Collett v Robina Projects Australia Pty Ltd t/a Easy T Retail Centre & Ors [2009] QDC 53

DISTRICT COURT OF QUEENSLAND CITATION: Collett v Robina Projects Australia Pty Ltd t/a Easy T Retail Centre & Ors [2009] QDC 53 PARTIES: DIANE COLLETT (Applicant) AND ROBINA PROJECTS AUSTRALIA PTY LTD T/A EASY T RETAIL CENTRE (First Respondent) AND BROAD CONSTRUCTION SERVICES (QLD) PTY LTD (Second Respondent) AND COTTEE PARKER ARCHITECTS PTY LTD (Third Respondent) AND CERTIS GOLD COAST PTY LTD (Fourth Respondent) AND LG FORMWORK PTY LIMITED (Fifth Respondent) AND ULTRA TILING QUEENSLAND (Sixth Respondent) AND BLUE CHIP CONCRETE SERVICES PTY LTD (Seventh Respondent) AND CORPORATE SOLUTIONS PTY LTD (Eighth Respondent) -- 1 of 34 -- 2 FILE NO/S: BD269/09 DIVISION: Civil PROCEEDING: Originating application ORIGINATING COURT: District Court, Brisbane DELIVERED ON: 13 March 2009 DELIVERED AT: Brisbane HEARING DATE: 13 February 2009 JUDGE: Irwin DCJ ORDER: I order that the application is dismissed CATCHWORDS: DEEDS – Construction – general principles – effect of entire agreement or understanding (merger) provision CONTRACTS – Not Read by Signatory – whether that person was bound by its terms EQUITY – Remedies and Procedure – rectification – need to establish common intention to justify rectification COUNSEL: Mr RJ Oliver for the applicant Mr KF Holyoak for the respondents (except for the third respondent against whom the application did not proceed) SOLICITORS: Shane Ellis Lawyers for the applicant Barry & Nilsson for the respondents (except for the third respondent) Issues This is an application for: (1) A declaration pursuant to s 68(1)(b)(xiii) of the District Court of Queensland Act 1967 (the DCA) as to the true construction of the terms of settlement entered into on behalf of the applicant and the respondents on 16 October 2008. (2) Alternatively, an order pursuant to s 68(1)(b)(iv) of the DCA for the rectification of a Deed of Release signed by all parties on or about 5 November 2008. I note that the application did not proceed against the third respondent. -- 2 of 34 -- 3 Background [1] It is alleged that on 6 November 2006 the applicant, who was employed by the eighth respondent, suffered a workplace injury. Subsequently she served a Notice of Claim on each of the respondents in accordance with the Personal Injuries Proceedings Act 2002 (PIPA) and the Workers’ Compensation and Rehabilitation Act 2003 (the 2003 Act). The common law claim against the eighth respondent was governed by the 2003 Act. [2] The application proceeded on the basis that the applicant received statutory benefits from WorkCover Queensland (WorkCover), totalling $31,155.08 under the 2003 Act.1 [3] Mediation was scheduled to take place between all parties on 17 October 2008 pursuant to an order of this court. [4] Between 13 and 16 October 2008 negotiations were conducted with a view to resolving the claims for damages by Ross Lewis Percival of Shane Ellis Lawyers on behalf of the applicant and David Robert Shannon of McInnes Wilson Lawyers on behalf of the respondents. 2 [5] As a result of these negotiations, on the afternoon of 16 October Mr Shannon sent Mr Percival an email on the letterhead of McInnes Wilson setting out the terms of the offer to settle the claim. This letter included the following: “We confirm that on behalf on all respondents, we are instructed to make an offer to settle you client’s claim for the sum of $115,000 inclusive of statutory refunds and also inclusive of costs. From the aforementioned settlement amount, WorkCover Queensland agrees to waive its statutory refund to the extent of $18,500 leaving a sum of $12,615.08 to be refunded by your client from the settlement sum. The offer is also inclusive of any statutory refunds your client may be required to make to Medicare Australia, Centrelink, or Deewr. … 1 “DS8” to the affidavit of David Robert Shannon. Although this was sometimes referred to in the materials as $31,355.38. 2 Affidavits of Messrs Percival and Shannon. In addition to their affidavits, Messrs Percival and Shannon gave oral evidence at the hearing of the application. -- 3 of 34 -- 4 A form of Release Discharge and Indemnity is being prepared and will be submitted to your client for signature. The Release will cover the interests of all parties involved in the claim. Could you please sign a copy of this email to indicate your client’s acceptance of the joint offer of settlement on behalf of all respondents. When the settlement documentation is ready it will be forwarded initially by email for your perusal and your client’s signature. … The settlement proceeds will be paid direct to your trust account after receipt of all statutory clearances or charges which will be sought expeditiously.” 3 On the same date Mr Percival signed the email indicating acceptance of the terms of settlement on behalf of the applicant. I note the addition of the amounts of the waiver and the refund referred to in the second paragraph equals $31,115.08 which the applicant had received from WorkCover under the 2003 Act. It is this document that constitutes the “terms of settlement” for the purposes of the declaration sought under the application. [6] Mr Shannon advised Mr Percival during the settlement negotiations that the Release Discharge would be prepared by Deacons Lawyers who were the solicitors for the second respondent.4 [7] Mr Shannon forwarded this document titled “Deed of release” by email to Mr Percival on 27 October 2008. 5 It was signed by the applicant, whose signature was witnessed by Mr Percival and faxed to Deacons on 5 November 2008.6 [8] The Deed of release (the Deed) in paragraph 1.1(6) defined “Settlement Sum” to mean “the sum of $115,000.00”. Paragraphs 2.2-2.5 of the Deed are as follows: 3 “RLP3” to Mr Percival’s affidavit (30/1/09); “DS4” to Mr Shannon’s affidavit. 4 Mr Percival’s affidavit (30/1/09), para 11; Mr Shannon’s affidavit, para 15. 5 Mr Shannon’s affidavit, para 18 and “DS6”. 6 Mr Percival’s affidavit (30/1/09), para 11 and “RLP4”. -- 4 of 34 -- 5 “2.2 The Settlement Sum includes: (1) any sum the claimant is required to pay to the Commonwealth under the Health and Other Services (Compensation) Act 1995 (Cth), the Disability Services Act 1985 (Cth) or the Social Security Act 1991 (Cth); (2) legal costs; and (3) interest. 2.3 The respondents shall pay the claimant the sum of $115,000.00 (inclusive of the WorkCover refund) in full and final settlement of the claim, such sum to be paid as follows: 2.4 (1) The first respondent on its own behalf shall pay the claimant the sum of $15,000,00; (2) The second respondent on its own behalf shall pay the claimant the sum of $15,000.00; (3) The third respondent on its own behalf shall pay the claimant the sum of $Nil; (4) The fourth respondent on its own behalf shall pay the claimant the sum of $2,500.00; (5) The fifth respondent on its own behalf shall pay the claimant the sum of $18,000.00; (6) the sixth respondent on its own behalf shall pay the respondent the sum of $23,000.00; (7) the seventh respondent on its own behalf shall pay the respondent the sum of $23,000.00; (8) WorkCover, the eighth respondent, on its own behalf acknowledges that it is not entitled to the first $18,500 of the statutory benefits paid and refundable under claim number SOGNC 428190 or DO6AH 428190; 2.5 The respondents must pay the Settlement Sum as follows: (1) first, to Medicare Australia, the amount specified in the notice of charge, or if the claimant elects, 10% of the settlement sum by way of an advanced payment; (2) second, to Centrelink, any amount Centrelink might claim by recovery notice under s 1179 of the Social Security Act 1991 (Cth); (3) third, to DEWR Australia such sum as it identifies as the charge on the Claimant’s damages; (4) fourth, any statutory refunds due to WorkCover Queensland; (5) fifth, to any other governmental or semi- governmental authority, any other statutory refund or charge notified to WorkCover as owing by the Claimant under legislation under which such authority operates; and -- 5 of 34 -- 6 (6) the balance to the claimant, payable to the claimant’s solicitors or as otherwise directed in writing by the claimant’s solicitors.” This reference in paragraph 2.4(8) to WorkCover is due to the fact that it was the common law insurer of the applicant’s employer, the eighth respondent, in addition to being the statutory insurer that had already paid benefits to the applicant.7 The rectification application is for the deletion of paragraphs 2.4(1) to (8) of the Deed. [9] Paragraph 8 of the Deed is also relevant and has been the subject of submissions. It is a “merger” provision in the following terms: “Entire Understanding (1) This is the entire agreement and understanding between the parties on everything connected with the subject matter of this release; and (2) supersedes any prior agreement or understanding on anything connected with that subject matter.” [10] On 12 November 2008 the sixth respondent paid the balance of WorkCover’s statutory refund in the sum of $12,615.08. 