Manny v Rose

1. [1]

   By a notice of motion filed on 18 November 2022, the third defendant, Iridium Developments Pty Limited (Iridium), seeks, pursuant to s 73(1) of the Civil Procedure Act 2005 (NSW), (1) an order declaring that these proceedings have been compromised and settled as between the plaintiffs and Iridium; and (2) an order that within two business days of the orders being made, the plaintiffs are to specifically perform the settlement agreement by signing and exchanging the deed that was sent by the solicitors for Iridium to the solicitors for the plaintiffs on 27 October 2022.

Background

1. [2]

   The proceedings were commenced by Mr Theodore Manny and entities associated with him (the Manny Parties) on 6 December 2021. The proceedings concern three property development projects in Sydney, two in Cronulla and one at Willoughby.

2. [3]

   The proceedings were initially commenced against the first defendant, Mr Christopher Rose, and entities associated with him (the Rose Parties), the eighth defendant, Mr Robert Manassen, and entities associated with him (the Manassen Parties), and the third defendant, Iridium.

3. [4]

   On 22 March 2022, the proceedings were dismissed by consent against the Manassen Parties with no order as to costs.

4. [5]

   In October 2022, the Manny Parties and the Rose Parties sought to organise a mediation of various disputes between them including the disputes the subject of these proceedings. By that stage, Iridium was controlled by the Manassen Parties and was represented by Dentons, who had previously acted for the Manassen Parties. Iridium was invited to participate in the mediation. However, it declined to do so. It gave two reasons. First, in an email dated 11 October 2022, Ms Bianca Williamson, special counsel with Dentons, relevantly said:

5. [6]

   Second, in an email dated 17 October 2022, Mr David McIntosh, a partner of Dentons, relevantly said:

6. [7]

   Despite Iridium’s absence, the mediation proceeded between the Manny Parties and the Rose Parties on 26 October 2022.

7. [8]

   At 1.55 PM on the day of the mediation, Mr Toufic Bazouni, who represented the Manny Parties, sent an email to Ms Williamson saying:

8. [9]

   Ms Williamson replied at 2.07 PM on 26 October 2022 stating that “We are obtaining instructions and will revert”. She sent a second email at 4.09 PM saying:

9. [10]

   Mr Bazouni responded to that email at 11.12 PM saying:

10. [11]

    At 3.25 PM on 27 October 2022, Ms Williamson sent Mr Bazouni an email attaching a draft deed of release. The email said:

11. [12]

    The parties to the proposed deed of release were the Manny Parties, Iridium and the Manassen Parties.

12. [13]

    Clause 2 of the deed of release relevantly provides:

13. [14]

    “Released Matters” is defined to mean:

14. [15]

    “Claims” is defined broadly to include “all claims, demands, debts, liabilities, accounts, costs and expenses of whatever description …”.

15. [16]

    The draft deed, evidently due to an oversight, does not include a release by or in favour of Iridium.

16. [17]

    On 28 October 2022, Mr McIntosh sent Mr Bazouni an email asking “When can we expect your comments on the draft deed?”

17. [18]

    Following further correspondence, on 3 November 2022, Ms Williamson sent Mr Bazouni an email saying:

18. [19]

    The principal amendment to the revised deed was to include Manassen Holdings Pty Ltd as a party to it.

19. [20]

    On 3 November 2022, Ms Williams sent Mr Bazouni and Ms Hannah Brown, of Brown Ward King, the solicitors for the Rose Parties, an email observing that the matter was before the Court for directions the following day. The email attached proposed consent orders providing for a one week adjournment together with a draft email to my Associate which relevantly said:

20. [21]

    A solicitor in Mr Bazouni’s office replied to that email suggesting a four week adjournment. Ms Williamson responded to that email stating:

21. [22]

    Mr Gasic in Mr Bazouni’s office responded to that email at 12.12 PM stating that “We will propose a deed to your client towards the end of next week” and inviting Iridium to reconsider its objection to the four week adjournment.

22. [23]

    Mr McIntosh responded to that email at 12.49 PM on 3 November 2022. On the question of settlement, the email relevantly said:

23. [24]

    At the directions hearing on 4 November 2022, the matter was stood over to 11 November 2022.

24. [25]

    Following further correspondence between the parties, the Manny Parties took the position that no concluded agreement had been reached.

Consideration

1. [26]

   It is Iridium’s position that an agreement was reached as a result of the exchange of emails on 26 October 2022 that fell within either the first category of cases identified in Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 (that is, where the parties have reached agreement on terms and intend to be immediately bound but intend to restate their agreement in fuller or more precise terms) or the so-called fourth category (where the parties have reached agreement on terms and intend to be bound immediately but intend to substitute for their agreement a further one containing additional terms): see Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628 per McLelland J, upheld on appeal in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 635–6 per McHugh JA (Kirby P and Glass JA agreeing).

