New South Wales Supreme Court CITATION : Australasian Correctional Services Pty Ltd and GEO Group Australia Pty Ltd v El-Masri [2009] NSWSC 1239 HEARING DATE(S) : 12 November 2009 JUDGMENT DATE : 19 November 2009 JUDGMENT OF : Smart AJ DECISION : Summons dismissed with costs. CATCHWORDS : Whether settlement of proceedings had been agreed - Construction of correspondence including emails LEGISLATION CITED : Evidence Act 1995 CATEGORY : Principal judgment CASES CITED : Masters & Anor v Cameron (1954) 91 CLR 353 Tallerman and Company Pty Limited v Nathan's Merchandise (Victoria) Pty Limited (1956 – 1957) 98 CLR 93 Australasian Correctional Services Pty Ltd (First Plaintiff) PARTIES : GEO Group Australia Pty Ltd (Second Plaintiff) Ahmad Saleh El-Masri (Defendant) FILE NUMBER(S) : SC 3224/09 COUNSEL : N Polin (Plaintiffs) I Archibald (Defendant) SOLICITORS : Davidson Gerathy (Plaintiffs) - (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Smart AJ Thursday 19 November 2009 3224/09 Australasian Correctional Services Pty Ltd (ACS) and GEO Group Australia Pty Ltd (GEO) v Ahmad Saleh El-Masri JUDGMENT 1 Ahmad Saleh El-Masri, in proceedings 20492 of 2008 (Common Law Division), sued the Commonwealth of Australia, ACS and GEO, GSL (Australia) Pty Limited and a number of individual officers of GSL (Australia) Pty Ltd. 2 He claims damages, exemplary, punitive and aggravated damages and costs. He claims that he was wrongfully detained from 14 November 2002 to 14 October 2005 at Villawood Immigration Detention Centre, that there was a breach of a duty of care in failing to provide a level of medical care reasonably designed to meet the plaintiff's health care needs, trespass (unlawful assault) and that he was further wrongfully detained at Villawood Immigration Detention Centre on 28 November 2006. 3 By their Summons filed 16 June 2009, ACS and GEO seek: "1. A declaration that proceedings numbered 20492/08 in the Supreme Court of New South Wales (Sydney Registry) between the plaintiffs herein, as second and third defendants to those proceedings, and the defendant herein, as plaintiff to those proceedings have been settled on the basis that: a. A verdict is entered in those proceedings in favour of the second and third defendants to those proceedings against the plaintiff to those proceedings. b. The plaintiff and the second and third defendants to those proceedings pay their own costs of those proceedings. 2. An order that the defendant forthwith execute a copy of the Terms of Settlement in the form of those annexed and marked as the letter 'T' in the affidavit of Colin Davidson sworn 5 June 2009. 3. Such further other orders the Court deems fit. 4. An order that the defendant pay the plaintiffs' costs of these proceedings." 4 By letter of 5 January 2009 the solicitor for GEO wrote to the solicitor for Mr El-Masri a detailed letter, headed "Without Prejudice Save as to Costs", explaining why his action against GEO could not, in its view, succeed. The reasons given appeared to be substantial. The letter concluded by GEO offering to settle the matter on the basis that it bear its own costs of the proceedings in return for a verdict in its favour in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333. The offer was stated to be open for 28 days. The time period was extended by arrangement to 17 February 2009. 5 On 5 January 2009 the solicitor for GEO wrote another and open letter to the plaintiff's solicitor alleging that the Statement of Claim discloses no reasonable cause of action against GEO. The letter also alleged that the Statement of Claim contained pleading deficiencies of consequence and lacked necessary particularisation as against GEO. The letter concluded by GEO requesting that the plaintiff either discontinue the claim or amend his Statement of Claim within 21 days. 6 The letter of 3 February 2009 from the author of the two letters of 5 January 2009 extending the time limit was headed "Australasian Correctional Services Pty Ltd & GEO Group Australia Pty Limited ats El-Masri". 7 By letter of 16 February 2009 the solicitor for Mr El-Masri advised that she had received instructions to discontinue the claim against GEO. She wrote that she had instructed Counsel to draft an Amended Statement of Claim and that she would provide the solicitor for GEO with a copy of the stamped amended Statement of Claim. The question of costs was not mentioned. If an action is discontinued, without more, the plaintiff pays the costs of the defendants. 8 By email of 18 February 2009, sent at 2:44 pm, the solicitor for GEO replied that GEO wanted a verdict in its favour in return for bearing its own costs. It was stated that the offer would "remain on the table for today only". This reflected a desire to finalise the matter that day on the part of GEO. The email continued: "If your client is agreeable to my client's proposed course of action I will prepare Terms of Settlement to reflect such an agreement." 