8 On 14 November 2008 it paid a statutory charge to Medicare Australia of $240.30.9 It forwarded a cheque for $10,144.62 to the applicant’s lawyer on 10 December 2008 in payment of the settlement monies owing to the applicant.10 This was calculated on the basis of deducting the statutory refund and charge from the sum of $23,000 it was required to pay under paragraph 2.4(6) of the Deed. [11] As at 15 January 2009 Mr Percival had received cheques for the settlement sum from all respondents with the exception of WorkCover Queensland. These cheques were for a total of $83,644.62.11 By this time it had come to his attention through a telephone call with Ms Lamb, who was acting on behalf of WorkCover, that the respondents were of the opinion that there were no further settlement funds to be paid or received on behalf of the applicant.12 7 Transcript, 1-38. 8 Mr Shannon’s affidavit, para 22. 9 Mr Shannon’s affidavit, para 23. 10 Mr Shannon’s affidavit, para 24 and “RS10”. 11 Mr Percival’s affidavit (30/1/09), para 12. 12 Mr Percival’s affidavit, para 13. I also proceed on the basis of the judgment of Thomas J in Winks v WH Heck & Sons Pty Ltd [1986] 1 Qd R 226 at 228 that evidence of the subsequent conduct of the -- 6 of 34 -- 7 [12] Mr Percival considered that the applicant should have received the sum of $102,144.62 and consequently there was a shortfall of $18,500.00. [13] He advised Mr Shannon accordingly in a telephone conversation on 20 January 2009. What Mr Percival said during this conversation is the subject of paragraphs 27 and 29-30 of Mr Shannon’s affidavit sworn on 10 February 2009. This was not challenged in a subsequent affidavit sworn on 13 February 2009 by Mr Percival in reply. In order to appreciate the basis of the applicant’s complaint, and the issues which I must decide, and for this purpose only, I set them out in full. They are as follows: “27. Mr Percival stated that the terms of the Release, Discharge and Indemnity executed by his client did not reflect the terms of settlement that he had negotiated on behalf of his client with myself on 16 October 2008. Mr Percival further stated that the list of contributions in paragraph 2.4 of the Release, Discharge and Indemnity totalled only $96,500 if one were to exclude the contribution to be made for WorkCover Queensland of $18,500.00 … 29. Mr Percival stated that the listing of the WorkCover contribution of $18,500 in paragraph 2.4 of the Release was wrong. … 30. Mr Percival stated that his understanding of the settlement negotiated on behalf of his client, the applicant, was that she should receive the sum of $115,000.00 less a refund to WorkCover of $12,615.08 and a refund to Medicare of $240.30, leaving her with a net sum in the hand of $102,144.62. In fact she had received only $83,644.62.” Mr Percival’s contention was subsequently confirmed on that date in a letter of demand for the payment of the $18,500 by the respondents.13 [14] I have not included the response to which Mr Shannon deposes because there is a dispute about this. Even if this response was admissible, it would not possible to resolve this dispute because of the manner in which the case was conducted. The parties to a contract is admissible to prove the existence of the contract or a term of it not otherwise clearly proved but not its meaning. This is in accordance with Mr Holyoak’s submission on behalf of the respondents. -- 7 of 34 -- 8 evidence was limited to the affidavits by Messrs Percival and Shannon and their evidence during the hearing. This largely consisted of cross-examination on the basis of the affidavits. This area of contention was not canvassed directly during cross-examination. Each counsel referred in support of his client’s case, to some aspects of evidence given by the witness whom he cross-examined, on the basis that the evidence was truthful. Having carefully observed the witnesses I have also concluded that their evidence was a truthful account of the events as they perceived them. However, I consider that there was scope for each misconstruing what the other said, and that this explains the opposing recollections of the contentious aspects of this conversation. For reasons that I will give, I do not consider that the file notes of either solicitor in this case assist to determine the actual content of the conversations where there is a dispute. [15] The respondents’ contention is that it was at all times intended to settle the claim on the basis that the total amount payable was limited to $115,000 and that the contribution to this sum by WorkCover as the insurer of the eighth respondent was by the waiver of the first $18,500 of its first charge/refund as specified in paragraph 2.4(8) of the Deed. Applicant’s submissions [16] Paragraph 1 of the Outline of Submissions on behalf of the applicant14 refers to the application being for a true construction of the Deed. In fact as has been identified, the application is for a declaration as to the true construction of the terms of the settlement entered into on behalf of the applicant and the respondents on 16 October 2008. This is Mr Shannon’s letter of that date which was emailed to Mr Percival. There was no amendment sought to the application. Therefore I proceed on this basis. [17] The declaration which is sought is that the terms of settlement be construed as follows: 13 “DS12” to Mr Shannon’s affidavit, paras 31-34. I refer to this letter for the same limited purpose as the reference to paras 27 and 29-30 of the affidavit. This was also the effect of Mr Percival’s evidence at the hearing as to his understanding of the settlement negotiated with Mr Shannon. 14 Exhibit A. Mr Oliver’s oral submissions were also that the Deed should be read in a certain way to conform with the terms of settlement, or, alternatively, that the Deed be rectified to conform with those terms (Transcript, 1-43). -- 8 of 34 -- 9 (a) The respondents pay to the applicant the sum of $115,000. (b) The respondents refund to WorkCover from the said sum of $115,000 the sum of $12,615.88. (c) The respondents pay to the solicitor for the applicant the sum of $102,144.62. [18] For completeness I add that on the basis I either make a declaration in these terms or rectify the Deed by deletion of paragraphs 2.4(1) to (8), a consequential order is sought that the respondents collectively pay to the applicant the further sum of $18,500 on account of the settlement funds in accordance with the terms of the Deed. [19] It is submitted on behalf of the applicant that the fact the Deed contains an “entire agreement” or “understanding” clause (or what I have described as a “merger” provision) does not prevent the court admitting extrinsic evidence concerning the negotiations leading to the entry into the agreement where rectification is sought. It supports this submission by reference to MacDonald v Shinko Australia Pty Ltd.15 [20] It is then submitted that the clear intention of the parties at the time the terms of settlement were signed and accepted by the applicant was that she was to receive the sum of $102,384.92 from which she would have to pay other statutory refunds. This position was reached with reference to the negotiations between Messrs Percival and Shannon. The other statutory refunds would be the $12,615.08 which had not been waived by WorkCover and the $240.30 to Medicare Australia. [21] It is submitted that having regard to the circumstances of the parties entering into the terms of settlement this must fall within the first category of arguments referred to in Masters v Cameron, 16 namely: “They may intend to be bound immediately, but at the same time propose to have the terms restated in a form which is fuller or more precise, but not different in effect.” 15 [1999] 2 Qd R 152. 16 (1954) 91 CLR 353. -- 9 of 34 -- 10 In support of this proposition it is said that there is nothing in the terms of settlement making the agreement subject to or conditional upon the applicant signing the respondents’ terms of settlement. [22] In his oral submissions, Mr Oliver on behalf of the applicant emphasised the importance of the negotiations in construing the terms of settlement. He submitted that these negotiations were for the purpose of increasing the lump sum payment and reducing the WorkCover refund to place more money in the applicant’s pocket so as to make the deal more attractive to her and therefore elect to accept the settlement offer. 17 [23] He submitted that the terms of settlement are crystal clear and speak for themselves – there is no ambiguity.18 [24] In relation to rectification he submits everything stands or falls on what the terms of settlement mean, and therefore if I accept his argument about them this flows on to the issue of rectification.19 It is submitted that the Deed does not reflect the agreement between the parties as contained in the terms of settlement. In support of this it is said that in the negotiations between Messrs Percival and Shannon, and in the terms of settlement, it was never intended, discussed, or intimated that WorkCover make a direct financial contribution to the payment of $115,000 but it proceeded on the basis that it would simply waive its entitlement to a full refund of the monies paid to the applicant. The common intention was to try and give the applicant some relief from the refund by reducing the amount that was paid back.20 It was also contended that if the Deed means that the waiver by WorkCover is in fact a payment, then this is contrary to the terms of settlement reached and binding on the parties, and the Deed ought be rectified to ensure it is consistent with those terms. [25] It was submitted that the Deed itself is ambiguous because paragraph 2.4(8) does not say that WorkCover will pay, but that it will waive. 