National Australia Bank Limited v Sayed (No 4)

1. [1]

   HER HONOUR: The issue to be determined is whether an order should be made for specific performance of an In Principle Agreement made between the parties.

2. [2]

   By notice of motion filed 2 October 2014, the plaintiff seeks orders pursuant to s 73 of the Civil Procedure Act 2005 (NSW), and an In Principle Agreement between the plaintiff and the defendants, for judgment in the sum of $700,000 including interest and judgment for the plaintiff against the defendants for possession of the whole of the land referred to in Certificate of Title, Folio Identifier x/xxxxx known as xx xxxx, Woonona, New South Wales (“the Woonona property”). In the event that the judgment for $700,000 remains unsatisfied by payment of the sum referred to in the In Principle Agreement on or before 15 January 2015, the plaintiff seeks that the stay be lifted in respect of all judgments, and that it be granted leave to issue a writ of possession. The date 15 January 2015, mentioned above, has now passed.

3. [3]

   The plaintiff is National Australia Bank Limited (“NAB”). The first defendant is Bill Sayed (“Mr Sayed”). The second defendant is Nicole Sayed (“Mrs Sayed”). The first and second defendants are husband and wife. Mrs Sayed has been served with the notice of motion. She did not appear at the hearing and has filed a submitting appearance. Mrs Sayed also filed a submitting appearance at the hearing of the appeal.

4. [4]

   NAB relied on the affidavits of Danielle Kuti affirmed 2 October 2014, 24 November 2014, 20 February 2015 and 23 February 2015. Mr Sayed relied on his two affidavits affirmed 11 November 2014 and 25 February 2015.

5. [5]

   Pursuant to Schedule D, Part 3 para 4 of the Supreme Court Rules 1970 (NSW), this matter was referred to me for hearing by the List Judge.

6. [6]

   There are two important documents that will be referred to in this judgment. The first is an in principle agreement (“the In Principle Agreement”) and the second is the subsequent settlement agreement set out in the deed of settlement and release (“the Settlement Agreement”).

Background

1. [7]

   On 21 June 2006, NAB advanced two loans to Mr and Mrs Sayed. NAB took as security a first registered mortgage over a vacant property in Corrimal (“Corrimal property”) and a first registered mortgage over Mr and Mrs Sayed’s residential home at Woonona.

2. [8]

   On or about 1 October 2008, Mr and Mrs Sayed went into default under both loans. In May 2009, NAB took possession of the Corrimal property and subsequently sold it. The proceeds of the sale were insufficient to discharge the amount still outstanding on the secured debt.

3. [9]

   By amended statement of claim, NAB claimed judgment for possession of the Woonona property, leave to issue a writ of possession to enforce such judgment and judgment for the sum of $488,881.32, together with interest. NAB claims that Mr and Mrs Sayed entered into a mortgage on the Woonona property to secure moneys owing by them to it and that they were in default under the terms for repayment of the secured moneys.

4. [10]

   Mr Sayed has cross claimed against NAB and other parties. He seeks a declaration that the conduct of NAB in exercising a power of sale over land at Corrimal owned by him and Mrs Sayed, which also secured NAB’s debt, involved a breach of NAB’s duty to act in good faith. In essence, the cross claim alleges:

5. [11]

   It is common ground that this cross claim is extant. It does not form part of the In Principle Agreement and became the sticking point in the Settlement Agreement.

In Principle Agreement

1. [12]

   From 13 August 2012 to 23 August 2012, there was a chain of email communication between Mrs Sayed’s solicitor (Mr Andrew Luong) and NAB’s solicitors (Ms Danielle Kuti and Ms Emma Hodgman, of DibbsBarker) including a series of offers and counter-offers and draft versions of the formal deed of settlement and release.

2. [13]

   On 20 August 2012, the proceedings came on for hearing in the Supreme Court before Adams J. Settlement negotiations continued during that hearing.

3. [14]

   At 1.51pm on 23 August 2012, Mrs Sayed’s solicitor sent an email to NAB’s solicitors saying “We are very close to settling this matter. Our client would accept the general terms of the offer made”, except for some alterations to the judgment amount. Mrs Sayed’s solicitor asked NAB’s solicitors to let him know her instructions so that the matter could be settled “when we return to Court at 2pm.” An In Principle Agreement was signed by all parties and handed up to Adams J. His Honour noted the agreement of the parties and vacated the balance of the days set aside for hearing. The In Principle Agreement is a handwritten document dated 23 August 2012 (on green paper and marked Ex D before Rein J). I shall refer to the terms of the In Principle Agreement in more detail later in this judgment.

4. [15]

   By 30 August 2012, Mrs Sayed (through her solicitor) had agreed to all of the terms of the Settlement Agreement. Mr Sayed had agreed to all the terms except for clause 7(a).

5. [16]

   Clause 7(a) is in these terms:

6. [17]

   Clause 7(a) was included in the Settlement Agreement. Mr Sayed was not prepared to agree to this clause being included.

7. [18]

   At 1.57pm on Thursday 30 August 2012, NAB’s solicitor emailed Mr Sayed setting out “the maximum to which NAB is prepared to compromise on the terms of the deed of settlement and release”. The solicitor wrote that she was instructed that, if Mr Sayed did not consent to the terms of the Settlement Agreement, she was to make an immediate application to the Court for specific performance of the agreement and would also seek NAB’s costs against Mr Sayed on an indemnity basis.