2. [27]

   The question whether the parties reached an agreement of either type is to be decided objectively. That is, it is to be decided by reference to what the parties’ words and conduct would be reasonably understood to convey, not upon their actual beliefs and intentions: see Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 at [34]. The words and conduct, taken in context, must show that the parties intended to be bound by their agreement, not simply that they had reached agreement on the terms: see Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 326, 329 per Mahoney JA.

3. [28]

   The Manny Parties point to a number of features which they say demonstrate that the parties did not reach a binding agreement. First, they point out that the exchange of emails occurred in the context of a mediation that Iridium refused to participate in. It was a term of the mediation agreement that “If agreement is reached at the mediation, the terms of the agreement must be written down and signed by the parties before they leave the mediation”. Second, there is nothing in the parties’ communications which indicate that they intended to be bound immediately. The email sent at 11.12 PM on 26 October 2022 specifically states that “We will communicate with you further in relation to documenting the agreement”. Third, the Manny Parties submit that it is inherently improbable that the parties to such a large commercial dispute would agree to resolve the matter immediately through an exchange of emails. Lastly, the Manny Parties rely on the various emails sent after 26 October 2022 in which Iridium denied that any binding agreement had been reached. They also rely on the fact that the draft deed makes no reference to the earlier agreement.

4. [29]

   I do not accept these submissions. The question of a settlement on the proposed terms was raised in the context of the mediation. It was evident from the email sent at 1.55 PM on 26 October 2022 that the Manny Parties were seeking Iridium’s agreement to the proposed terms as part of a broader agreement to wrap up the whole proceedings. Iridium was asked to respond to the email urgently, which suggests that it was expected that an agreement would or might be reached between the Manny Parties and the Rose Parties that day. That was consistent with the mediation agreement, which contemplated that a binding agreement would be reached at the mediation, and not as a result of a formal settlement agreement negotiated subsequently.

5. [30]

   Although the response was contained in an email, the drafting of that email was formal. It contained the full name of the parties and stated that those parties were acting in their own right and as trustees for named trusts. It identified the proceedings to be settled by their action number. The email was drafted with sufficient precision that acceptance of the terms proposed in it would give rise to an enforceable contract.

6. [31]

   The offer contained in Ms Williamson’s email at 4.09 PM was accepted by the email sent at 11.12 PM sent by Mr Bazouni. That email stated that the Manny parties “agree to the below and mutual releases”. Although the email does not specifically say that the parties would be bound immediately, the last paragraph suggests that there was agreement, but that it was intended that it would be documented. That is entirely consistent with the first and the so-called fourth categories of Masters v Cameron.

7. [32]

   Contrary to the Manny Parties’ submission, it is not inherently improbable that the parties would reach an agreement through an exchange of emails. It was Iridium’s position that the real dispute was between the Manny Parties and the Rose Parties. What was proposed was, in effect, that Iridium would bear its own costs of the proceedings and that there would be mutual releases. That was not a complicated settlement and was consistent with Iridium’s position that the real dispute was between the other parties. There is nothing inherently improbable in the parties reaching an agreement of that type through the exchange of emails, with the precise terms of the release to be documented later. Nor is there any particular reason why the earlier agreement would be mentioned in a draft of the formal deed.

8. [33]

   In my opinion, the subsequent correspondence carries little weight. It is common ground that evidence of subsequent events is admissible in relation to the question whether parties reached a binding agreement: see Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25] per Heydon JA; Australian Medico-Legal Group Pty Ltd v Claireleigh Mosman Pty Ltd [2017] NSWCA 218 at [70] per White JA. However, that principle does not displace the objective theory of contract. The fact that after the alleged contract has been entered into one party or the other asserts that there is no binding contract is nothing more than the subjective expression of that party’s belief. It is not relevant to the question whether the parties reached an agreement at some earlier point in time. Nor was it suggested in this case that the parties by their conduct had abandoned the agreement reached on 26 October 2022.

Orders

1. [34]

   It follows that Iridium is entitled to the declaration it seeks. However, it does not appear to be entitled to the order for specific performance it seeks, since the deed in respect of which specific performance is sought does not contain a release by or in favour of Iridium.

2. [35]

   In those circumstances, it is appropriate to give the parties an opportunity to bring in short minutes of order that give effect to these reasons for judgment. Any outstanding issues should be determined on 16 December 2022.

3. [36]

   Accordingly, the orders of the Court are:

   1. (1)

      Direct that within 7 days of today’s date the parties bring in short minutes to give effect to these reasons for judgment and to deal with the question of the costs of the motion filed on 18 November 2022;

   2. (2)

      Stand the matter over to 9.15 am on 16 December 2022 to deal with any outstanding questions.