January 2008, we have taken further instructions from our client and confirm that the most recent proposals that you have put to us are not acceptable. The only basis upon which our client will now settle the matter as follows: a. Your client must deliver a stamped and registrable Transfer of all of his right title and interest in the Property to our client, together with the Certificate of Title thereto. b. Your client must discharge, or transfer to other of his assets, the existing mortgage over the Property and make available at settlement a registrable discharge along with the documents referred to in (a) above. c. The parties are to release each other from all and any obligations to each other including matters arising under the administration of the Estate of their mother or moneys that our client has lent to yours over the years. d. The parties are to pay their own costs of and incidental to the proceedings and the above arrangements; and e. The terms of resolution are not to be disclosed. Whilst all other settlement offers that we have put to you have lapsed, our client will reinstate that part of the lapsed offer we made on 13 November 2007 by arranging (subject to having title) to borrow and remit to your client at settlement $50,000.00 and no more. Once again we emphasise that this offer is not for negotiation and will remain open for acceptance until the close of business on Friday 25 January 2008 whereupon it will lapse. We note that such stipulation coincides with the date upon which your client's evidence is due to be filed and served pursuant to the consent orders made in Court on 17 December 2007." 6 The plaintiff says that the offer was accepted by words spoken by Mr Davis to Mr Bruce on 24 January 2008. A handwritten note made by Mr Bruce and bearing that date reads: "Ted [Mr Davis] again 9233 2722 - Accepted the offer but can't work out how to implement it." 7 Mr Davis denies that he spoke words to Mr Bruce on or about 24 January 2008 which amounted to acceptance of the offer in Mr Bruce's letter of 18 January 2008. 8 A typewritten file note made by Mr Bruce and dated 25 January 2008 refers to a number of events. It is clear that the events happened on 24 January 2008, rather than the date the note bears. I say this because the last thing recorded in the note is a statement by Mr Bruce to Mr Davis on the telephone: "Please fax me the two titles and you can have the extension of time which I will confirm tomorrow." 9 On 25 January 2008, Mr Bruce faxed Mr Davis a letter which must be taken to be the promised confirmation. It reads: "On the basis that you have, on behalf of your client, firstly undertaken to send by facsimile copy of the two unencumbered titles to land that he owns at Lake Conjola, and secondly, accepted the proposals that we put to you in our communication of 18 January 2008, we confirm that our client will accommodate your request to extend the time for formal acceptance until the close of business on Friday 1 February 2008. Unless formalities are concluded by that time, the offer will lapse and default action will be initiated unless you have served your client's evidence." 10 It is this confirmation that Mr Bruce's file note foreshadowed would be sent "tomorrow" that places the telephone conversations in that file note on 24 January 2008 rather than 25 January 2008. 11 The first telephone conversation of 24 January 2008 recorded in Mr Bruce's typewritten file note of the following day refers to a statement of Mr Davis recorded as follows in indirect speech: ". . . he had been instructed by his client to settle the matter but he needed to discuss with RRB [Mr Bruce] the manner of implementation of such and for that purpose would attend upon RRB as a matter of urgency." 12 Mr Davis and Mr Bruce met at the latter's office later the same day, 24 January 2008. It was in the course of that meeting that Mr Bruce first asked Mr Davis to fax him copies of the certificates of title for the two properties at Lake Conjola, to which Mr Davis agreed. The reference in Mr Bruce's letter of 25 January 2008 to Mr Davis' having undertaken to fax these copies is thus a reference to Mr Davis' statement in the course of the meeting of the previous day that he would do so. 13 Mr Davis wrote to Mr Bruce on 29 January 2008 as follows: "We refer to your letter dated 25 January 2008 and enclose copies of the Title Deeds of the two blocks at Conjola. We are forwarding these as a matter of courtesy in an endeavour to resolve the matter." 14 It is then necessary to traverse events on 1 February 2008. 15 At 11.45am on that day, Mr Davis faxed to Mr Bruce a "without prejudice" letter as follows: "We refer to your letter dated 18 January 2008 and subsequent discussions. We confirm our verbal advice that our client accepts the offer for your client to borrow $50,000.00 at settlement and that there be a release by all parties. Our client is using his best endeavours to obtain alternative finance so that the mortgage can be removed from the Paddington property. An application for finance has been made and our client is waiting a response. We assure you that our client is doing his best endeavours but is unlikely to arrange alternative finance by today to comply with paragraphs (a) and (b) of your letter. We are instructed to assure you that our client wishes to proceed and bring this matter to end on the basis set out in your letter however completion will be subject to the finance being arranged. We will get back to you as soon as possible." 