BJP1 v Salesian Society (VIC) Inc

1. [1]

   On 15 August 2019, the plaintiff, who has been given the pseudonym BJP1, commenced proceedings claiming damages from the Salesian Society (Vic) Inc (“the defendant”). The plaintiff claimed that he had been sexually abused by a Salesian priest, whilst a resident at Boys Town Engadine (“Boys Town”) between 1978 and 1982.

The Pleadings

1. [2]

   The Statement of Claim pleaded that the defendant was liable because it owed a duty of care to the plaintiff which was a “non-delegable duty of care to exercise reasonable care for the safety of the plaintiff”. The plaintiff pleaded that the defendant was in breach of that duty by failing to take a series of particular precautions including the institution of, and maintenance of, various systems of preventative education and mandatory reporting.

2. [3]

   As well, the plaintiff pleaded that the defendant was vicariously liable for the conduct of the person identified as being the perpetrator of the sexual assaults on the plaintiff. Exemplary damages as well as compensatory damages were claimed.

3. [4]

   In its Defence, the defendant put in issue the scope and content of the non‑delegable duty pleaded by the plaintiff, did not admit the abuse which was pleaded and denied that it was in breach of any duty. It denied that it was vicariously liable for the criminal conduct of the alleged perpetrator.

4. [5]

   The defendant also pleaded as an entire answer to the plaintiff’s Statement of Claim, that the plaintiff and the defendant had, in 1999, entered into a Deed of Release (“the 1999 Deed”) “… the effect of which is to extinguish any further liability of the defendant and to bar any further claim or action brought by the plaintiff”.

5. [6]

   In a Reply filed on 21 April 2020, the plaintiff pleaded that the 1999 Deed “… was made non est factum and does not bind the plaintiff”. He also sought an order that “… the deed be set aside for mistake”. No point has arisen as to whether such a claim can be made in a Reply filed to a Defence, and in the absence of a cross-claim.

Court Ordered Mediation

1. [7]

   On 3 October 2019, the Court made an order that the parties participate in a mediation which was to conclude prior to 8 May 2020. The power of the Court to make such an order is found in s 26 of the Civil Procedure Act 2005 (“CP Act”)

2. [8]

   On 5 May 2020, a mediation took place as had been arranged between the parties, with Mr M Spartalis as the mediator.

Issue for Determination

1. [9]

   The issue in dispute before the Court, and with which this judgment deals, is whether the settlement, which was undoubtedly reached at the mediation, was intended to, and did, constitute an immediately binding agreement between the parties or whether the agreement reached at the mediation was intended only to become effective if and when a Deed of Release was executed by each of the parties and, in the case of the plaintiff, that executed copy returned to the defendant to enable it to take the necessary steps to pay the agreed monies.

2. [10]

   There is little dispute about the facts of and surrounding the mediation and the conduct of the parties.

3. [11]

   The defendant’s solicitor, Mr Alex Kohn, was present at the mediation. He has sworn a number of affidavits in support of the defendant’s contention that there was an immediately binding agreement. He was cross-examined for a short period.

4. [12]

   The other participants in the mediation were not called as witnesses in the proceedings nor was any affidavit material filed recording their account of the mediation. The plaintiff did not give evidence.

5. [13]

   Mr Kohn in evidence gave his recollection of what had occurred during the mediation. That recollection was not challenged. It is, in any event, consistent with contemporaneous notes made at the time by the mediator, Mr Spartalis, and the plaintiff’s solicitor, Ms McCoy. Senior counsel for the plaintiff explicitly invited the Court to accept all of Mr Kohn’s evidence. I accept Mr Kohn’s account of all that occurred.

6. [14]

   For the reasons which are set out below, I am satisfied that the agreement reached at the mediation was intended by the parties to be immediately binding, and the plaintiff should be held to that agreement.

7. [15]

   It will be necessary for the parties to confer and agree upon the precise orders which the Court is to make.

Relevant Facts

1. [16]

   The proceedings were commenced by the filing of a Statement of Claim on 15 August 2019.

2. [17]

   On 3 October 2019, the Court ordered mediation to occur.