17 Transcript, 1-44. 18 Transcript, 1-47. 19 Transcript, 1-48. 20 Transcript, 1-74. -- 10 of 34 -- 11 [26] It is therefore submitted that because it can be established that: (a) there was a prior concluded agreement or at least a common intention that continued unaltered until the execution of the Deed; and (b) convincing proof that the written document does not embody the final agreement,21 rectification should follow in the interests of justice to ensure consistency with the terms of settlement. [27] In conclusion it is submitted that the only relevance of paragraph 2.4 of the Deed is between the respondents. Respondents’ submissions22 [28] Firstly it is submitted that upon the applicant making a claim for damages against the non-employer respondents, which claims were regulated in their pre-proceedings phase by the PIPA, the amount of workers compensation to be paid in the sum of $31,335.08 [sic] was, in effect, treated as an existing payment towards damages payable to the plaintiff either by the non-employer respondents by way of a first charge under s 207B of the 2003 Act or by the employer directly to the applicant by virtue of s 270(1) of the 2003 Act. In short, it is suggested, that prior to any settlement, the applicant had already received a payment of $31,355.08 [sic] by way of damages from WorkCover. [29] It is then submitted that it is in this legal context well known to all parties, but relevantly, well known to Mr Percival, that the conversations on or before 16 October 2008 and the correspondence of that day from McInnes Wilson to the applicant’s solicitors must be understood. [30] With reference to the application for a declaration as to the true construction of the terms of settlement of 16 October 2008, it is submitted that this cannot be done in light of clause 8 of the subsequent Deed. It is said that this is because the Deed entirely superseded the terms of settlement, and consequently there was no operative agreement of 16 October 2008 at all. The respondents rely on passages 21 Pukallus v Cameron (1982) 180 CLR 447 at 452 is relied on for this proposition. 22 Exhibit B. -- 11 of 34 -- 12 from the judgments in McDonald v Shinko to support this proposition, while accepting that clause 8 does not prevent the equitable relief of rectification. [31] It is submitted that by paragraph (1) of the application, the applicant does not seek rectification of the Deed. Rather, it seeks to rely upon the earlier terms of settlement and their contents, and contends for a particular meaning to be given to the agreement. It is said that this cannot be done in light of paragraph 8 of the Deed, and therefore the applicant’s reliance on the terms of settlement of 16 October 2008 is misplaced. [32] It was also submitted that the role of the Deed as being the only and final record of the agreement of the parties is enhanced by s 293 of the 2003 Act. This is identical in all material respects to the provision considered by Wilson J in Bishop v Woolworths Ltd.23 As a result there is no binding settlement until the Deed was signed. Following Bishop v Woolworths Ltd, the discussions and correspondence of 16 October 2008 were always subject to the Deed and its contents. The facts are within the third category in Masters v Cameron, namely: “They may not intend there to be a concluded bargain at all, unless and until they execute a formal contract.” Consequently, it was submitted that it was not possible to say that there was antecedent concluded agreement when it was subject to the provisions of a formal deed.24 [33] Further, it is submitted that on the basis of this Deed there can be no doubt that the total amount payable was limited to $115,000 in paragraph 2.3, that sum including a contribution from WorkCover by waiver of the first $18,500 of its first charge/refund under paragraphs 2.4(8). It is also said that the applicant then had to refund the balance of the WorkCover refund from the $115,000 (so comprised), by virtue of paragraph 2.5.25 23 (2008) QCS 154. 24 The applicant’s response to this submission in Exhibit A was that the requirement to the parties to sign a discharge, does not prevent them from reaching a concluded agreement and then formalising it by signing the discharge. 25 I note that in his evidence, Mr Percival agreed that there was common ground that the settlement was to be $115,000 gross, inclusive of the refund to WorkCover, partially reduced; and also that the refund was never agreed to be wholly waived (Transcript, 1-21). He also gave evidence that his client could expect no more than $115,000 (Transcript, 1-24). -- 12 of 34 -- 13 [34] The applicant has submitted what it describes as the relevant principles of rectification by reliance on authorities including Slee v Warke,26 Pukallus v Cameron, Maralinga Pty Ltd v Major Enterprises Pty Ltd,27 Winks v WH Heck & Sons Pty Ltd, and Ryledar Pty Ltd v Euphoric Pty Ltd,28 to which I will refer. [35] Having regard to these principles it was submitted that rectification of the Deed ought to be refused because in context, even if the words used on 16 October 2008 were as Mr Percival proposes 29 as opposed to the words Mr Shannon recalls being used30 in the legal context set out above, the better understanding of the words used is that set out in paragraphs 2.3 and 2.4 of the Deed. WorkCover was making a contribution of $18,500 to the total of $115,000 because it had already paid that amount and was prepared to waive it. Otherwise, it is submitted the offer would not be $115,000, but would be an offer of approximately $133,500. [36] Alternatively it was submitted that even if, in context, the words used in the offer and in the letter of 16 October 2008, have a meaning, other than that submitted by the respondents, at least the words are ambiguous, and consequently: (i) there was no convincing proof that a common intention was shared which was not recorded in the Deed; (ii) the negotiations were vague and inconclusive and it is not possible to ascertain what the parties meant so that the primacy of the written records in the Deed cannot be displaced; (iii) if the language used is doubtful and ambiguous as to its meaning, then the Deed is taken to represent the construction which the parties put on the words used in the oral and written communications on 16 October 2008; (iv) the evidence is merely of a unilateral intention of Mr Percival which was not disclosed, the context does not support its implied communication to Mr Shannon, and there is no suggestion of unilateral mistake in the sense 26 (1949) 86 CLR 271. 27 (1973) 128 CLR 336. 28 (2007) 69 NSWLR 603. 29 Mr Percival’s affidavit (30/1/09), para 9. 30 Mr Shannon’s affidavit para 15 (there appears to be an incorrect reference to para 16 in Exhibit B). -- 13 of 34 -- 14 that Mr Shannon was aware of Mr Percival’s mistaken belief of the meaning of the words used and sought to take advantage of it; and (v) in such circumstances, the primacy of the Deed which was entered into subsequently and contains the “merge” provision, as to the meaning which the parties agreed the earlier words and negotiations should have, cannot be displaced. [37] Further, it was submitted that because it was not possible to say that there was an antecedent concluded agreement, this makes it even less likely that there was continuing common intention at the time of the execution of the Deed. It was said that in this context, the intention had to be that it was the Deed which had to embody the agreement. [38] In his oral submission, Mr Holyoak on behalf of the respondents expressed the Court’s task as being, first to construe the final record of the parties (which is said to be the Deed) and secondly to determine whether or not there is convincing proof that there was a shared common intention that the Deed did not embody, so as to displace the primacy of the Deed.31 [39] As he put it, the evidence does not prove that there was a deal other than that recorded in the Deed.32 He submitted that the highest Mr Percival’s evidence reached is that he had another understanding or intention to that of Mr Shannon. Nothing said by Mr Shannon in his affidavit or cross-examination shows that he shared Mr Percival’s understanding. Mr Shannon maintains to the contrary and there is no suggestion that each communicated to the other that they had a different understanding.33 [40] Alternatively it was submitted that in the event that the court was not persuaded that the Deed supplemented or displaced the oral and written communications of 16 October 2008: (i) If Mr Shannon’s account is accepted, there can be no doubt that the interpretation of the agreement of 16 October 2008 is that represented in paragraph 2.4 of the Deed. 31 Transcript, 1-56, 1-57. 