8. [19]

   Mr Sayed responded at 11.24am on Friday 31 August 2012, saying that there were other issues but agreed that they needed to go back to Court. Mr and Mrs Sayed did not sign the Settlement Agreement. The matter was urgently relisted before Adams J.

The notice of motion filed 6 September 2012

1. [20]

   The notice of motion, filed in Court on 6 September 2012, relevantly sought:

2. [21]

   NAB sought a declaration that the parties to the proceedings had entered into a binding settlement agreement on the terms contained in the deed of release and settlement. A copy of the deed was attached to the email sent by Ms Kuti at 1.57pm on 30 August 2012. The motion sought orders and directions that Mr and Mrs Sayed specifically perform the deed of release and settlement by executing it, together with the consent judgment. This motion did not refer to the In Principle Agreement.

The decision of Rein J dated 22 October 2012

1. [22]

   On 22 October 2012, the motion came before Rein J for hearing. His Honour delivered an ex tempore judgment. Mrs Sayed was represented by both a solicitor and counsel. Mr Sayed represented himself.

2. [23]

   It is now necessary to set out the terms of the In Principle Agreement. That document reads:

3. [24]

   The In Principle Agreement was signed at the foot by Mr and Mrs Sayed, and by Ms Kuti on behalf of NAB.

4. [25]

   It is important to observe that in clause 1, before the word “binding” the word “non” was crossed out and the word “but” interposed between the word “binding” and “subject”. These alterations were initialled by Mr and Mrs Sayed.

5. [26]

   Apart from Clause 1, the In Principle Agreement can be summarised as follows:

6. [27]

   On 22 October 2012, Rein J held at [18] and [19] of his reasons that the Settlement Agreement was binding. His Honour stated:

7. [28]

   Rein J made a declaration that the parties to these proceedings entered into a Settlement Agreement. He ordered that Mr Sayed and Mrs Sayed specifically perform the Settlement Agreement (subject to deletion of “or other persons” in clause 7(a)) by executing the Settlement Agreement and the consent judgment. His Honour ordered that in the event the Sayeds failed to execute the Settlement Agreement and consent judgment by 25 October 2012, any Registrar or Deputy Registrar of the Supreme Court of New South Wales be empowered to execute the Settlement agreement and the consent judgment on behalf of them. On 6 November 2012, a Registrar of the Court executed the Settlement Agreement and the consent judgment on behalf of Mr and Mrs Sayed.

The appeal decision dated 17 September 2013

1. [29]

   On 20 August 2013, Mr and Mrs Sayed appealed the declaration and orders of Rein J. On 17 September 2013, the Court of Appeal set aside the orders and allowed the appeal: see Sayed v National Australia Bank Limited [2013] NSWCA 304.

2. [30]

   The parties have differing views as to exactly what was decided by the Court of Appeal in Sayed v National Australia Bank. Hence, it is necessary for this Court to analyse the decision. Emmett JA (with whom McColl JA and Tobias AJA agreed) held that the parties had not entered into a binding Settlement Agreement on the terms contained in the email sent by Ms Kuti.

3. [31]

   At the hearing of the appeal, Mr Sayed was represented by counsel. He sought to file an amended notice of appeal. By consent, Mrs Sayed was removed as an appellant and joined as a respondent. She submitted to the orders of the Court. Ultimately, leave was granted to Mr Sayed to reply upon the amended grounds of appeal (1), (2), (3), (4) and (5) (J [46]). They read:

4. [32]

   Leave to appeal was refused in relation to ground (6).

5. [33]

   Emmett JA set out the two different approaches in the interpretation of the In Principle Agreement. His Honour stated at [23] to [25]:

6. [34]

   At [26] to [27] the Court of Appeal expressed the better view as:

7. [35]

   At [48] Emmett JA continued:

8. [36]

   NAB contended at the appeal that three conclusions may be drawn in relation to the In Principle Agreement. They were firstly, that the provisions of clause 1, that the In Principle Agreement was binding but “subject to formal deed that will contain further terms not inconsistent”, had legal effect, since all essential terms had at that point been agreed there was no impediment to giving effect to that common intention for any want of certainty or lack of agreement on any essential matter; secondly, having agreed on all essential terms, but wishing to record that agreement in a formal deed, the arrangement was binding, being one where the parties had made a provisional contract intending to be bound by it but assuming that, in due course, a further contract would be made between them containing both the agreed terms and further terms that they might both agree upon; and thirdly, because the parties had agreed to all essential terms and wished those terms to be set out in a formal deed, their agreement to include “further terms not inconsistent” meant no more than that the parties intended to include such further incidental or consequential terms as might be appropriate, but not inconsistent with those upon which they had agreed (J [53]).

9. [37]

   In relation to NAB’s submissions in the Court of Appeal, Senior Counsel for NAB emphasised (in oral argument before this Court) that it was Mr Sayed who had put the In Principle Agreement into contention. Senior Counsel submitted that accordingly, the submissions made defending the In Principle Agreement as a binding were only made because it was an issue raised on the notice of appeal.