3. [18]

   On 17 April 2020, the solicitors for the plaintiff, together with the counsel who was briefed at that time, Mr John Sharpe, held a conference with the plaintiff in which there was a discussion about the 1999 Deed. In the course of that conference, Mr Sharpe advised the plaintiff that there was a risk that the Court would not set aside the 1999 Deed which had been signed at a time when the plaintiff was legally represented. The plaintiff was informed that if the defendant relied successfully on the 1999 Deed, he might be at risk of paying the defendant’s legal costs of these proceedings.

4. [19]

   On 29 April 2020, a further conference was held with the plaintiff, which included Ms McCoy (the solicitor with the day-to-day carriage of the matter on behalf of the plaintiff) and Mr Sharpe of counsel. During that conference the process for the mediation taking place the following week was discussed together with the range of possible values of the “relevant three heads of damage for your claim (general damages, medical expenses and economic loss)”.

5. [20]

   On 5 May 2020, Mr Spartalis, the mediator, convened the mediation by use of an AVL meeting platform. The plaintiff’s counsel, Mr John Sharpe attended by telephone and the plaintiff’s solicitor, Ms McCoy, attended by AVL. Mr Kohn and Father William Matthews, the Provincial of the Salesian Society, also attended by AVL.

6. [21]

   The plaintiff indicated that he did not wish to participate by AVL in the mediation conference, but was available to, and did, provide instructions to his solicitor and counsel by telephone. The plaintiff was offered the opportunity, which he declined, to speak directly with the mediator from time-to-time in the course of the mediation.

7. [22]

   It was accepted that the plaintiff’s lawyers were fully instructed on his behalf, authorised to negotiate for him, and to enter into any agreement on his behalf.

8. [23]

   The mediation was conducted by the mediator speaking separately on the one hand to the legal representatives of the plaintiff and in particular Mr Sharpe, and the other with Mr Kohn and his client, Father Matthews. There were no direct discussions either prior to the commencement of the mediation or during it between the legal representatives of the plaintiff and the defendant.

9. [24]

   Negotiations commenced shortly after the mediation started. At about 8.43am, the plaintiff’s lawyers put the first offer to the mediator. Thereafter, up until 10.28am, a further nine offers were exchanged in sequence, with the defendant responding to the plaintiff and then the plaintiff responding to the defendant. All of these negotiations took place with each party’s lawyers indicating their client’s respective position to the mediator, and the mediator conveying that position to the opposing party. The detail of these offers was recorded by the mediator by reference to the monetary amounts. It is unnecessary to set the contents of that record out here.

10. [25]

    Within that sequence of 10 offers, the last two were significant. At 10.25am the plaintiff offered to settle for $400,000 inclusive of costs. That sum was two‑thirds of the plaintiff’s opening offer. The defendant responded to that offer with a counter-offer of $190,000. That offer was 90% more than its opening offer. Both parties had moved significantly from their opening offers towards a compromise agreement.

11. [26]

    According to Mr Kohn’s affidavit, there was then a discussion between the mediator, Mr Kohn and his client, Father Matthews. It was to the following effect:

12. [27]

    The mediator then spoke to the plaintiff’s lawyers. According to a file note prepared by Ms McCoy, shortly prior to the exchange of the final two offers, there had been a discussion in some detail between the plaintiff, his counsel and his solicitor. At this stage, the defendant had offered $180,000 inclusive of costs. That discussion was along the following lines, as set out in Ms McCoy’s file note:

13. [28]

    Although the next offer of the defendant was recorded as being made at 10.28am, there is no note as to whether that was in fact communicated to the plaintiff, although I would infer that it was because a telephone call from the plaintiff to his solicitor was recorded at 10.42am in the following terms:

14. [29]

    Clearly, after that time there was a discussion between the mediator and the plaintiff’s counsel. At 11.08am a further phone call with the plaintiff was recorded in these terms:

15. [30]

    At about 11.10am, the mediator spoke to Mr Kohn and his client and said:

16. [31]

    At 11.16am, Mr Spartalis, the mediator, sent an email to the plaintiff’s and the defendant’s lawyers and also to the Provincial of the defendant. It said:

17. [32]

    The chronology of offers which was attached to that email noted that there was no opening session, and that a written apology would follow the mediation. It also recorded that the parties were bound by the Mediation Agreement. The sequence of offers was then set out.