32 Transcript, 1-61. -- 14 of 34 -- 15 (ii) Even if Mr Percival’s account is accepted, then, having regard to the position of a reasonable person with knowledge of the words and actions of the parties in the surrounding circumstances in the background and context and legal “market” in which the parties were operating, the respondents’ contentions are, by far, the more likely. (iii) If the applicant’s contentions were correct then the settlement is not for $115,000 but for approximately $133,500 and the applicant has not only had the benefit of $18,500, which WorkCover has waived, but will recover a further sum of $18,500. This is to completely ignore the real value, and statutory treatment, of the WorkCover refund. (iv) This outcome cannot be reconciled with a sensible objective intention, in the legal context in which the parties operated, or the language used. Issue 1: Declaration as to the true construction of the terms of settlement [41] As I have noted this aspect of the application relates to the true construction of the terms of settlement entered into on behalf of all parties on 16 October 2008 and not of the Deed which was entered into subsequently. This is Mr Shannon’s letter of that date which was signed by Mr Percival accepting the terms on behalf of the applicant. The relevant aspects of this letter are set out above at [5]. [42] The Deed which was signed by the applicant and faxed to Deacons on 5 November 2008 contains the “entire understanding” or “merger” provision in paragraph 8, the terms of which are set out at [9]. This is a Deed that was executed by all parties.34 [43] I agree with the respondents’ submission that by reason of the clear terms of paragraph 8 the Deed entirely superseded the terms of settlement entered into on 16 October 2008. Consequently the Deed is the operative settlement agreement between the parties. [44] The fact that the Deed is the operative settlement agreement between the parties is consistent with s 293 of the 2003 Act which section provides: 33 Transcript, 1-61, 1-64. 34 “DS7” to Mr Shannon’s affidavit. -- 15 of 34 -- 16 “If a claim or contribution claim is settled before the start of a court proceeding, the parties to the settlement must sign a discharge of the claim.” [45] This provision applied to the circumstances of this case in which WorkCover was the insurer of the eighth respondent because the claims were settled before the commencement of a court proceeding in relation to them. My inquiries of the court files relevant to this matter confirm that other than this application the only other proceeding filed in this Court in relation to it was the originating application for direction generally on the progress of the matter which resulted in the court order for mediation between all parties.35 [46] In Bishop v Woolworths Ltd, Wilson J interpreted a similar provision in the WorkCover Queensland Act 1996 to have the effect that a settlement is not binding on the parties until the parties signed a discharge. [47] Therefore in the present case the terms of settlement of 16 October 2008 were not binding on the parties until they signed the Deed. As a result the Deed became the operative record of the terms of settlement. [48] This is also consistent with Mr Shannon’s letter of 16 October 2008 which is said to contain the terms of settlement. Although it is submitted by the applicant that there is nothing in those terms of settlement making the agreement subject to or conditional upon the applicant signing the respondents’ terms of settlement, the letter itself includes the following terms: “A form of Release Discharge and Indemnity is being prepared and will be submitted to your client for signature. The release will cover the interests of all parties involved in the claim. … When the settlement documentation is ready it will be forwarded initially by email for your perusal and your client’s signature.” [49] It was clearly intended that the terms of settlement in the letter signed by Mr Percival on behalf of the applicant would be subject to and conditional upon the applicant signing the subsequent settlement documentation. It is this subsequent documentation which was intended to become the operative terms of settlement. For example, it is clear from the terms of settlement that it was intended that the Deed would include an additional feature that was not present in those terms – that -- 16 of 34 -- 17 is, it would “cover the interests of all parties involved in the claim”. This must have been clearly understood by Mr Percival. In accordance with this intention the subsequent Deed covered the specific contributions to be made by each respondent, (including WorkCover) to the settlement sum in paragraphs 2.4(1) to (8). [50] In these circumstances I consider that as submitted by the respondents the facts of this case fall within the third category of the types of agreements referred to in Masters v Cameron, namely that the terms of settlement of 16 October 2008 were not intended to be a concluded bargain at all, but were subject to the execution of the formal Deed and its contents. [51] Paragraph 8 also operates to exclude evidence outside the Deed to prove terms additional to or different from the Deed or collateral contracts or to construe the Deed in a way different from the meaning to be inferred solely from its terms: see Macdonald v Shinko at 156, per Davies JA. Consistently with this, in that case McPherson JA (with whom Moynihan J agreed) said with reference to a similar “merger” provision at 155: “In excluding material outside the four corners of a written instrument, the parol evidence rule, at least on one view of its operation, arises from the inference that a document which appears on its face to be a complete record of the parties’ contract is conclusively presumed to be so: see State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 at 191. Once that presumption applies it is doubtful if a merger clause like cl 28.1 adds much if anything to the parol evidence rule.” [52] However, as McPherson JA stated at 154, it is equally well settled that a contractual “merger” provision does not prevent the adduction of parol evidence in proof of fraud, and it remained an open question whether it is capable of excluding reference to a pre-contractual misrepresentation that is innocent. There is no suggestion of fraud or innocent misrepresentation in the present case. [53] As recognised by both parties, it was also held in Macdonald v Shinko that such a provision does not prevent the court admitting parol extrinsic evidence where the equitable relief of rectification is sought. As Davies JA also said at 156: 35 Number 2129/08 filed on 8 August 2008. -- 17 of 34 -- 18 “There is therefore nothing inconsistent between giving full effect, at law, to cl 28.1 and granting equitable relief, whether by rescission or rectification, and as for the latter purpose to prove a prior oral agreement or continuing common intention.”36 [54] In this case the applicant does not seek rectification of the terms of settlement of 16 October 2008. Rather it asks the court to put a particular construction on these terms and then construe the subsequent Deed on this basis. [55] However, because the operative settlement agreement is the Deed, it must be construed without reference to these earlier terms of settlement. Therefore the application for making a declaration as to the true construction of these earlier terms is without merit. [56] This does not prevent the court determining the meaning of the terms of settlement in order to decide the application for rectification of the Deed itself. [57] However, because the Deed is the operative settlement agreement, this is the document that must be construed in the first instance. In doing so, the approach that I have taken to addressing this issue without reference to the earlier terms of settlement is consistent with the statement of principle in the joint judgment of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd,37 as follows: “This court, in Pacific Carriers Ltd v BNP Paribas,38 has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That normally requires consideration not only of the text, but also to the surrounding 36 See also Ryledar Pty Ltd v Euphoric Pty Ltd per Campbell JA (with whose reasons Mason P agreed) at 655 [262]-656 [266] as to the type of intention relevant to contract formation and construction, and at 657 [269]-658 [272] as to the admissibility of parol evidence in an action seeking rectification; and The Acacia Ridge Hotels Holdings Pty Ltd & Anor v Stratis & Ors [2009] QSC 21 per Chesterman JA at [28]-[29]. 37 (2004) 219 CLR 165 at 179 (Gleeson CJ, Gummow, Hayne, Callinan, and Heydon JJ). 