10. [38]

    At [54] Emmett JA stated:

11. [39]

    The Court of Appeal emphasised that because the parties deleted the word “Non” before the word “binding”, they were intending to make a binding contract when they signed the In Principle Agreement. Emmett JA stated at [56] and [58]:

12. [40]

    In relation to the specific performance of the In Principle Agreement, Emmett JA observed at [60]:

13. [41]

    However, so far as the Settlement Agreement was concerned, Emmett JA at [57] and [62] expressed the view that:

14. [42]

    The issue before the Court of Appeal for determination was whether the declaration to enforce the Settlement Agreement should have been made. In doing so the Court addressed and made comments in relation to the In Principle Agreement. It stated that the In Principle Agreement was a binding contract and that its essential terms were set out exhaustively in it. Further, the Court of Appeal stated that the In Principle Agreement would have been enforceable had NAB had sought specific performance of it.

15. [43]

    The Court of Appeal also stated that there are cogent reasons for concluding that the parties intended that the In Principle Agreement was to be an immediately binding contractual arrangement. The reasons were, first, the In Principle Agreement was signed when the proceedings before Adams J were still part heard and that the parties clearly intended that, by signing the In Principle Agreement, the proceedings before Adams J would come to an end immediately; second, and more significantly, the fact that the parties deleted the word “Non” before the word “binding” and that was very compelling evidence of their intention to enter into a legal binding arrangement immediately (J [58]). The Court of Appeal’s view was that the parties intended that the In Principle Agreement was to be a binding contract. However, on a strict legal analysis, these comments concerning the In Principle Agreement are obiter dicta.

The current notice of motion to enforce the In Principle Agreement

1. [44]

   Having failed in its attempt to have the Settlement Agreement enforced, NAB now seeks to enforce the In Principle Agreement according to its terms under s 73 of the Civil Procedure Act.

2. [45]

   Section 73 relevantly reads:

3. [46]

   There are two main issues to be determined here. They are: (A) whether the In Principle Agreement is binding; and (B) if the In Principle Agreement is binding, whether specific performance can be enforced.

A. Is the In Principle Agreement binding?

1. [47]

   NAB’s primary submission is that the reasoning and conclusions of the Court of Appeal regarding the In Principle Agreement were correct and should be adopted and applied. NAB’s argument is that the express terms of clause 1 mean what they say; a fortiori because the parties specifically changed the words “Non-binding” to “Binding”. Senior Counsel for NAB submitted that Emmett JA in Sayed v National Australia Bank was correct in finding that this amendment evidenced “…a change of heart. The parties agreed that the In Principle Agreement would be a binding contract. Hence the deletion of the word ‘Non’.”

2. [48]

   Senior Counsel for NAB also argued that the heading of the document “In Principle Agreement” cannot prevail over the clear words in clause 1: “Binding but subject to formal deed that will contain further terms not inconsistent”.

3. [49]

   Senior Counsel for NAB relied upon the well known passage by McLelland J at 628D in Baulkham Hills Private Hospital Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622; (1986) 4 BPR 9315 in support of that proposition, where his Honour stated:

4. [50]

   NAB submitted that the clear words of clause 1 put the In Principle Agreement squarely into that “fourth class” of case referred to by McLelland J in Baulkham Hills Private Hospital, and that the parties were “content to be bound immediately and exclusively by the terms which they had agreed upon”. This view, it says, accords with what was stated by the Court of Appeal at [56].

5. [51]

   Senior Counsel for NAB further submitted that Emmett JA was also correct in finding that the terms of the In Principle Agreement “are clear and precise and capable of specific performance.” It was submitted that the In Principle Agreement follows the “usual” structure: the defaulting mortgagors are given a period of grace to realise the mortgaged security and tender a compromised amount by a certain deadline, failing which the mortgagee recovers possession and the full debt.

6. [52]

   Mr Sayed contended that the In Principle Agreement was not binding for three reasons. They are first, that NAB repudiated the In Principle Agreement, discharging them from any obligations of further performance; secondly, that the parties had abandoned the In Principle Agreement by 17 September 2013; and thirdly, that there had been laches and unconscionable delay in asserting a right to specific performance. I shall deal with each of these issues in turn.

(i) Repudiation

1. [53]

   Mr Sayed submitted that NAB repudiated the In Principle Agreement by first, insisting in the mail exchanges on 29 and 30 August 2012 that it required him to enter into a deed releasing NAB and its agents from liability to it despite Mr Sayed’s warning that NAB would not proceed with the In Principle Agreement on that basis; secondly, refusing to accommodate his reasonable request to limit the scope of the release on which NAB was insisting; thirdly, seeking and obtaining orders for specific performance on the basis of an entitlement to a wide release in the formal deed; and finally, maintaining that stance in seeking to uphold that judgment in the Court of Appeal.

2. [54]

   After 3.22pm on 28 August 2012, Mr Sayed deposes (Aff, 11/11/2014 at paragraph 54) that he had a telephone conversation with Ms Kuti where he said words to the effect:

3. [55]

   Ms Kuti recalls having this telephone conversation (Aff, 24/11/2014 at paragraph 4). Her letter dated 29 August 2012 refers to some parts of that conversation. While she does not deny that Mr Sayed used those words, she cannot recall Mr Sayed saying, “I will go back to Court.”

4. [56]

   Following that telephone conversation, on 29 and 30 August 2012 there was email correspondence between the parties concerning the deed of release, in which Mr Sayed says NAB’s repudiatory conduct is implicit. Accordingly, it is now necessary for me to briefly refer to that correspondence, the contents of which are also relevant to other topics covered in this judgment.

