Parties Dispute Agreement Made at Mediation

Englisch v Sully [2021] VSC 434 (23 July 2021)

The parties entered into an agreement made during mediation. However, the parties dispute whether or not the agreement was binding and whether the parties intended to be immediately bound. The Court adjudicated this case through the 'in principle' agreement as well as the parties' conduct subsequent to their alleged agreement. 

Facts:

On 23 March 2020 in VCAT, the Respondent had brought a claim against the Appellant for misleading or deceptive conduct. VCAT Orders required the Appellant to pay the Respondent the sum of $38,271.45 and reimburse the Respondent’s application fees. As at 26 August 2020 the Appellant had paid to the Respondent the total sum of $36,246.85 and had entered into a payment plan with the Respondent for the balance of the sum required to be paid by the VCAT Orders. The Appellant sought for the Orders to be set aside.

Orders were made by consent between the parties referring the proceeding to mediation where the Respondent alleges that the parties entered into an agreement to settle their dispute on terms which were immediately binding. The Appellant denies that any agreement was intended to be binding between them. The parties referred to affidavits from people who attended the Mediation. 

Issues:

Whether a binding agreement on terms of settlement had been reached at the Mediation.

Whether the parties intended to be immediately bound.

Applicable law:

Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 - provides that parties may in their negotiations leave aspects of an agreement to be decided at a later date while agreeing to be immediately bound in respect of other, concluded terms.

Evidence Act 2008 (Vic) (‘Evidence Act’) s 55(1) - provides that the evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.

Analysis:

For an agreement to be made with immediate binding force, notwithstanding that a written instrument may be executed at a later time, the original oral agreement must be complete, certain and enforceable on its own terms. The Respondent relied on evidence which provided that there was no point during the Mediation that any person, including the Mediator or anyone on the Appellant’s side said that the agreement was not immediately binding. It is submitted that absence of such a suggestion is indicative of an intention to be bound.

The Appellant submitted that the incompleteness or failure to conclude certain terms was indicative of a lack of intention to be immediately bound by the Alleged Terms. It was also submitted that if parties are represented by solicitors the ‘general practice and ordinary expectation’ is that they would not be bound by an agreement until a deed of settlement is entered into. The Appellant submitted that the subsequent conduct and correspondence of the parties was inconsistent with the Alleged Binding Agreement having binding force. The Alleged Binding Agreement in correspondence was described as an ‘in principle’ agreement, the expression ‘in principle’ carries an ‘accepted imputation that there was not yet a final agreement’.

Conclusion:

The Court held that the parties reached an agreement on each of the Alleged Terms but did not agree to be immediately legally bound by the Alleged Terms, so that there was no Alleged Binding Agreement.