38 (2004) 218 CLR 451 at 461-462. -- 18 of 34 -- 19 circumstances known to the parties, and object of the transaction.” (emphasis added) [58] In Ryledar Pty Ltd v Euphoric Pty Ltd Campbell JA (with whom Mason P agreed) said at 656 [264]: “But the purpose and object of the transaction is itself ascertained objectively – it is ascertained by considering what a reasonable observer, in the situation of the parties, would conclude was the purpose and object of the transaction.” [59] His Honour also referred to the speech of Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381 at 1385 [240]: 39 “The commercial, or business object, of the transaction, objectively ascertained, may be a surrounding fact … evidence of negotiations, or of the parties intentions … ought not be received, and evidence should be restricted to evidence of the factual background known to the parties at or before the date of the contract, including evidence of the ‘genesis’ and objectively the ‘aim’ of the transaction.” (emphasis added) [60] I therefore consider what a reasonable person would understand the parties to mean by the language of the Deed in the context of the surrounding circumstances known to the parties and the object of the transaction. [61] It is clear from the language of the Deed and the evidence of Messrs Percival and Shannon that the object of the Deed was to avoid the expense and inconvenience of litigation by settling the proceeding for which the applicant had served notices of claim on the respondents, 40 for no more than $115,000. This is in accordance with the definition of “Settlement Sum” in paragraph 1.1(6) of the Deed, and paragraph 2.3 which required the respondents to pay the applicant the sum of $115,000 (inclusive of the WorkCover refund). [62] Paragraph 2.4 then quantified how that Settlement Sum was to be paid in subparagraphs (1) to (8). It is noted that by virtue of paragraph 2.4(3) the third respondent was to pay “$Nil”. By virtue of paragraph 2.4(1), (2) and (4) to (7), each of the respondents, with the exception of WorkCover, was to pay a sum of money which in total constituted $96,500. The balance of $18,500 was made up by WorkCover in place of the eighth respondent waiving its right to the first $18,500 of 39 Also reported at [1971] 3 All ER 237. -- 19 of 34 -- 20 the statutory benefits paid and refundable under the relevant claims. The specific terms of that paragraph are as follows: “WorkCover, the eighth respondent, on its own behalf acknowledges that it is not entitled to the first $18,500 of the statutory benefits paid and refundable under claim number SOGNC 428190 or DO6AH 428190.” It was not suggested that this was not a reference to the applicant’s claim. [63] Although it may not strictly be correct to describe a waiver of $18,500 of a statutory refund due to WorkCover as a payment, in my view considered in the context of paragraphs 2.3 and 2.4 the clear meaning of the Deed is that the total Settlement Sum of $115,000 was to be made up of the itemised payments and the equivalent value of the waiver, with the result that the WorkCover refund which was expressly included in that Settlement Sum was reduced. [64] Although subparagraph 2.4(8) could have been better drafted, on the basis of the above analysis I consider this is what a reasonable person would understand the language of the Deed to mean in the context of the object of the transaction and the surrounding circumstances known to the parties. [65] Before I consider the surrounding circumstances in more detail I observe that the reasonable person would also be aware that under paragraph 2.5(4) the respondents had to pay the statutory refund, as reduced by the extent of the waiver under paragraph 2.4(8) to WorkCover before paying the balance to the applicant under paragraph 2.5(6). [66] The surrounding circumstances known to the parties were that WorkCover was the eighth respondent’s insurer and had paid “no fault” statutory benefits totalling $31,155.08 to the applicant under the 2003 Act. [67] The circumstances also include knowledge of the legislation relevant to this payment. This was ss 207B and 270(1) of the 2003 Act. [68] Section 207B relevantly provides: “(1) This section applies to— 40 See for example paragraph C of the Deed and the evidence of Mr Shannon at Transcript, 1-30. -- 20 of 34 -- 21 (a) an injury sustained by a worker in circumstances creating— (i) an entitlement to compensation; and (ii) a legal liability in the worker’s employer or other person to pay damages for the injury, independently of this Act; and (2) An amount paid as compensation to a person for an injury, to which there is an entitlement to payment of damages at a time or for a period before the person becomes entitled to payment of damages by an employer or other person, is a first charge on any payment of damages recovered by the person to the extent of the amount paid as compensation to the person. (3) An employer or other person from whom the damages are recoverable must pay the insurer the amount of the first charge, or, if the damages are not more than the amount of the first charge, the whole of the damages. (4) Payment to the insurer under subsection (3) satisfies the liability of the employer or other person for payment of damages. …” [69] Section 270 relevantly provides: “(1) The amount of damages that an employer is legally liable to pay to a claimant for an injury must be reduced by the total amount paid or payable by an insurer by way of compensation for the injury. …” [70] Therefore s 207B created a first charge on the damages recovered by the applicant from the non-employer respondents “to the extent of the amount paid as compensation” to her, and this amount had to be paid to WorkCover. And by virtue of s 270(1) the damages payable by the employer respondent had to be reduced by the total amount paid by WorkCover to her as compensation for the injury. [71] I would not regard the $31,155.08 paid as compensation to the applicant to be an “advance of damages”, “an existing payment towards any damages payable”, or as being an amount the applicant “had already received as a payment … by way of damages from WorkCover” as submitted by Mr Holyoak on behalf of the respondents. This is because, notwithstanding that Mr Percival seemed to accept -- 21 of 34 -- 22 that it was fair to describe them as a “down payment”,41 as Mr Oliver put it on behalf of the applicant, damages may never be claimed.42 Sections 207B and 270(1) apply when an amount is paid as “compensation” to a person for an injury. And under s 207B(2), for example, this payment is a first charge on “any amount of damages recovered”. [72] However the payment of $31,155.08 as compensation is properly categorised, it is clear that at all times WorkCover was entitled to have that full amount refunded in the event that the applicant recovered any amount of damages, subject to the extent of any waiver. [73] In my view a reasonable person being aware of these circumstances would understand the language of the Deed to mean that WorkCover’s contribution to the Settlement Sum was the value of the waiver of the $18,500 of this amount, leaving the balance of $12,615.08 to be refunded to it from that Sum. [74] The reasonable person would also be aware that the purpose of provisions such as s 270 is to ensure that claimants are not compensated twice for the same injury.43 This person would therefore not understand the language of the Deed to mean that the applicant was entitled to an actual payment of $18,500 of that amount by WorkCover as opposed to a waiver by it. Such a construction would have the effect, as the applicant submits, that the settlement is not for $115,000 as Mr Percival accepts, but for approximately $133,500 with the applicant having not only the benefit of the $18,500 which WorkCover has waived, but also recovering a further sum of $18,500. This would have the effect of compensating the applicant twice for the same injury, contrary to the purpose of the 2003 Act. [75] Therefore, as contended by the respondents, the meaning of the Deed is that the contribution by WorkCover under paragraph 2.4(8) was the waiver of the first $18,500 of the statutory benefits paid by it and refundable to it, with the result that the settlement sum of $115,000 is constituted by this amount and the sum of $96,500 payable by the other respondents, and from which amount $12,615.08 is payable as the balance of the statutory refund. 41 Transcript, 1-10. 42 Transcript, 1-74. 