5. [57]

   On 29 August 2012 at 8.54am, NAB’s solicitor emailed Mr Sayed and stated:

6. [58]

   On 29 August 2012 at 9.20am, Mr Sayed emailed NAB’s solicitors advising that he did not accept the terms when he stated:

7. [59]

   Mr Sayed also pointed out that:

8. [60]

   On 30 August 2012 at 1.57 pm, NAB’s solicitor emailed Mr Sayed advising him of the maximum it was prepared to compromise on the terms of the deed of settlement and release. NAB advised that if he did not consent it would make an immediate application to the Court seeking specific performance of the Settlement Agreement (this email was referred to earlier at [18]).

9. [61]

   On 30 August 2012 at 2.08pm, Mr Sayed wrote to NAB’s solicitors:

10. [62]

    On 30 August 2012 at 4.28pm Mr Sayed emailed Mrs Sayed’s solicitor (Mr Luong) saying:

11. [63]

    On 31 August 2012 at 1.51pm, Mr Sayed wrote to the Associate to Adams J requesting that the matter be listed before his Honour at “the soonest available day.”

12. [64]

    According to Mr Sayed, NAB’s conduct concerning the deed of release was repudiatory, and due to that repudiatory conduct, he elected not to be bound by and treated himself as discharged from further performance of the In Principle Agreement. He says that both the email of 29 August stating, “I guess I will see you in court”, and the email dated 31 August 2012 to the Associate to Adams J requesting that the matter be relisted, amounted to a communication of that election. Mr Sayed submitted that accordingly, his obligations of further performance of the In Principle Agreement have been discharged.

13. [65]

    NAB disputed the idea that it repudiated the In Principle Agreement. It submitted that the position it took in the Court of Appeal is that it did not seek to impugn the In Principle Agreement. NAB submitted that rather, in the Court of Appeal, it sought to establish by declaration that a binding agreement had been reached in the terms recorded in the Settlement Agreement which was, on any version of things, a larger agreement than that recorded by the In Principle Agreement. In any event, even though it was found by the Court of Appeal to be wrong in thinking that the Settlement Agreement was binding, NAB submitted that a party who seeks a judicial ruling as to the term of a contract is not taken to have repudiated the “true” agreement as ultimately determined by the Court. In support of this proposition senior counsel for NAB relied upon DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] 138 CLR 423; (1978) 19 ALR 223, where the High Court (per Stephen, Mason, Jacobs, Murphy and Aickin JJ) stated at 431:

14. [66]

    It is my view that the statements and conduct of NAB from the 28 August 2012 up until the time of the Appeal cannot be construed as repudiating the In Principle Agreement. During the telephone call of 28 August 2012 and the correspondence of 29 and 30 August 2012, Mr Sayed did not specifically say to NAB that he regarded himself as no longer bound by the In Principle Agreement. Nor within that correspondence did NAB say that it no longer intended to be bound by the In Principle Agreement. Rather, since the terms incorporated in the In Principle Agreement were included in the subsequent Settlement Agreement, NAB’s conduct was to the contrary. NAB sought to enforce the subsequent Settlement Agreement even though Mr Sayed had refused to sign it. That conduct by NAB indicates that although its preference was to have the Settlement Agreement enforced, it did not repudiate the In Principal Agreement. NAB’s refusal to accommodate Mr Sayed’s request not to include the release in the Settlement Agreement also does not, in my opinion, amount to repudiatory conduct.

15. [67]

    On appeal, NAB did not express the view that In Principle Agreement was unenforceable. Emmett JA noted, “The Bank did not seek specific performance of the In Principle Agreement” and then offered the explanation that: “That may well be because of the absence in it of any provision for mutual releases. That is to say, the Bank was only prepared to enforce the contract if it obtained a release from Mr and Mrs Sayed that it regarded as satisfactory.” Emmett JA went on to say, “The Bank may well prefer to pursue its original causes of action, rather than accept a reduced payment in full satisfaction without any release of the claims made in the cross-claim.” The Court did not make a finding that NAB would prefer to pursue its original causes of action, rather that it may prefer to do so. (My emphasis added).

16. [68]

    However, if I am wrong, after the Court of Appeal decided that the Settlement Agreement was unenforceable, NAB accepted that it had an incorrect interpretation of the Settlement Agreement. In these circumstances, NAB’s erroneous view of the law does not evince its intention to repudiate the In Principle Agreement. Mr Sayed’s argument in relation to repudiation fails.

(ii) Abandonment

1. [69]

   Whether abandonment is shown is characterised as an objective test based on the conduct of the parties. The nature of the inquiry to be made when it is alleged that the parties to a contract have abandoned that contract has recently been discussed in Fazio v Fazio [2012] WASCA 72 and Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd [2014] VSCA 32. In the former case, Murphy JA said at [74]:

2. [70]

   The Court of Appeal in Sayed v National Australia Bank referred to abandonment at [61] when it stated:

3. [71]

   Mr Sayed submitted that NAB had abandoned the enforcement of the In Principle Agreement by 17 September 2013. He submitted that the following conduct, when viewed objectively, supports the conclusion that NAB abandoned the In Principle Agreement:

4. [72]

   Mr Sayed submitted that the Court of Appeal was correct to read the carriage of that matter by NAB as indicative of abandonment of the In Principle Agreement “if the release it was after wasn’t included”, and that it was also correct in interpreting the stance taken by Mr Sayed in the proceedings as indicative of abandonment, especially in the absence of any need to adduce evidence of and litigate Mr Sayed’s primary stance, namely, that he had terminated the In Principle Agreement on 30 August 2012 because of the Bank’s stance on the release.