18. [33]

    The terms of the Mediation Agreement were not said to be relevant by either party for the purposes of the resolution of the current dispute and can be put to one side.

19. [34]

    Very shortly after the mediation concluded, there was a short separate telephone discussion between Mr Kohn and Ms McCoy, in which the following exchange occurred:

20. [35]

    Sometime after that discussion, at about 1.50pm on 5 May 2020, Ms McCoy telephoned the plaintiff. She asked if he had an email address to which a written form of “Instructions to Settle” could be sent. Apparently, the plaintiff did not have an email address and asked for the document to be posted. Ms McCoy’s file note recorded the following:

21. [36]

    A document headed “Instructions to Settle” was sent to the plaintiff. On 11 May 2020, the plaintiff signed those Instructions, together with an authority to his solicitors to receive the settlement monies and returned both documents to Ms McCoy.

22. [37]

    The signing of those documents occurred after a further telephone discussion between the plaintiff and his solicitor, which included the following:

23. [38]

    The Instructions to Settle, a four-page typed document, included the following statements:

24. [39]

    On the following day, 12 May 2020, the defendant’s solicitor sent to the plaintiff’s solicitor a proposed Deed of Release. The covering email read as follows:

25. [40]

    It will be necessary to refer to some of the provisions of the Deed of Release in due course.

26. [41]

    When the Deed was received by email, the solicitors for the plaintiff printed out a copy of it and posted it, together with a covering letter, to the plaintiff. That covering letter read, in part:

27. [42]

    On the day following the despatch of that letter to, and before it was received by him, the plaintiff telephoned Ms McCoy. She recorded the contents of the phone call in a file note which reads as follows:

28. [43]

    A further telephone call occurred between the plaintiff and his solicitor on 18 May 2020. Ms McCoy’s file note records the telephone call in the following terms:

29. [44]

    On the following day, Ms McCoy telephoned the plaintiff. She made a note of that call in the following terms:

30. [45]

    On that day, and after that conversation, Ms McCoy telephoned Mr Kohn. She told him that her instructions had been terminated and that another firm would likely be taking over conduct of the matter. She told Mr Kohn that she thought that he would be contacted by the new solicitors prior to the directions hearing on 22 May 2020.

31. [46]

    On 21 May 2020, Porters Lawyers sent a long letter to the plaintiff which summarised what they had done for him, what the issues were, of the various Court orders that had been made, what had occurred at the mediation and what had occurred afterwards. It is unnecessary to recount all that is contained in that letter.

32. [47]

    However, it does include the following:

Deed of Settlement and Release

1. [48]

   The proposed Deed of Settlement and Release (“the 2020 Deed”) which was sent by the solicitor for the defendant to the plaintiff’s solicitor on 12 May 2020, included the following features:

2. [49]

   The only signatories to the 2020 Deed were the plaintiff, the defendant and Father Matthews in his capacity as Provincial of the Salesian Order.

Other Deeds of Release

1. [50]

   Mr Kohn’s unchallenged evidence was that in the 10 years or so preceding this particular mediation he had participated in “… well over 200 settlement conferences and mediations with Porters Lawyers, the former solicitors for the plaintiff”. He then said this:

2. [51]

   Mr Kohn went on to describe his invariable practice with respect to mediated, or negotiated, settlements. He said:

3. [52]

   Mr Kohn pointed out that on occasions where negotiations have taken place face to face, it is his practice to hand the deed to Porters Lawyers on the day, once the settlement sum had been agreed upon. In other instances, such as where negotiations have occurred over the telephone, via AVL or in some other way, his practice is to forward the Deed to Porters Lawyers by email.

4. [53]

   Mr Kohn then said in his affidavit:

5. [54]

   Mr Kohn noted that at no time, either prior to or during the mediation, did either the mediator (speaking on behalf of the plaintiff and plaintiff’s solicitors) or the plaintiff’s solicitors themselves, give him any indication that any clarification was needed as to terms upon which offers were being put, nor that they wanted to see the Deed before completing the financial discussions, or that there was anything about the usual course of conduct of past negotiations which would not apply in this particular case.