43 This is in accordance with the Explanatory Notes to the Workers’ Compensation and Rehabilitation Bill 2003, Queensland Acts 2003, Volume 1, Explanatory Notes, Acts Nos. 1-31 at 733. -- 22 of 34 -- 23 [76] I add that in my view this paragraph is not ambiguous, unintelligible or inconsistent with other parts of the Deed. [77] A further issue which must be addressed is the effect of Mr Percival’s evidence during the hearing of the application that neither he nor the applicant read the whole of the Deed word for word before she signed it and he witnessed her signature. In particular, he looked to see whether the amount of the Settlement Sum was correct and then as to how the refunds were to be dealt with, with particular interest in the WorkCover refund. He noticed that paragraph 2.3 said that the Settlement Sum of $115,000 was inclusive of that refund, which “naturally alarmed him”. He scanned down the document without reading the contributions of the parties listed in paragraph 2.3(1) to (7) and without adding the amounts up, until he reached paragraph 2.4(8), which stated how the WorkCover refund was being dealt with. He described this clause as stating that the first “18,500 was to be waived”. He then generally noted or assumed that the rest of the general content of the discharge appeared to be fairly standard. He felt wrongly that he had been presented with a standard discharge. He would have told the applicant that this was a standard discharge. He always invites clients to read such documents for themselves. However, obviously she chose not to.44 He subsequently said that she probably didn’t read it but relied on his interpretation, and he probably did not expressly direct her to paragraph 2.4(8). However, he certainly informed her that $12,600 would go back to WorkCover out of the $115,000. Her expectation based on his interpretation would have been to receive an additional $18,500.45 He did not understand at the time that paragraph 2.4(8) was the eighth contribution to the sum of $115,000 and still does not read it this way.46 Although he could see how you could put that interpretation on it now.47 [78] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd decided that where a person signs a document which was intended to affect legal relations and knew that it contained contractual terms, and there was no suggested vitiating element, such as misrepresentation, duress, or mistake, and no claim for equitable or statutory relief, the person was bound by those terms and it was immaterial that the person had not 44 Transcript, 1-13, 1-14, 1-16, 1-23. 45 Transcript, 1-23, 1-24, 1-25. 46 Transcript 1-16, 1-18. 47 Transcript 1-24. -- 23 of 34 -- 24 read the document. In such circumstances, the other party did not have to show that due notice had been given of those terms.48 [79] The specific types of equitable relief referred to in the judgment are avoidance “in accordance with equitable principles which take as their foundation a contract valid at common law but transform it so that it becomes voidable”49 and “any grounds such as misrepresentation”.50 [80] However, there is no suggestion of misrepresentation in this case and it is not sought that the contract be voidable as opposed to seeking rectification of the Deed to ensure consistency with what are said to be the terms of settlement of 16 October 2008. [81] As stated in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd51 the parol evidence rule, the limited operation of the defence of non est factum and the development of the equitable remedy of rectification all proceed on the premise that a party executing an agreement is bound by it. Having executed the Deed, the applicant is bound by it unless she is able to rely on a defence of non est factum, or able to have it rectified. There is no suggestion that the defence applies in this case. Issue 2: Order for rectification of the Deed of Release [82] Accordingly it is this issue of rectification that I now address. [83] In Ryledar Pty Ltd v Euphoric Pty Ltd Campbell JA (with whom Mason P agreed) summarised the principle to be derived from the High Court decisions of Slee v Warke,52 Maralinga Pty Ltd v Major Enterprises Pty Ltd,53 and Pukallus v Cameron54 as follows: “It is now clearly established that what is necessary for rectification of a document is a common intention of the parties that continues to the time of execution of the document, but that an antecedent concluded contract is not needed.”55 (emphasis added) 48 At 184 [54] and 185 [57]. 49 At 179 [41]. 50 At 183 [49]. 51 (2004) 218 CLR 471 per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ at 483 [33]. 52 At 280-281 per Rich, Dixon, and Williams JJ. 53 At 350 per Mason J. 54 At 452 per Wilson J; at 456 per Brennan J. 55 At 655 [259]. -- 24 of 34 -- 25 [84] With reference to Slee v Warke56 his Honour observed: “It is not sufficient to show that a written instrument does not represent the common intention of the parties – as well, it must be shown what their common intention was.” (emphasis added) [85] In Pukallus v Cameron Wilson J said: “The second principle governing the rectification of a contract … is that which requires the plaintiff to advance “convincing proof” that the written contract does not embody the final intention of the parties. The omitted ingredient must be capable of such proof in clear and precise terms. The court must not assume for itself the task of making the contract for the parties.”57 (emphasis added) [86] The principles in these decisions have been adopted and applied by the Queensland Court of Appeal in Winks v WH Heck & Sons Pty Ltd.58 [87] By contrast to the construction of a contract, the type of intention that is relevant to rectification of a contract is the subjective intention – sometimes called actual intention of the parties.59 Parol evidence is receivable to establish this.60 Previous negotiations of the parties and their declarations of subjective intent are admissible.61 [88] With reference to what is needed before an intention of the parties to a negotiation counts as a common intention in Ryledar v Pty Ltd v Euphoric Pty Ltd Campbell JA said at 660 [281]: “In my view, when that intention relates to the terms upon which they will contract with each other, it is still necessary for them to know enough of each other’s intentions for it to be said that there is common intention. They might come to know of each other’s intentions in this way through those intentions being directly stated, or they might come to know of them through the various other means by which one person’s intentions can become known to another person. These means can sometimes involve the process of conscious and deliberate inference. Those means can sometime involve simply receiving a gestalt in a series of events. Those means 56 At 281. 57 At 452. 58 At 234-235 per Kniepp J; at 236-238 per Thomas J; and at 242-243 per Shepherdson J. 59 Ryledar Pty Ltd v Euphoric Pty Ltd per Campbell JA at 657 [268]. 60 Ibid at 657 [269]. 61 Investors Compensation Scheme Ltd v West Bromich Building Society [1998] 1 WLR 896 at 912- 913; [1998] 1 All ER 98 at 114-115; see Ryledar Pty Ltd v Euphoric Pty Ltd per Tobias JA (with whom Mason J agreed) at 625 [106]. -- 25 of 34 -- 26 can depend to some extent on the people involved sharing a common understanding of how particular bodies of knowledge or markets or social institutions they are operating in work – the experienced surgeon, or the experienced chess player, can sometimes see what another surgeon, or chess player, is seeking to do, in a way that an inexperienced person cannot. What matters for the present purposes is that for a negotiating party to perform actions or say words from which the other party can gather his or her intention is itself a form of communication. Negotiation of any contract takes place in which various facts are known or assumed by the negotiating parties. Sometimes, for example, if a contract is negotiated in a context where there are understood business practices and conventions, and nothing is said about those practices and conventions not applying, it can be legitimate to conclude that both parties intended to contract in accordance with those practices and conventions, even if they did not expressly communicate to each other that they intended to act in accordance with those practices and conventions.” (emphasis added) [89] However, as Campbell JA said at 661 [287]: “… mere proof that the subjective intentions of contracting parties were identical, if each contracting party had kept his or her intention completely to himself or herself, would not amount to showing a consensual relationship between the parties.” [90] He said in conclusion at 667-668 [316]: “For the reasons I have given, the common intention that is required to grant rectification is subjective. Even though there is a requirement for the intention to be disclosed before it can count as common intention, that disclosure need not be by words that say in substance “this is my intention”. The need for disclosure fills the role of being a limitation on the types of subjective intention that can be enforced through the remedy of rectification, or a limitation on the circumstances in which the subjective intention must exist before it can be enforced through the remedy of rectification. It still remains that proof of the subject the intention of the parties to the contract is fundamental to the grant of rectification.” [91] I apply these principles to the resolution of the issue raised in the present case. [92] On the basis of these principles the applicant must persuade the court on the balance of probabilities by convincing proof that there was an antecedent concluded agreement or at least a disclosed common intention that continued unaltered to the time of the execution of the Deed, and that the Deed does not embody the final intention of the parties. In addition, it must be shown by clear and convincing proof -- 26 of 34 -- 27 what that common intention was, and in particular as is submitted by the applicant that it was inconsistent with paragraphs 2.4(1) to (8) being inserted in the Deed. [93] In order to prove this I am entitled to have regard to the negotiations and subjective intentions of the parties which culminated in the execution of the Deed, including the terms of