5. [73]

   In response, NAB submitted that there is no evidence of any express statement by NAB that it considered the In Principle Agreement as no longer on foot. NAB says that the conduct of the parties after the Court of Appeal ruling is quite inconsistent with the idea that there had been abandonment of rights by NAB, either generally or specifically.

6. [74]

   In my view, the Court of Appeal did not make a definitive finding that both the parties have effectively abandoned the In Principle Agreement. It dropped short of doing so when it stated, “… it may be appropriate to conclude …”. (My emphasis).

7. [75]

   To ascertain whether objectively, there has been an abandonment of the In Principle Agreement, it is necessary to refer to some more correspondence between the parties and examine their conduct. I have already referred to the emails dated 29 and 30 August 2012 earlier in this judgment under the heading “Repudiation”.

8. [76]

   On 12 April 2013, the Court of Appeal granted a stay of the orders for possession on terms that Mr and Mrs Sayed made fortnightly payments of interest to NAB. Mr and Mrs Sayed made payments in accordance with those terms.

9. [77]

   On 9 September 2013, NAB’s solicitor wrote to Mr Jim Thompson, counsel for Mr Sayed and stated:

10. [78]

    NAB went on to make an offer of settlement without prejudice, save as to costs (in the Court’s copy of this letter, the settlement offer has been redacted).

11. [79]

    On 18 September 2013, Mr Sayed wrote to NAB’s solicitors requesting the return of the moneys that were paid in relation to the terms of the stay of proceedings. The letter continues:

12. [80]

    Mr Sayed’s letter of 18 September 2013, does not make clear which “agreement” he is referring to. The Court of Appeal held that the Settlement Agreement was not binding on the parties. It appears that Mr Sayed was referring to only one of the agreements, as he uses the singular not the plural. It is more likely that as this letter is written two days after the Court of Appeal handed down its decision, the reference is to the Settlement Agreement. Hence, Mr Sayed does not say anything about the validity of the In Principle Agreement.

13. [81]

    On 12 November 2013, the associate to Davies J emailed Ms Kuti seeking confirmation “that the proceedings are now concluded.” Ms Kuti replied, “We are awaiting instructions in respect of NAB’s position regarding these proceedings” and requested that the court listing on 15 November 2013 be vacated. That listing was vacated.

14. [82]

    Also on 12 November 2013, this Court issued an order that incorrectly stated “finalised as per Johnson J’s orders”. Johnson J had previously dealt with and refused the Sayeds’ initial application to grant a stay pending the appeal.

15. [83]

    On 11 May 2014 (some eight months later), Mr Sayed emailed NAB’s solicitors “in response to your letter dated September 2013”, with a counter offer to settle proceedings on a without prejudice save as to costs basis. He also requested that these current proceedings, including his cross claim, be dismissed by consent with no order as to costs and also that all past costs orders vacated.

16. [84]

    On 12 June 2014, Mr Sayed wrote a follow up letter to NAB’s solicitor referring to his earlier email of 11 May 2014. He stated, “I am sending this letter because I haven’t received a reply from you or your office.”

17. [85]

    While there was a period of eight months of inactivity by both parties, it was Mr Sayed who responded to NAB’s offer of settlement and then chased NAB up.

18. [86]

    On 24 September 2014 (over 3 months later), NAB wrote to Mr and Mrs Sayed in the following terms.

19. [87]

    In response to this letter, on 24 September 2014, Mr Sayed on his behalf and Mrs Sayed’s, wrote:

20. [88]

    On 12 November 2014, NAB emailed Davies J’s associate and stated:

21. [89]

    Mr Sayed (Aff, 11/11/2014 at [23]) deposed that the Court of Appeal decision meant the Court was holding that the In Principle Agreement was no longer valid or enforceable, as referenced in his email to Ms Kuti on 24 September. At no stage, did NAB or its legal representatives inform him that they did not accept what Emmett JA said about the position or that NAB disagreed with his statements about that in his email of 24 September 2013. Mr Sayed’s own understanding as a result of reading the judgment and because of the correspondence concerning repayment of interest instalments, was that the In Principle Agreement was no longer valid or enforceable and that NAB was not contending to the contrary.

22. [90]

    At the hearing of this motion before me, Mr Sayed was cross examined in relation to the effect of the Court of Appeal decision. His evidence is as follows:

23. [91]

    In his affidavit dated 11 November 2014, Mr Sayed deposed at [27]:

24. [92]

    On 13 November 2014, the Associate to Davies J replied to the parties and stated:

25. [93]

    I accept that as at 24 September 2014, Mr and Mrs Sayed made it clear that they considered the In Principle Agreement neither binding nor enforceable and that it had well and truly expired. That means that as at 24 September 2014 Mr and Mrs Sayed took the view that the In Principle Agreement had been abandoned. However, the tenor of NAB’s letter indicates is that it regarded the In Principle Agreement as still being operative. For the In Principle Agreement to be abandoned, the conduct of both parties, viewed objectively, had to convey an intention to discharge the In Principle Agreement.

26. [94]

    While NAB took no steps in these proceedings for months, it had made an offer to settle. Mr Sayed eventually made a counter offer and then chased it up. The parties conduct viewed objectively does not evince its intention to abandon the In Principle Agreement. This is because NAB’s conduct did not indicate it regarded the In Principle Agreement as operative. It is my view that the In Principle Agreement has not been abandoned. This submission fails.