9 On 18 February 2009 at 3:31 pm Mr El-Masri's solicitor sent this email to GEO's solicitor: "Please prepare the terms of settlement." 10 Until this stage the exchanges had related to the proceedings between GEO and Mr El-Masri. Although the letter of 3 February 2009 included ACS in the heading, nothing else was mentioned about ACS and the position as to it. 11 By email of 4 March 2009, sent at 11:31 from the solicitor for GEO to Mr El-Masri's solicitor, the subject was stated to be "Australasian Correctional Services Pty Ltd and GEO Group Pty Ltd ats El-Masri". This email read: "I have attached proposed terms of settlement. If they are suitable to your client can you please print them out, sign them and send them back to me in the normal post, I will attend to having them filed, sealed and provide you a copy of them after the process has been completed." 12 By this email and the attached proposed terms of settlement the solicitor for GEO was also stating that Australasian Correctional Services Pty Limited was included in the proposed settlement. The attached Terms of Settlement read: "Without any admission of liability the parties agree to compromise and resolve these proceedings as follows: 1. Verdict and judgment for the Second and Third Defendants against the Plaintiff. 2. The Plaintiff is to pay his own costs of the proceedings as against the Second and Third Defendants. 3. The Second and Third Defendants are to pay their own costs of the proceedings. 4. Any and all previous costs orders made in the proceedings are to be waived. 5. The Court notes the Plaintiff will hold harmless the Second and Third Defendants from any further claims, proceedings demands or damages or any other liability ('liability') arising from the injuries alleged to have occurred to the Plaintiff that are the subject of these proceedings. 6. These terms are not to be disclosed except as required by law." 13 The second defendant was Australasian Correctional Services Pty Ltd and the third defendant was GEO Group Australia Pty Ltd. 14 On 4 March 2009 at 12:16 pm the solicitor for the plaintiff sent this email to the solicitor for both ACS and GEO: "I confirm that I have received your email and I have forwarded it for Counsel's perusal. I anticipate replying to you in a week …" 15 By letter of 1 April 2009 the solicitor for ACS and GEO wrote: "We are yet to be advised whether the proposed Terms of Settlement are suitable to your client." 16 By email of 6 April 2009, from Mr El-Masri's solicitor to the solicitor for ACS and GEO, it was stated: "I advise that Mr El-Masri rejected the terms of settlement and will proceed against the second and third respondents. I attach the amended statement of claim that will be filed today." 17 By (faxed) letter of 8 April 2009 the solicitor for ACS and GEO wrote to Mr El-Masri's solicitor, "a settlement has been agreed from which your client cannot now resile". Clause 5 of the Terms of Settlement quoted earlier was not pressed and it was stated that it could be removed. 18 By (faxed) letter of 8 April 2009 the solicitor for Mr El-Masri denied that an agreement was reached. 19 The plaintiffs sought to overcome the problem of the late addition of ACS by referring to the letter of Mr Rod Casimir, Legal Manager of GEO, dated 26 November 2008, the accompanying Notice of Appearance filed by him on behalf of ACS and GEO and the Notice of Change of Solicitor filed 19 May 2009 indicating that the same solicitor was acting on behalf of ACS and GEO. Previously that solicitor's firm had been acting on their behalf. It was significant that, in writing on 5 January 2009 to the solicitor for Mr El-Masri, the solicitor acting for both plaintiffs purported to write on behalf of GEO. 20 The plaintiffs also sought to rely on inter-company relationships, but that does not assist them when the early correspondence (with the exception of the letter of 3 February 2009) and emails up to 18 February 2009 refer to GEO and not to ACS. ACS is not entitled to the declaration sought on its behalf. The more difficult question is whether GEO is entitled to a declaration to the effect that proceedings 20492/2008 between it and Mr El-Masri had been settled on the basis that a verdict be entered in those proceedings in favour of GEO as against Mr El-Masri and the plaintiff and GEO each pay his or its own costs of those proceedings. In my opinion this depends on whether as at 18 April 2009 Mr El-Masri and GEO had reach a concluded agreement as to the settlement of those proceedings. 