6. [55]

   There is in evidence a folder of some past Deeds of Release. Of those deeds, Mr Kohn said this:

7. [56]

   An examination of the deeds, the earliest of which is dated in April 2013 and the latest of which is dated in June 2020, supports the evidence of Mr Kohn that the deeds are identical in respect of the operative provisions, the way in which the releases, confidentiality terms, and parties protected by the releases are expressed, and that there is no difference of any significance between them.

8. [57]

   Senior counsel for the plaintiff in his final submission, did not suggest that there was any difference in substance between what the Deed provided to the plaintiff in this case and the provisions of any of the other deeds.

Defendant’s Submissions

1. [58]

   The defendant submitted that the Court would be satisfied that, immediately prior to the conclusion of the mediation on 5 May 2020, the parties made an immediately binding agreement, the terms of which included:

2. [59]

   In support of its submission that the agreement was intended to be immediately binding, the defendant pointed to the following objective circumstances as being relevant:

3. [60]

   The defendant also argued that there were terms which the Court ought imply into the agreement by reference to past dealings between the lawyers and their common understanding of the terms upon which the agreement was being negotiated and finalised.

Plaintiff’s Submissions

1. [61]

   The plaintiff opposed the relief sought in the defendant’s Notice of Motion. The plaintiff submitted that in the present case there was no immediately binding agreement reached between the parties at the mediation because:

2. [62]

   In dealing with the proposition that there were a multitude of terms which were not discussed at the mediation, the plaintiff pointed to the following:

3. [63]

   In addition, the plaintiff contended for other reasons that the Court should not accept the defendant’s submissions. This included a submission from the plaintiff that it was unlikely that parties to litigation of the kind engaged in here, would bind themselves to a settlement without having reached explicit agreement on the matters which were included in the 2020 deed.

Principles of Law

1. [64]

   Before considering the arguments of the parties, it is convenient to identify the relevant legal principles.

2. [65]

   The first issue is whether a binding contract came into existence. In Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 (at 360) the High Court of Australia held that in circumstances where the parties conduct contractual negotiations and agree that the subject matter of their negotiations is to be dealt with by a subsequent formal contract, those circumstances would fall into one of three categories:

3. [66]

   The High Court held that the first two categories were binding contracts, but the third category was not.

4. [67]

   A fourth category, derived from the High Court’s decision in Sinclair, Scott & Co v Naughton [1929] HCA 34; (1929) 43 CLR 310, was recognised by McClelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities (1986) 40 NSWLR 622 (at 628E):

5. [68]

   Notwithstanding the category in which the agreement falls, it is necessary to identify the objective intention of the parties. In GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, McHugh JA (with whom Kirby P and Glass JA agreed) said (at [634]) that:

6. [69]

   In Pavlovic v Universal Music Australia Pty Limited [2015] NSWCA 313 Beazley P (with whom Bathurst CJ and Meagher JA agreed) observed (at [64]) that:

7. [70]

   In Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 Mahoney JA set out (at 326G) three questions which are helpful to consider:

8. [71]

   It is clear that subsequent conduct of the parties can be considered when determining the existence of a binding contract: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [25] per Heydon JA: see also Howard Smith & Co Ltd v Varawa [1907] HCA 38;(1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 at 668, 669, 672; GC NSW Pty Ltd v Galati [2020] NSWCA 326 at [92].

Discernment

1. [72]

   Before the mediation started, and having regard to the extensive prior dealings between the solicitors for both the plaintiff and the defendant, I am satisfied that both sets of solicitors entered upon and negotiated during the mediation with the clear mutual understanding that any settlement agreed upon would be given effect to by the plaintiff entering into a deed in and to the effect of the many deeds which had been prepared by the solicitors for the defendant in other matters, and sent to the solicitors for the plaintiff in other matters.

2. [73]

   As well, it was a common understanding between the solicitors that the proceedings in Court would be resolved by the filing of a Notice of Discontinuance once the settlement monies had been paid. The timing of the payment of those monies was dependent upon the obtaining of certificates from the Commonwealth Government with respect to the payback, if any, owed by the plaintiff to Medicare or the Department of Social Security, or both. This was a well-known and commonly understood mechanism by which any settlement agreed upon would be given effect to.

