By Jeffrey Brown, Principal at Matthews Folbigg Lawyers
The recent judgment in the matter of Hunter Distillery Pty Ltd ([2022] NSWSC 948) is a timely reminder that, when it comes to settling litigation, finality is the key.
In this case, the parties (we’ll them Party A and Party B) had been attempting to resolve disputes arising out of a joint venture to operate a vodka, gin and schnapps distillery. There had been a number of offers and counter offers back and forth between the parties until, on 20 December 2021, an email was sent from Party A’s solicitor to Party B’s solicitor which contained the words:
“We … attach settlement terms our client will accept to resolve the matter.”
The email attached a list setting out the structure of a settlement arrangement. Importantly, the email also went on to list a number of other matters, not directly related to those in the attached list, that were not agreed to between the parties.
A reply to the email was sent by the solicitor for Party B later that day, which stated that:
“We are instructed to agree to the proposed basis for settlement. I will commence drafting a deed.”
Before the deed could be finalised, discussions between the parties broke down and Party A’s solicitors approached the Court for an order that the parties were bound by an agreement, the terms of which were set out in the list attached to Party A’s 20 December email.
Although the emails exchanged on 20 December 2021 contained the words “agree”, “accept” and “settlement”, the Court decided there was no binding agreement in place.
The Court found that:
- The references to a Deed suggested that Party B only intended to be bound to an agreement once a Deed was finalised and signed, and
- It was clear from Party A’s email of 20 December 2021 that a number of minor additional matters still needed to be resolved between the parties.
This judgment neatly illustrates the importance of properly concluding any “agreement” to settle a commercial dispute, and to ensure there can be no ambiguity about whether all parties intend to be bound by settlement terms that are clearly identifiable.
If you would like more information or advice in relation to any of the issues raised in this article, please contact Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au, or Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au.