21 Both parties referred to Masters & Anor v Cameron (1954) 91 CLR 353 at 360 – 361 (citations omitted), per Dixon CJ, McTiernan and Kitto JJ: "Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common. Throughout the decisions on this branch of the law the proposition is insisted upon which Lord Blackburn expressed in Rossiter v Miller when he said that the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, show that they continue merely in negotiation. His Lordship proceeded: ' ... as soon as the fact is established of the final mutual assent of the parties so that those who draw up the formal agreement have not the power to vary the terms already settled, I think the contract is completed'." 22 Masters & Anor v Cameron was a vendor and purchaser case, but these observations are of general application. The parties did not submit otherwise. ACS and GEO submitted that this case fell within the first category and Mr El-Masri that it fell within the third category. 23 The plaintiff referred to the extended course of the settlement negotiations. It was on receipt of the letter of 16 February 2009 from Mr El-Masri's solicitor, that she had received instructions to discontinue as against GEO, that the solicitor for ACS and GEO sent the email of 18 February 2009 at 2:45 pm stating that GEO wanted a verdict in its favour in return for bearing its own costs of the (Common Law) proceedings and that its offer "will remain on the table for today only". 24 If normal business hours applied, that would have been until about 5:00 pm to 5:30 pm for the offer to be accepted. If "today" meant until midnight that left about nine and a quarter hours for the offer to be accepted. This was a very short period. In neither case was much time allowed for Mr El-Masri's solicitor to obtain instructions. The short periods of time allowed reflect that ACS and GEO wanted a quick and final decision made. 25 ACS and GEO emphasised the final sentence of the email: "If you client is agreeable to my client's proposed course of action, I will prepare Terms of Settlement to reflect such an agreement". It was contended that the solicitor for GEO (at least) was only proposing to prepare Terms of Settlement if the course of action he was propounding was agreed. ACS and GEO submitted that, in this context, the response of Mr El-Masri's solicitor of "Please prepare the terms of settlement" meant, and could only mean, that the offer of GEO had been accepted by Mr El-Masri. There would be no point in preparing terms of settlement if no settlement had been agreed. 26 Mr El-Masri, by his tutor, submitted that the response of his solicitor was no more than a request to prepare the terms of settlement GEO sought so they could be considered and that this request did not mean that the offer of GEO had been accepted. It was pointed out that the email of 18 February 2009 did not say that the offer or proposition being advanced by GEO was accepted or use words to that effect. 27 Mr El-Masri also relied on the email of 4 March 2009 including ACS and stating that he had attached "proposed" terms of settlement. Emphasis was placed on the word "proposed" and the words "if they are suitable to your client". 28 Reliance was placed by Mr El-Masri on the attached proposed terms of settlement in proceedings 20492 of 2008 (Common Law) and the words "the parties agree to compromise and resolve these proceedings". Up to that stage, in the communications exchanged, the reference had been to GEO and Mr El-Masri. Was GEO seeking to make any settlement depend upon a verdict in favour of ACS? 29 Term 1 referred to a verdict and judgment for ACS against the plaintiff. That had not been agreed. 30 Term 2 (that Mr El-Masri is to pay his own costs of the proceedings as against ACS and GEO) had not been agreed. Nor had it been expressly stated previously that Mr El-Masri was to pay his own costs of the proceedings as against GEO. It was probably implied. I have seen instances of amounts being paid by a defendant on account of the plaintiff's costs where there is a verdict for the defendant, but it is uncommon. 31 Term 3 – It had not been agreed that ACS was to pay its own costs of the proceedings. 32 Term 4 – This had not been previously mentioned, nor agreed. It is probably harmless and inserted for more abundant precaution as I was told that there had been no previous costs orders. 33 Term 5 – This had not been previously mentioned. It was not agreed. GEO did not press it. 34 Term 6 – This had not been previously mentioned. While it is common, it nevertheless required the agreement of Mr El-Masri. 35 Mr El-Masri contended that the Terms of Settlement showed that there was a considerable distance to travel before Mr El-Masri and GEO (or perhaps ACS and GEO) reached agreement. 