3. [74]

   That the solicitors engaged in the mediation whilst sharing this common understanding is obvious from their past dealings and that there was no specific discussion of the details of that mechanism being used at the start of, or else during, the mediation. Nor was there any demur observable from the correspondence after the mediation concluded. In particular, I note that there was no objection, protest or query raised by the solicitor for the plaintiff at any time after the mediation concluded, which suggested that the proffering of a Deed of Release, the entry into that Deed, the filing of a Notice of Discontinuance after payment of the money, and a delay to enable the obtaining of the Government clearance certificates, was either unexpected or else outside the terms of the “settlement” reached at the mediation. This seems to me to clearly demonstrate that the solicitors for the plaintiff at all times knew exactly what was intended to occur.

4. [75]

   Accordingly, at the mediation the parties were engaged in a discussion about the only contentious issue between them, namely, in what sum would the matter resolve. Of course, it may have been that the parties could not reach an agreement on that sum but the mediation was intended to enable the parties to explore a resolution of the whole proceedings, the essential term of which was the relevant sum of money.

5. [76]

   The mediation was arranged pursuant to Court orders and was an invariable part of the Court’s management approach to the disposition of claims of the kind which the plaintiff made. The parties approached the mediation with the intention of resolving the proceedings. A representative of the defendant, who was authorised to negotiate on its behalf, was present during the mediation. The plaintiff was available to give instructions to his lawyers by telephone. This is an important factor in considering whether the parties intended to reach a final and binding agreement at the mediation.

6. [77]

   These settlement negotiations did not take place without a context. They did not take place by chance or in an informal setting. On the contrary, the parties agreed upon the identity of the mediator, a mediation agreement was agreed upon providing for the parties to participate in the mediation. The mediation was formally convened – albeit by an AVL platform – and negotiations took place. The fact that negotiations occurred through the medium of the mediator, with each party speaking to the mediator and then the mediator conveying the offers from one party to the other, rather than the parties conveying them directly, serves only to emphasise the formal nature of what was occurring with recognition on all sides that the intention was to reach a final agreement if that were possible.

7. [78]

   The language used between the parties, and to which I have earlier referred, was not language consistent with some form of provisional agreement or some form of conditional agreement. The language during the mediation was clear. The defendant made a final offer. It was open to be accepted by the plaintiff or not. The plaintiff accepted that final offer. The mediator, consistently with what he had been told by each party during the course of the mediation, said that the matter was settled. He terminated the mediation. No expression was used by either party, such as “settled in principle” or “settled subject to the execution of a final deed” or “settled, subject to confirmation from the plaintiff once the proposed deed is received” or any words to that effect, which indicated that the settlement was in any way conditional or provisional.

8. [79]

   It is also important for the purpose of determining objectively what had occurred at the mediation, and what was intended to occur, to examine the correspondence and notes made by the solicitors for the plaintiff. Immediately after the mediation concluded, Ms McCoy noted:

9. [80]

   The plaintiff told his solicitor, having been informed of the final offer from the defendant and what sum he would get clear after deductions, that the offer was a good one, he had considered it and discussed it with his wife and it was best to accept it. That acceptance instruction was not conditional.

10. [81]

    The terms of the Instructions to Settle document, which are in part infelicitous, when read as a whole, are only consistent with the plaintiff instructing his solicitors that he was prepared to accept the offer on a final and unconditional basis. The significance of those written instructions is not that they indicated that the solicitors were not authorised to resolve the matter, but rather that the plaintiff was, subsequent to the provision of oral instructions, confirming his understanding of all of the terms of the settlement which he had instructed his lawyers to accept. There is nothing about the Instructions to Settle which, on my reading of them, suggests in any way that there was not intended to be a binding settlement at the mediation.

11. [82]

    It is also of significance that when the Deed of Settlement and Release was sent by the solicitor for the defendant to the solicitor for the plaintiff, it was forwarded without comment to the plaintiff. There was no complaint made by the plaintiff’s solicitor to the defendant’s solicitor that the terms of the 2020 Deed were in any way unexpected or did not accord with the common understanding to which I have earlier referred. As well, it is clear from the correspondence from the plaintiff’s solicitor to him that they did not regard the 2020 Deed as being at all remarkable or binding the plaintiff to any contractual obligation which fell outside what was to be expected.