settlement of 16 October 2008. [94] As I have indicated, the applicant’s argument is that the Deed does not reflect the agreement between the parties as contained in the terms of settlement of 16 October 2008 and the Deed ought to be rectified to ensure it is consistent with those terms. [95] The applicant relies upon the following terms in Mr Shannon’s 16 October 2008 letter: “We confirm that on behalf on all respondents, we are instructed to make an offer to settle you client’s claim for the sum of $115,000 inclusive of statutory refunds and also inclusive of costs. From the aforementioned settlement amount, WorkCover Queensland agrees to waive its statutory refund to the extent of $18,500 leaving a sum of $12,615.08 to be refunded by your client from the settlement sum. The offer is also inclusive of any statutory refunds your client may be requested to make to Medicare Australia, Centrelink or Deewr.” [96] It is submitted that this offer does not provide a breakdown of each respondent’s contribution to the Settlement Sum and on its face the plain meaning is that the applicant is to receive the sum of $115,000 from which she will have to pay the statutory refunds. In relation to this Mr Shannon agreed that these terms of settlement set out precisely, as best he could, what had been negotiated, and on the basis the offer of $115,000 is inclusive of costs, in practice absent the statutory charges, a cheque for $115,000 would be sent to Mr Percival.62 However, he also said that the second paragraph quoted above constitutes the statement to Mr Percival that WorkCover would be making a contribution to the sum of $115,000 in the order of $18,500.63 Although he conceded that one way of reading the letter was that all that had to go back to WorkCover was $12,615.64 It is again relevant that 62 Transcript, 1-34, 1-35. See also Transcript, 1-40 where he said he considered it a fair reflection of what he had discussed with Mr Percival. 63 Transcript, 1-37, 1-38. 64 Transcript, 1-38. -- 27 of 34 -- 28 while this offer does not provide a breakdown of each respondent’s contribution, as I have observed at paragraph 49 it is clear from the terms of settlement that the Deed would include an additional feature that was not present in those terms – that is, it would “cover the interests of all parties involved in the claim”. I take this to be a reference to a breakdown of each respondent’s contribution. [97] It is also submitted that, upon signature by Mr Percival indicating acceptance of these terms of settlement on behalf of the applicant, this was a concluded agreement within the first category of the types of agreement referred to in Masters v Cameron. [98] However, for the reasons set out in paragraphs [44] to [50] I consider that as submitted by the respondents the facts of this case must fall within the third category of the types of agreement referred to in Masters v Cameron, namely that the terms of settlement of 16 October 2008 were not intended to be a concluded agreement at all, but were subject to the execution of the formal Deed and its contents. [99] Further, the terms of settlement are not to be considered in isolation but in the context of the negotiations which led up to it and culminated in the execution of the Deed. [100] The applicant particularly refers me to an email exchange between Messrs Percival and Shannon on 13 October 2008 and 14 October 200865 and two communications between them on 15 and 16 October 2008 concerning the initial offer of settlement made by Mr Shannon on behalf of all respondents. [101] The email of 13 October 2008 commenced the negotiations with Mr Shannon saying that he may be able to put together an offer of “around $100K inclusive” on the basis that WorkCover will “waive $15k of the refund down to $16,115.00.” With reference to this on 14 October 2008 Mr Percival queried “why we should not seek the full WorkCover refund or alternatively amend our client’s claim to obviously update for the WorkCover amount.” Under cross-examination 65 “RPL1” to Mr Percival’s affidavit (3/2/09). -- 28 of 34 -- 29 Mr Shannon also referred to a telephone discussion in which Mr Percival made it clear to him that in the negotiation, WorkCover should waive all of their refund.66 [102] On 15 October 2008 Mr Shannon sent Mr Percival an email on the letterhead of McInnes Wilson setting out the terms of the initial offer to settle the claim. This letter included the following: “On behalf of all the respondents we have instructions to make your client an offer in the sum of $90,000 inclusive of statutory refunds and also inclusive of standard basis costs. In making the offer WorkCover, who is the insurer of the eighth respondent, Corporate Solutions Pty Ltd, agrees to waive its statutory refund to the extent of $15,000, meaning that the claimant would still have a refund payable to WorkCover of $16,115.00. Other statutory refunds would need to be paid out of the settlement amount of $90,000.” For completeness I note that this offer was rejected and Mr Percival advised that his client would not accept anything less than $120,000 inclusive of statutory refunds and inclusive of costs and that WorkCover would be required to waive its entire statutory refund from such proposal.67 [103] On this basis the applicant submits that it was immediately apparent that the WorkCover refund was going to be an issue, and the clear intention was to pay $90,000 inclusive of costs and refunds and WorkCover waiving $15,000 of its statutory refund. It is said that the clear intention was to pay $90,000 to the plaintiff, with no mention, then or subsequently, of the fact that WorkCover would “contribute” or “pay” $15,000 towards the $90,000. [104] However, negotiations continued until the terms of settlement of 16 October 2008 were sent to Mr Percival. Although these are in substantially the same terms as the $90,000 settlement offer, they must be considered in the context of the recollections by Messrs Percival and Shannon of the conversations that immediately preceded this. 66 Transcript, 1-31. See also “DS2” to Mr Shannon’s affidavit with reference to a telephone conversation with Mr Percival on 16 October 2008. 67 Mr Shannon’s affidavit, para 9. There is a dispute as to whether Mr Percival’s reply was “without prejudice”. However, this is irrelevant, as such discussions are admissible to establish a claim to rectification of a written agreement entered into after settlement negotiations to reflect the actual agreement: Cedenco Foods v State Insurance Ltd [1996] 3 NZLR 205 at 211. -- 29 of 34 -- 30 [105] Mr Percival deposes that the telephone offer from Mr Shannon was: “that the respondents would pay the sum of $115,000 inclusive of costs and statutory refunds except that WorkCover’s refund was limited to $12,615.08 out of a total of $31,355.38.”68 [106] Mr Shannon deposes that in the telephone conversation he told Mr Percival: “that I had instructions on behalf of the respondents to reject his client’s offer to resolve the claims for $120,000 inclusive of costs and statutory refunds and make a counteroffer in the sum of $115,000 inclusive of statutory refunds and inclusive of costs. With an $18,500 contribution coming from WorkCover. I told Mr Percival that WorkCover’s contribution were to be used to reduce that insurer’s statutory refund from $31,115.00 to $12,600.00 approximately.”69 (my emphasis) It is to be noted that Mr Shannon’s recollection is that he did tell Mr Percival that WorkCover’s waiver of its statutory refund to the extent of $18,500 was its “contribution”.70 [107] Accordingly, Messrs Percival and Shannon have different recollections of this conversation. While Mr Percival does not respond to Mr Shannon’s recollection in his second affidavit, I proceed on the basis that he did not do so because he considered that he had addressed the issue sufficiently by his first affidavit. [108] This difference in recollection is about a significant matter. Because, if Mr Shannon expressed himself in terms of $18,500 of the sum of $115,000 being WorkCover’s “contribution” and that this “contribution” was to be used to reduce its statutory refund to $12,600 approximately, it is arguable that the Deed was in accordance with what he had told Mr Percival. [109] I have already referred in paragraph [14] above to the difficulty in resolving disputed recollections on behalf of both lawyers. Under cross-examination neither lawyer resiled from his recollection of the conversation. For example, as set out in 68 Mr Percival’s affidavit, para 9 and “RPL2”. 69 Mr Shannon’s affidavit, para 15 and “DS3”. 