36 By faxed letter of 16 April 2009 the solicitor for ACS and GEO forwarded "Terms of Settlement that reflects accurately the agreement as to settlement reached between our clients". 37 Those terms included ACS and were in the same terms as those previously transmitted except for the previous Term 5 – the indemnification term. 38 Mr El-Masri relied on the email of 1 April 2009 sent by the solicitor for ACS and GEO and the words "whether the proposed Terms of Settlement are suitable to your client". It was submitted that ACS, GEO and the plaintiff were still not agreed. Of course the emails and Terms of Settlement in March and April were after 18 February 2009. 39 Usually a request by a solicitor for one party to the solicitor for the other party to submit Terms of Settlement (or prepare them) does not amount to an acknowledgement that the parties have reached a concluded agreement or settlement, but it may do so, depending on the circumstances. 40 It was not contended that Mr El-Masri's then solicitor did not have ostensible authority to send the email of 18 February 2009 stating, "Please prepare the terms of settlement". 41 GEO regarded a discontinuance by Mr El-Masri with no mention as to costs as unacceptable. GEO wanted a verdict in its favour in return for bearing its own costs. 42 GEO's solicitor wanted to know, by his email, if Mr El-Masri was agreeable to GEO's proposal. If Mr El-Masri was agreeable, GEO's solicitor would prepare Terms of Settlement to reflect such an agreement. The response of Mr El-Masri's solicitor was cryptic. It does not state whether GEO's proposal was agreed. While my mind has waivered, I do not think that the request "Please prepare the terms of settlement" should be taken in the context as agreement to GEO's proposed course of action. GEO's solicitor may have intended to prepare Terms of Settlement once agreement had been reached but it does not follow that the request of Mr El-Masri's solicitor was based on the same premise. I accept that an objective approach has to be taken based on the terms of the correspondence, including emails, passing between the solicitors. 43 I record that no argument was addressed to the Court based on Mr El-Masri's disability, evidence having been led on the application to appoint a tutor, of his being unable to conduct and manage own affairs. Usually, when a plaintiff is disabled any settlement requires the approval of the Court. ACS and GEO relied on the tutor being appointed on 12 November 2009, whereas the events took place in early 2009. 44 On the Short Minutes of Order, by consent, filed 19 August 2009 this Note appears: "The Court notes that the defendant [Mr El-Masri] will endeavour to file the consent of any Tutor who may be appointed by 9 September 2009." 45 I should also record that no argument was addressed that when the email of 4 March 2009 was sent with the attached proposed terms of settlement they amounted to a counter offer. 46 Counsel for Mr El-Masri was directly instructed by his tutor and wife. He submitted that all that took place between 5 January 2009 and 8 April 2009 was covered by settlement negotiations which took place under the banner of "without prejudice". 47 I did not agree with this submission. See the remarks of Dixon CJ and Fullagar J in Tallerman and Company Pty Limited v Nathan's Merchandise (Victoria) Pty Limited (1956 – 1957) 98 CLR 93 at 110. Section 131(2)(f) of the Evidence Act 1995 provides that s 131(1) (excluding evidence of settlement negotiations) does not apply if: "… the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute or a proceeding in which the making of such an agreement is in issue." 48 While counsel for ACS and GEO sought the relief specified in the Summons, it was submitted that, if the Court took the view that ACS was not entitled to the relief sought, the Court should grant this relief: "1. A declaration that proceeding numbered 20492/08 in the Common Law division of this Court as between the second plaintiff (GEO) and defendant (Mr El-Masri) herein have been settled on the basis that: (a) A verdict is entered in those proceedings in favour of the third defendant to those proceedings as against the plaintiff to those proceedings. (b) the third defendant to bear its own costs of those proceedings. 3. An order that the defendant forthwith execute Consent Orders in proceedings numbered 20492/08 in accordance with Order 1." 49 For the reasons earlier given I would not grant the plaintiffs the relief sought in the Summons nor the lesser relief sought by GEO. 50 I dismiss the Summons. I order that the plaintiffs ACS and GEO pay the costs of Mr El-Masri, the defendant, of these proceedings. ********** 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.