16 It is Mr Bruce's evidence that he spoke to Mr Davis on the telephone at some point during the morning of 1 February 2008 and that Mr Davis said "he still needed more time". Mr Bruce made a telephone call to Mr Davis at 12.10pm but Mr Davis was away from his office. It is Mr Bruce's evidence that he left a message with Mr Davis' secretary in these terms: "Your client can't have his cake and eat it. He must either openly accept the offer of settlement or seek a short extension of time to enable him to do so. That is the simple position. I have instructions to take action in the event of default of the close of business today." 17 Mr Davis' secretary made a record of the conversation (at 12.08pm) as follows: "12.08 Bob Bruce called and left msg saying – our client cannot have his cake and eat it too. Either accept settlement or seek short extension of time to do so. He has instructions to issue default proceedings." 18 At 12.41pm on 1 February 2008 Mr Davis sent Mr Bruce an email as follows: "Dear Bob I refer to your last message. I request a two week extension of time in order to get finance in place. Please respond urgently. Yours faithfully Ted Davis ." 19 Mr Bruce spoke to Mr Davis by telephone at a later point on 1 February 2008. Mr Bruce recorded the conversation as follows: "I had a further discussion with Ted Davis who still wanted to buy time, and he explained why. I told him I would seek instructions and come back to him." 20 After speaking to his client, Mr Bruce telephoned Mr Davis and made a note as follows: "I spoke to Ted Davis on 9233 2722 and said that the only basis upon which he could have an extension of time for fortnight would be an open letter from him accepting the settlement. He said he will forward it – as he did." 21 It may be inferred that, before this conversation, Mr Davis had faxed Mr Bruce a "without prejudice" (that is, not "open") letter shown as transmitted at 3.47pm on 1 February 2008: "We refer to your letter dated 1 February 2008 and our subsequent telephone conversation. We confirm that our instructions are that Mr Goldsbrough accepts the terms of settlement as set out in your letter dated 18 January 2008 subject to being able to obtain alternative finance to transfer the mortgage of $400,000.00 currently existing over the Paddington property. All other terms set out in your letter are agreed. Our client must obtain the finance in order to deliver a stamped and registered Transfer pursuant to sub-paragraph (a). You have our assurance that Mr Goldsbrough is doing everything he can to transfer the mortgage from Paddington to the two blocks of land at Conjola. We trust that this satisfies your enquiry and that you can provide us with the two week extension of time as requested." 22 This letter must have been faxed before the conversation referred to at paragraph [20] above because, at 4.06pm, Mr Davis faxed an "open" copy of the letter he had transmitted on a "without prejudice" basis at 3.47pm. Mr Davis' statement that he would send "an open letter … accepting the settlement" is referred to in Mr Bruce's note. 23 I refer finally to an email sent by Mr Bruce to Mr Davis on Sunday 3 February 2008: "With your [sic] having accepted my Client's settlement proposal she has agreed to the extension you seek. Please let me know the earliest date that you can deliver the requisite transfer (in escrow) so that I can arrange our client's contribution that must be [sic] at completion." 24 Several points must be made about the correspondence and conversations. 25 There can be no doubt that Mr Bruce's letter of 18 January 2008 constituted a contractual offer that was, by its terms, open for acceptance until the close of business on 25 January 2008. 26 Mr Davis' statement on 24 January 2008 (as recorded in Mr Bruce's handwritten note set out at paragraph [6] above) that he "can't work out how to implement it" is at odds with any conclusion that there was, in that conversation, an unequivocal and unconditional acceptance of the offer of 18 January 2008. If an experienced solicitor could not work out how to implement a proposed settlement, it is not credible that he would nevertheless commit his client contractually to that settlement. 27 The true nature and significance of what Mr Davis said on the telephone on 24 January 2008 appear from Mr Bruce's file note of 25 January 2008: see paragraph [11] above. According to that file note, Mr Davis said that he had been instructed by his client to settle the matter but that he needed to discuss with Mr Bruce the manner of implementation of a settlement. It was to explore the question of implementation that Mr Davis later attended upon Mr Bruce. Mr Davis' aim, clearly enough, was to see whether a manner of implementation could be found so that the instruction from his client to settle the matter could sensibly be carried into effect by way of acceptance of the settlement offer of 18 January 2008. 28 Mr Bruce's letter of 25 January 2008 extended until 1 February 2008 "the time for formal acceptance" and said that, unless "formalities" were concluded by that time, "the offer will lapse and default action will be initiated unless you have served your client's evidence" (the reference to "default action" is, in the context, an application by Mr Bruce's client for some appropriate order of the court because of the failure of Mr Davis' client to take a step required of him). It was thus made clear by Mr Bruce that, as at 25 January 2008, there had been "no formal acceptance" and that "the offer" had not lapsed; but that "the offer" would "lapse" if "formalities" were not concluded by 1 February 2008. These statements are quite inconsistent with the proposition that the offer made on 18 January 2008 had ceased to be open for acceptance because it had already been accepted orally on 24 January 2008. Rather, Mr Bruce's letter of 25 January 2008 renewed the offer of 18 January 2008, varied so as to specify as the deadline for acceptance the close of business on 1 February 2008. There was, at that point, a new offer. 