(iii) Laches and unconscionable delay

1. [95]

   No specific submissions were made on this topic other than Mr Sayed saying that this application should be refused by reason of NAB’s laches and unconscionable delay in asserting a right to specific performance of the In Principle Agreement.

2. [96]

   There was a delay of about eight months between the Court of Appeal judgment and NAB’s letter dated 24 September 2014. During that period there was a further attempt by the parties to settle the proceedings. In my view, in these circumstances, NAB’s delay does not preclude its right to seek specific performance of the In Principle Agreement. This submission fails.

B. If the In Principle Agreement is binding, can specific performance be enforced?

1. [97]

   Mr Sayed submitted that the orders of the Court of Appeal included the In Principle Agreement. Counsel for Mr Sayed argued that since the In Principle Agreement was not remitted to the trial judge for further hearing it has merged. According to counsel for Mr Sayed, this current application for specific performance is an impermissible attempt by NAB to relitigate the same question. He says that the claim for specific performance should not be allowed because:

(i) Res judicata and issue estoppel

1. [98]

   The principles of res judicata or issue estoppel apply where there is an attempt to re-litigate issues that have previously been determined in proceedings. Alternatively, an attempt to litigate issues which could and should have been litigated in previous proceedings will give rise to an Anshun estoppel: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45.

2. [99]

   Dixon J’s analysis of res judicata and issue estoppel in Blair & Perpetual Trustee Co Ltd v Curran (Adams’ Will) [1939] HCA 23; (1939) 62 CLR 464 remain a guiding precedent. His Honour says at 531-532:

3. [100]

   Re-litigation of the same cause of action in fresh proceedings is likely to involve the same issues and gives rise to res judicata and issue estoppel.

4. [101]

   Mr Sayed argued that the authorities show that all claims on a contract need to be brought in the one proceeding, and that failure to litigate an available claim in initial proceedings creates a res judicata whereby all available claims are treated as merged in the first judgment. Mr Sayed premised these submissions by stating that: “the cause of action heard and determined at first instance by Rein J and on appeal by the Court of Appeal was the plaintiff’s claim for specific enforcement of the IPA”. Mr Sayed then submitted that the claim for specific performance on the current motion is thus barred because it could and should have been made at the hearing of the original proceedings (commenced on 5 September 2012 and heard by Rein J on 22 October 2012), but was not, and also that it could and should have been made by cross appeal or notice of before the Court of Appeal.

5. [102]

   Mr Sayed submitted that it was open to NAB to seek to enforce the In Principle Agreement without the inclusion of a release provision when it prosecuted its original motion in September 2012. Since NAB failed to do so then, Mr Sayed submitted that it is not open to it to do so now. Nor, according to Mr Sayed, has NAB sought to adduce evidence capable of explaining how or why it failed to adduce a claim for specific performance of the IPA in the motion before Rein J or in the Court of Appeal.

6. [103]

   According to Mr Sayed, the judicial determination of the Court of Appeal directly involved the Settlement Deed between the parties and the issue of whether the Settlement Deed can be ordered to be specifically performed has been disposed of once and for all. Mr Sayed says that the result is that the cause of action for specific performance of the In Principle Agreement was litigated in the notice of motion filed 5 September 2012, was merged in the decision on that motion, and has now been disposed of.

7. [104]

   In support of this proposition, counsel for Mr Sayed referred to McGrory v Alderdale Estate Company Ltd [1918] AC 503; [1918-19] All ER Rep 1184, where the House of Lords held that it was not open to the vendor to adduce evidence after proceedings for specific performance had been determined. However, I note that there is an important distinction between McGrory and the factual situation here. In McGrory, the proceedings had been finalised. After they had been finalised, the vendor sought to adduce evidence. The factual situation here is that these proceedings have not been finalised. For these proceedings to be finalised, the part heard hearing has to continue until judgment is given, it is settled or discontinued.

8. [105]

   NAB argued that the premise on which Mr Sayed has based his submissions, that NAB’s notice of motion filed 5 September 2010 was an action “for specific performance of the IPA”, is erroneous. NAB submitted firstly, that the orders sought in the motion of 6 September 2012 did not seek to enforce the In Principle Agreement, but rather sought to enforce the formal deed of settlement and release; and secondly, that the orders of the Court of Appeal, applied only to the Settlement Agreement and not to the In Principle Agreement. Further, NAB says that comments made by Emmett JA regarding whether the In Principle Agreement was binding and enforceable were obiter dicta.

9. [106]

   Counsel for NAB argued that the finding concerning the Settlement Agreement is the dispositive finding, which is the subject of any res judicata or issue estoppel, and that that finding was not in respect of the In Principal Agreement. Counsel for NAB further submitted that Emmett JA was able to find both that there had been an agreement in terms of the In Principle Agreement and that the Settlement Agreement, the subject of the appeal, did not record the larger agreement. As no relief was sought pursuant to the terms of the In Principal Agreement itself no res judicata or issue estoppel arises.

10. [107]

    In my opinion, Mr Sayed’s submissions on this issue are circular. While they are premised on the basis that the original motion was for specific performance of the In Principle Agreement, they criticise NAB on the basis that: “the claims for relief formulated in the [current] Notice of Motion… could and should have been made at the hearing of the original proceedings, but were not, and they could and should have been made by Cross-Appeal or Notice of Contention in the Court of Appeal”. In effect, Mr Sayed contends that NAB should have made a claim for specific performance of the In Principle Agreement in the original notice of motion or on appeal, but simultaneously contends that the original notice of motion and appeal concerned specific performance of the In Principle Agreement.