12. [83]

    Finally, it is clear that the plaintiff’s decision to not proceed with any further steps in the settlement was reached by him, and conveyed by him to his then solicitors, at a time prior to his receipt of the 2020 Deed. In other words, the plaintiff’s change of mind had nothing to do with the fact of, or terms of, the 2020 Deed.

13. [84]

    After the instructions by the plaintiff to his then solicitors were terminated, (because he did not wish to adhere to the settlement agreement reached in the mediation) the solicitors for the plaintiff wrote to the plaintiff setting out various matters. The terms upon which the settlement was referred to in that correspondence is also of relevance. In particular, the plaintiff’s solicitor recorded this:

14. [85]

    When all of these matters are considered together, I conclude that the agreement reached between the solicitors for the parties at the mediation, which was conducted on 5 May 2020 was, and was intended to be, a final and immediately binding agreement to resolve the proceedings.

15. [86]

    The terms included the payment of the sum of $215,000 less any amounts which the law obliged the defendant to deduct prior to payment to the plaintiff, and that the proceedings would be formally resolved in the Court by the lodging of a Notice of Discontinuance once the plaintiff had entered into a deed in the usual form with respect to the release and indemnity of an ordinary and typical kind.

16. [87]

    The plaintiff’s submissions in the proceedings, which placed a great deal of emphasis on the range of conditions and obligations contained in the proffered 2020 Deed as demonstrating that the settlement which was reached at the mediation was not intended to be immediately binding, are unpersuasive.

17. [88]

    First, the terms of the proffered 2020 Deed were not different from the terms of deeds which had been regularly proffered throughout previous matters and which, as I have earlier found, were the subject of a common understanding between the parties that if an agreement could be reached on the monetary sum, the settlement would be undertaken on those terms.

18. [89]

    Secondly, had these terms been as contentious as is now submitted, and had they proffered a settlement on terms so different from that reached by the parties, then one would have expected such a change to have been noted immediately after the settlement in correspondence between the solicitors for the parties. It was not.

19. [90]

    Thirdly, settlement was in fact reached between the solicitors for the parties. There is no doubt that the plaintiff’s solicitors were properly and adequately instructed and authorised to enter into a full and final settlement of the proceedings. That is what they did and what they confirmed to the mediator and the defendant.

20. [91]

    Objectively speaking, the provisions of the 2020 Deed, the execution of the Notice of Discontinuance and its filing after payment of the money, were simply ordinary, typical and usual procedural steps which the parties envisaged would be taken to give effect to the agreement which they had reached.

21. [92]

    As earlier indicated, had there been any concern about the terms of the proposed 2020 Deed, then the plaintiff’s solicitors would have expressed that concern not by entering into a “full and final settlement” of the proceedings, but rather by using language reflecting the conditional acceptance of the offer.

22. [93]

    For these additional reasons taken with the earlier considerations to which I have referred, I am persuaded by the defendant that the agreement reached at the mediation was intended to be a final and binding agreement.

23. [94]

    It will be necessary for the parties to determine what orders ought be made which have the effect of disposing of the proceedings in light of the agreed settlement and the terms of this judgment.

24. [95]

    I stand the proceedings over to enable that process to occur.

Orders

1. [96]

   I make the following orders:

   1. (1)

      Stand the proceedings over for directions to Friday 16 April 2021 at 9.30am.

   2. (2)

      Direct that on or before 26 March 2021, the solicitors for the defendant are to provide to the solicitors for the plaintiff a set of Short Minutes of Order which they contend appropriately reflect the terms of this judgment and the finalisation of the proceedings.

   3. (3)

      Direct the solicitors for the plaintiff to provide to the solicitors for the defendant a set of Short Minutes of Order to enable finalisation of these proceedings on or before 4pm 9 April 2021.

   4. (4)

      Direct that at the time the Short Minutes of Order are provided by each party, a copy is to be provided to my Associate.

   5. (5)

      Liberty to apply.