Feb 2018

Yet another reminder to take care during settlement negotiations!

In the case of Buildum Construction Pty Ltd v Pile & Bucket Pty Ltd [2017] NSWSC 1260, the Supreme Court of New South Wales (the Court) considered whether an oral agreement reached between the parties at settlement fell within the the first or second category of Masters v Cameron (1954) 91 CLR 353 (Masters v Cameron).

The proceedings arose out of a claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) where the Defendant, Pile & Bucket Pty Ltd (Pile and Bucket) obtained an adjudication determination against plaintiff, Buildum Construction Pty Ltd (Buildum) which was subsequently registered as a judgment in the Local Court of New South Wales.

Following Buildum commencing proceedings in the Court seeking orders to set the adjudication determination aside, the parties engaged in a settlement conference. At the conclusion of the settlement conference, the parties exchanged draft unsigned deeds though issues arose in connection with the terms of settlement after the conference with Pile and Bucket disputing that any binding or enforceable agreement was ever reached.

On return to the Court, Buildum put forward the following arguments, based on the oft-cited classification system in Masters v Cameron in support of their position:

  1. that the parties agreed on all the essential terms of the bargain, with a formal deed to be drawn up to give effect to those terms; or alternatively; and
  2. that the parties agreed to be bound to the terms reached at the settlement conference, albeit that enforceability of those terms were conditional upon the execution of a deed.

Pile and Bucket contended that the events which occurred at the settlement conference fell within the scope of the third category of Masters v Cameron, namely that the parties had agreed that they would not be bound unless a deed was entered into.

The Court considered the various affidavits from the parties present at the settlement conference and noted that whilst the affidavits paraphrased the oral statements made at the settlement conference, there was no clear evidence in direct speech of exactly what happened. The most useful evidence was a statement made by the solicitor for Buildum deposing to an oral offer being put forward by Pile and Bucket.

Ultimately, the Court held that the parties had agreed on a settlement figure and other key terms during the settlement conference and the issues in contention regarding the terms of the settlement were are too small to be regarded as essential therefore Pile and Bucket’s failure to agree these non-essential terms was not a defence to Buildum’s application.

This case serves as a timely reminder that any agreement reached at a settlement conference or mediation should be recorded and executed accurately to avoid complications that can arise later.

For more information, please contact ERA Legal.