After considering surrounding circumstances to interpret the parties’ intention on entering the settlement terms, including what passed between those parties at the mediation, his Honour concluded that he was “not satisfied that the parties had ‘reached finality’ or ‘were content to be bound immediately and exclusively by the terms agreed at mediation’. There are simply too many matters of importance on which the parties had not reached a consensus for it to be otherwise”.[4] These 'matters of importance' included:
the lack of more specific reference to the identity of the properties, either by title reference and/or a plan the absence of even pro forma-type terms for the sale of property, either at the mediation or at any time prior the reliance upon a rather vague 'marketing brochure' for the properties rather than proper plans. Almond J concluded that the lack of provision for these matters in the settlement terms “tends to suggest that the mediation terms were high level terms which were general in nature and not intended to be a concluded bargain”.[5] His Honour also relied upon the absence of a date for the settlement to complete, and the undefined 'construction funding facility' to reinforce his view. The settlement terms were held not to be enforceable under the third limb of Masters v Cameron, and the parties were not bound without a further contact being executed. Lessons To some, this finding might seem artificial. In most mediations, the parties and their lawyers know exactly what is in issue, and what is included in any settlement agreement. Perhaps their settlement is simpler; perhaps the settlement agreement is drafted more clearly; or both. However where the parties intend to create an immediately binding agreement, the terms need to unequivocally say so, and be crafted in such a way that there is no ambiguity as to their effect or the obligations they impose. This is particularly so in relation to real estate transactions that are strictly governed by legislation, or where there are cross-references to other existing documents. Parties need to know that, once a deal is reached in principle, it may still take significant time to properly document it. Taking shortcuts at the end of an exhausting, but otherwise successful, mediation can unfortunately result in there being no settlement at all. End Note 1. Al Azhari v 27 Scott Street Pty Ltd & Ors [2017] VSC 600 (5 October 2017) 2. [1954] HCA 72 3. [1929] 43 CLR 310 at 317 4. Note 1 at [32]. 5. Note 1 at [41]. NB: Read about the author, Mark Addison, at the end of Case in Brief, Double