11. [108]

    NAB’s case before Rein J was that as at 1.57 pm on 30 August 2012 an agreement in terms of the Settlement Agreement had been reached, as evidenced by the communications before the In Principle Agreement, the In Principle Agreement itself and communications after the In Principle Agreement. That is, a larger agreement was contended as being encompassed by the Deed. Mr Sayed denied that proposition. Rein J agreed with NAB’s position. Mr Sayed appealed. The Court of Appeal disagreed, finding that one terms of the Settlement Agreement, the release clause, had not been agreed by Mr Sayed, so that the Agreement terms did not reflect an agreement between the parties.

12. [109]

    In my opinion, a cause of action for specific performance of the In Principle Agreement has not yet been litigated. Contrary to the submissions of Mr Sayed, the original order for specific performance explicitly stated that it concerned the Settlement Agreement, not the In Principle Agreement. Nor have the In Principle Agreement and the Settlement Agreement “merged on judgment”. A cause of action for specific performance, including a contract, merges in a decree of specific performance (see K.R. Handley, Spencer, Bower and Handley: Res Judicata, (Butterworths 4th ed. 2009) [20.01]). However, in these proceedings, the order for specific performance has been set aside. The proceedings are still on foot. The contract has not merged: the In Principle Agreement still stands and is capable of being litigated.

13. [110]

    So far as issue estoppel is concerned, it was Mr Sayed who appealed to the Court of Appeal, not NAB. On appeal, NAB’s position was that it wanted the order for specific performance of the Settlement Agreement upheld and the appeal dismissed. NAB did not seek to enforce the In Principle Agreement by cross-appeal as that agreement was not the one for which specific performance was sought originally.

14. [111]

    Accordingly, it is my view that the In Principal Agreement is not subject to issue estoppel or res judicata. This claim fails.

(ii) Abuse of process giving rise to issue estoppel

1. [112]

   Mr Sayed submitted that NAB’s entitlement to obtain specific performance of the In Principle Agreement is precluded by the determination made in the Court of Appeal that NAB was not entitled to the consent judgments it had obtained. According to Mr Sayed, NAB is precluded by issue estoppel from again seeking to have those judgments entered and as the balance of the relief is consequential it must fall away if the judgments are precluded by the determination of the Court of Appeal that NAB was not entitled to them.

2. [113]

   Counsel for Mr Sayed referred to In the matter of Joe & Joe Developments Pty Ltd (subject to a Deed of Company Arrangement) [2014] NSWSC 1444 where Black J quoted from Ritchie’s Uniform Civil Procedure NSW at [104]:

3. [114]

   After the Court of Appeal decision was handed down, both parties were of the view that the claim for possession before Adams J should continue to be heard. They were also of the view that and the cross claim was still on foot and was to be heard separately after the possession proceedings had been determined.

4. [115]

   NAB is seeking to enforce the In Principle Agreement. As I elucidated earlier in this judgment, it has not previously sought to enforce this particular agreement. In my view, seeking to enforce the In Principle Agreement does not constitute an abuse of process that gives rise to an issue estoppel. Even if I am wrong, I would exercise my discretion to permit the possession proceedings to continue to finality, either by seeking specific performance or continuing with the part heard hearing of the proceedings.

(iii) Election

1. [116]

   An election between rights occurs where a party has two alternate rights, and acts in a manner consistent with the exercise of one of those rights and inconsistent with the other: see Bibby Financial Services Australia Pty Limited v Sharma [2014] NSWCA 37 at [15]. Accordingly, to be an election there must be a choice between inconsistent rights.

2. [117]

   Mr Sayed says that by seeking to enforce the Settlement Agreement, NAB made an election by exercising its right to litigate its version of the In Principal Agreement and insist on the release. According to Mr Sayed, NAB had to choose between exercising its right to litigate its version of the In Principle Agreement and insist on the release (which it did) or it could have elected to withdraw its demand for a release and implement the In Principle Agreement settlement without one. Mr Sayed submitted that those two rights were inconsistent with each other and presented NAB with an election. He argued that NAB chose to reject the opportunity it had to implement the In Principle Agreement without a release clause and pursue its claim for a release. This, he says, caused him to request that the matter be relisted to continue the hearing. However, he says that NAB thwarted his attempt to continue the hearing when it invoked s 73 by notice of motion and prosecuted that claim to its conclusion, albeit with adverse results: see O’Connor v SP Bray Ltd (1936) 53 WN(NSW) 72; (1936) 36 SR(NSW) 248 at 258 to 261 per Jordan CJ.

3. [118]

   Counsel for Mr Sayed also referred to Sargent v ASL Developments Ltd [1974] HCA 40; 131 CLR 634 at 655 to 666 where Mason J stated:

4. [119]

   Counsel for Mr Sayed further submitted that NAB’s present application is inconsistent with the election it made on 30 August 2012 to file the s 73 application based on the In Principal Agreement. He says that it is also inconsistent with its communications with Mr Sayed in September 2013 disclosing a decision to resume litigation of the original issues in dispute if the Court of Appeal set aside the Settlement Deed.

5. [120]

   Counsel for NAB submitted that again, Mr Sayed’s argument proceeds on the erroneous premise that it was seeking to enforce its version of the In Principal Agreement when in fact it was not seeking to enforce either its or any version of the In Principal Agreement, but rather a declaration that a binding agreement had been reached in the terms recorded in the Settlement Agreement which was, on any version of things, a larger agreement than the one recorded in the In Principle Agreement.