29 Mr Davis said in the letter of 29 January 2008 with which he faxed copies of the Lake Conjola certificates of title that he was sending these "as a matter of courtesy" and "in an endeavour to resolve this matter". This makes it clear that, in Mr Davis' opinion, there was still a "matter" which might be "resolved". He would not have characterised things in that way if a binding settlement agreement had already been concluded. 30 Mr Davis' letter of 11.45am on 1 February 2008 confirmed his client's acceptance of part only of the totality of terms set out in Mr Bruce's letter of 18 January 2008. There was an indication of acceptance (so called) of the parts envisaging that Mr Bruce's client would borrow $50,000 and that there would be mutual releases. There was no assent to the balance of the terms – and, in relation to the term requiring Mr Davis' client to obtain release of the Paddington property from the existing mortgage, Mr Davis said no more than that his client was using his best endeavours to obtain alternative finance so that this could be done. The letter of 11.45am did not amount to an acceptance of the renewed and extended offer conveyed by Mr Bruce's letter of 25 January 2008. 31 Mr Bruce's version of the message he left with Mr Davis' secretary at 12.08pm or 12.10pm on 1 February 2008 spoke of a need for Mr Davis' client to "openly accept the offer of settlement or seek a short extension of time to enable him to do so". The record made by Mr Davis' secretary is entirely consistent with this: "Either accept settlement or seek short extension of time to do so". On Mr Bruce's own account, therefore, there was at that point an extant offer capable of becoming the subject of either acceptance by the offeree or variation by the offeror, at the request of the offeree, by extension of the period for which it was open. It may be noted that Mr Bruce's message was left in the middle of what was, according to the renewal and extension of 25 January 2008, the last day for acceptance. 32 Mr Davis' email sent at 12.21pm on 1 February 2008 is consistent with the second of the alternatives outlined in Mr Bruce's telephone message, that is, a request by Mr Davis' client for a short extension of time within which to accept the offer that was to expire later that day. Mr Davis obviously wished to see the extant offer renewed and extended by two weeks. 33 Mr Bruce's subsequent statement to Mr Davis on the telephone (see paragraph [20] above) was to the effect that if Mr Davis required indulgence as to time, it could be had only by means of "an open letter from him accepting the settlement" – thus yet again indicating that there continued to exist an offer capable of being accepted. 34 Mr Davis' subsequent open letter (see paragraph [22] above) was not a letter accepting the extant offer. It was a purported acceptance to which was added a further term ("… subject to being able to obtain alternative finance …"). It was thus, in contract law terms, a counter offer. 35 The findings dictated by the evidence are accordingly as follows: 1. A contractual offer was made by Mr Bruce on his client's behalf by means of the letter dated 18 January 2008 to Mr Davis. 2. Mr Davis did not, on 24 April 2008, accept the offer of 18 January 2008. Rather, he indicated to Mr Bruce that he had been instructed by his client to settle the matter and therefore needed to understand or work out how any settlement on the terms proposed by Mr Bruce's offer could or would be implemented. 3. The offer contained in Mr Bruce's letter of 18 January 2008 was expressed to remain open only until the close of business on 25 January 2008, that is, the day immediately following that on which Mr Bruce and Mr Davis met to discuss how the proposed settlement might be implemented. With no resolution of implementation methodology having been found, Mr Bruce wrote on 25 January 2008 renewing the original offer but with a new deadline for acceptance, being close of business on 1 February 2008. 4. Mr Davis' letter faxed at 11.45am on 1 February 2008 was not an acceptance of the renewed offer conveyed by Mr Bruce's letter of 25 January 2008. It approved only two of the totality of the terms of that offer. 5. Mr Davis' letter faxed at 4.06pm on 1 February 2008 was not an acceptance of the renewed offer conveyed by Mr Bruce's letter of 25 January 2008. Because it purported to add a "subject to finance" qualification, it was in truth a counter offer. 6. Mr Bruce's email of 3 February 2008 misconstrued the legal position. The renewed offer of 25 January 2008 was open for acceptance until the close of business on 1 February 2008. The offer was not accepted by that deadline or at all. 36 It follows that the plaintiff has failed to establish an entitlement to the declaratory and other relief claimed in the notice of motion. 37 The court will therefore: 1. Order that the plaintiff's notice of motion filed on 18 March 2008 be dismissed. 2. Order that the plaintiff pay the defendant's costs of and incidental to the notice of motion. 3. Direct that the proceedings be placed in the Registrar's list on 19 June 2008 for directions. ********** 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.