6. [121]

   NAB further submitted that there was no election by it between any inconsistent rights, such as accepting rent, on the basis there is a lease, after termination of a lease and then seeking to evict the tenant, on the basis the lease is at an end. In support of this proposition NAB referred to a passage from Evans v Bartlam [1937] AC 473; [1937] 2 All ER 646 at 652 where Lord Russell of Killowen stated that a person “Having accepted a benefit given him by a judgment, cannot alleged the invalidity of the judgment which conferred the benefit.” NAB also referred to the recent decision of Mad Dogs Pty Ltd v Gilligan’s Backpackers Hotel & Resort Pty Ltd [2014] QSC 165 at [30] where Henry J stated, “The inconsistent, truly alternative character of the competing courses open is a vital feature of the doctrine of election.”

7. [122]

   According to NAB, by seeking a declaration as to the existence of an agreement in terms of the deed of settlement and release, it was not choosing between any inconsistent rights but rather, was requesting the assistance of the courts in connection with a contractual dispute, again referring to Mad Dogs at [25] where Henry J stated, “…the bare fact a party resorts to the assistance of the courts in connection with a contractual dispute will not bespeak an election.”

8. [123]

   I agree with the reasoning of NAB. The decision to proceed to claim for specific performance of the Settlement Agreement was not inconsistent with a decision to claim for specific performance of the In Principle Agreement. NAB’s position at all times was to finalise the possession proceedings whether it be by settlement, or by continuing with the part heard hearing. NAB was not willing to “withdraw its demand for a release and implement the In Principle Agreement without one”, which Mr Sayed says was the other, inconsistent option. It is my view that NAB was not presented with an election since I cannot see what type of benefit NAB would have received through a decision to claim specific performance of the In Principle Agreement without a release over a decision to claim specific performance of the Settlement Agreement, which was (as described by NAB), a larger version of the In Principle Agreement and contained the release provision. Mr Sayed did not elucidate any possible benefits, nor did he make submissions about why the two rights were inconsistent with each other. Accordingly, it is my view that NAB should not be precluded from seeking to enforce the In Principle Agreement in circumstances where the wider Settlement Agreement has been set aside. This submission fails.

(iv) Estoppel - additional conduct

1. [124]

   Mr Sayed’s submissions on this topic are similar to those he made in relation to election. Mr Sayed submitted that he organised his life and his financial affairs and has conducted this litigation since 30 August 2012, and since September 2013, on the basis of the understanding and belief, induced by NAB’s conduct, that NAB was not prepared to implement the In Principle Agreement without the provision of the release for which it was then stipulating and that an outcome of the September 2012 motion adverse to NAB’s stance would mean that the matter would return to a first instance hearings. The result he says is that NAB’s belated attempt to abandon its insistence on the wide release is precluded by estoppel arising from the elections made by NAB and that detrimental reliance.

2. [125]

   So far as detriment is concerned, Mr Sayed deposed that (Aff, 11/11/2014 at [29]):

3. [126]

   The four month period is referred to again by the Sayeds under the next heading “Terms of relief”.

4. [127]

   In response to this, NAB submitted that it was not the conduct of the bank that induced this conduct, but a misreading by Mr Sayed of the Court of Appeal judgment. Senior Counsel for NAB argued that no conduct of the bank could sensibly be said to have induced Mr Sayed either to a belief that the In Principle Agreement was not relied upon, or that if the Settlement Agreement reliance was unsuccessful, that somehow the proceedings as a whole had been disposed of by the Court of Appeal (and that NAB accepted that proposition). He submitted that such a submission was “simply fanciful”.

5. [128]

   As explained above, I do not agree that NAB made an election not to rely upon the In Principle Agreement. This ground fails.

Terms of relief

1. [129]

   The Sayeds submitted that any orders for specific performance of the mortgaged property and discharge of NAB’s claims for the settlement amount should not commence before expiry of that four month period set out in the In Principle Agreement. NAB submitted that if the Court was to consider that a further period of time is required in order to confer on Mr Sayed the full benefit of the moratorium agreed in the In Principle Agreement, then orders can be made accordingly.

2. [130]

   In my view, as the In Principal Agreement contemplated that the Sayeds would have a period of four months to pay the moneys owed, and arrange a private sale of the property they should have the same opportunity to do so now. I shall afford the defendant a four month period contemplated in the In Principle Agreement. I will make an order to this effect.

Stay of proceedings

1. [131]

   The Sayeds seek that the enforcement of any judgment to which NAB may be entitled under the In Principle Agreement should be stayed pending determination of Mr Sayed’s cross claim in the proceedings which should be set down for expedited hearing. Alternatively, they seek that such cross claim should be set down for expedited hearing in any event.

2. [132]

   As the period of four months has been allowed for the Sayeds to pay the settlement moneys, it is not appropriate that a stay application be determined now, particularly as no evidence in support of this application has been provided. I decline to grant a stay of the enforcement of this judgment. No grounds have been given for expedition of the hearing of the cross claim so I decline to make this order.

Conclusion

1. [133]

   The orders I make are that the parties are to specifically perform the In Principle Agreement dated 23 August 2012. I propose to make an order that judgment is not to be entered on or before 16 August 2015.

2. [134]

   Costs are reserved.