70 See also Transcript, 1-33 where Mr Shannon stated, “I told Mr Percival what [sic] WorkCover as part of the package was contributing $18,500” and “that … was to be used to reduce the insurer’s statutory refund.” Further, as previously observed, at Transcript, 1-37, 1-38 he said that the third paragraph of the 16 October 2008 terms of settlement letter constitutes the statement to Mr Percival that WorkCover would be making a contribution to the sum of $115,000 in the order of $18,500. Although he also conceded that one way of reading the letter was that all that had to go back to WorkCover was $12,650. -- 30 of 34 -- 31 footnote 70, Mr Shannon maintained that he told Mr Percival that WorkCover was “contributing” the $18,500 as part of the package to reduce the statutory refund. While he conceded that the terms of settlement set out precisely, as best he could what had been negotiated,71 Mr Percival said that he did not consider the Deed misrepresented the deal struck between them.72 [110] As I have observed, each counsel relied on aspects of the evidence given by the lawyer whom he cross-examined in support of his client’s case on the basis this evidence was truthful. From my careful observation the evidence of each witness was a truthful account of events as they perceived them; and I considered areas of contention as to their conversations were as a result of their misconstruing what the other said. [111] I also said that for reasons I would give subsequently, I do not consider that their file notes assist me to determine the actual contents of their conversations where there is a dispute. [112] The file notes are no more than a skeletal outline of the conversations. This is demonstrated by the three file notes exhibited to Mr Percival’s affidavit. “RPL1” and “RPL2” each make notes of a 10 minute conversation in half a foolscap page. “RPL5” reduces a 30 minute conversation to about 80% of a foolscap page. The file notes exhibited to Mr Shannon’s affidavit are “DS2”,”DS3”, and “DS10”. These are about one page, 33% of a page, and 1½ pages respectively. The notes mainly concentrate on the figures relevant to the settlement and do not include the detail of the conversations. As Mr Shannon conceded these notes are not as detailed as he would have liked.73 [113] In the case of Mr Percival, having originally deposed that “RPL1” was a contemporaneous record of a conversation on the afternoon of 15 October 200874 and recording in it a commencement time of 4.30 (concluding at 4.40) and costs and finishing with the entry: “he get back to me he said by time he rung around 7am”, in his second affidavit he deposed that having perused Mr Shannon’s affidavit and 71 Transcript, 1-34. 72 Transcript, 1-18. 73 Transcript, 1-40. 74 Mr Percival’s affidavit (30/1/09), para 8. -- 31 of 34 -- 32 referred back to his office file he realised this conversation “must have occurred on the morning of 16 October 2008 rather than the afternoon of 15 October 2008.” 75 [114] Therefore Mr Percival’s original recollection that this was a contemporaneous file note commencing at “4.30” is placed in doubt, as is the accuracy of the conversation recorded with reference to Mr Shannon getting back to him “around 7am”. [115] This places in doubt Mr Percival’s recollection of the detail of the conversations as deposed to in his affidavit. They are more likely to reflect his perception of the conversations in accordance with what he was seeking to achieve.76 [116] Although there are not the same touchstones with which to compare Mr Shannon’s affidavit, given the brevity of his file notes and their focus on the relevant settlement figures, I proceed on the basis that the affidavit similarly reflects his perception of the conversations in accordance with what he was seeking to achieve. [117] In other words, I consider that the importance of the content of the conversations is that they are evidence of the subjective intention of the parties in the negotiations which lead up to the drafting and acceptance of the terms of reference and which continued to the execution of the Deed. [118] Therefore without the need to resolve whether Mr Shannon’s recollection of the conversation as set out in paragraph [106] is accurate in all respects,77 I consider that it reflects that his intention at all times was to convey that WorkCover’s “contribution” to the settlement sum of $115,000 was the waiver or $18,500 of the statutory refund to which it was entitled. [119] That is, Mr Shannon’s intention which continued to the execution of the Deed, was in accordance with paragraphs 2.3 and 2.4(1) to (8) thereof. [120] He was the draftsman of the terms of settlement. In my view the words relied on from these terms as set out in paragraph [90] are at the least ambiguous in that they 75 Mr Percival’s affidavit (3/2/09), para 2. 76 In relation to what Mr Percival was trying to achieve, I proceed on the basis of Mr Oliver’s submissions which are summarised in paragraph [22]. This is consistent with Mr Shannon’s evidence at Transcript, 1-33. 77 If it is necessary to resolve this issue on the basis of my analysis of the evidence of Messrs Percival (with particular reference to paragraph [115]) and Shannon and my observations of them as witnesses, I could not exclude Mr Shannon’s recollection of the conversations as being more -- 32 of 34 -- 33 can be interpreted either in accordance with Mr Shannon’s intention or the intention of Mr Percival at that time. This is demonstrated by Mr Shannon’s evidence that he considered the third paragraph of the 16 October 2008 terms of settlement letter expressed this intention, although he now concedes that one way of reading the letter was in accordance with Mr Percival’s intention. This is referred to at footnote 70. [121] Mr Percival’s intention can be gleaned form paragraphs 27-30 of Mr Shannon’s affidavit as set out in paragraph [13] above. It can also be gleaned from the terms of the declaration sought as to the true construction of the terms of settlement which are set out in paragraph [17]. [122] Mr Percival’s intention can also be gathered from the last three sentences of paragraph 13 of his affidavit of 30 January 2009. I appreciate that this evidence is objected to by Mr Holyoak. However, I consider it is relevant to demonstrate Mr Percival’s intention, which in this case must be taken to be the intention of the applicant. [123] Therefore the intention of Mr Percival was different to the intention of Mr Shannon. What this demonstrates is that the applicant has failed to show by convincing proof that there was common intention of the nature submitted on her behalf which continued until the time of the execution of the Deed. Put another way, the applicant has failed to show by convincing proof that there was a shared common intention that the Deed did not embody so as to displace the primacy of the Deed. [124] As the applicant has also failed to establish that the terms of settlement were a concluded antecedent agreement, the fundamental basis for the grant of rectification has not been established. [125] I gain further support for this conclusion from the statement by Lord Chelmsford LC in Fowler v Fowler that: “Upon the question of rectifying a deed, the denial of one of the parties, that it is contrary to his intention, ought to have considerable weight. Lord Thurlow, in Irnham v Child (1 Bro CC 93) says, ‘The difficulty of proving that there has been a mistake in a deed is so probable than that of Mr Percival upon whom the onus falls of persuading the court on the balance of probabilities by convincing proof of the issues identified in paragraph [92]. -- 33 of 34 -- 34 great, that there is no instance of its prevailing against a party insisting there was no mistake.’ And Lord Eldon in Marquis of Townshend v Stangruum (6 Ves 334), after observing that Lord Thurlow seemed to say that the proof must satisfy the court what was the concurrent intention of the parties, adds “And it must never be forgotten to what extent the defendant, one of the parties, admits or denies the intention.”78 [126] This is a case in which the respondents deny that the Deed as construed by me is contrary to their intention. This is entitled to be given considerable weight. If there was a mistake in the present case, it was a unilateral one by Mr Percival on behalf of the applicant. Such a mistake is not a sufficient basis for the grant of the equitable remedy. I do not consider that the evidence demonstrates that Mr Shannon was aware of any such mistake on behalf of Mr Percival and sought to take advantage of it. [127] Further, the parties were negotiating in the well understood context of the 2003 Act and as such, like the reasonable person, would be aware that the purpose of provisions such as s 270 is to ensure that the claimants are not compensated twice for the same injury as would be the case if the applicant was to be entitled to an actual payment of $18,500 by WorkCover as part of the Settlement Sum as opposed to the value of a waiver by it of this amount. This is analogous to the reasoning in paragraph [74] above. [128] The fact is that the applicant has executed the Deed (with her signature witnessed by Mr Percival) and is bound by those terms notwithstanding that she has not read the document. As there is no vitiating element, such as misrepresentation, duress, or mistake, there is no claim for statutory relief, and the basis for the equitable relief of rectification has not been established she continues to be bound by it in accordance with what I have found it to mean at paragraph [75]. [129] Accordingly I order that the application is dismissed. [130] I will hear further submissions on the issue of costs. 78 (1859) 4 DeG & J at 273; 45 ER 97 at 106-107, referred to in Ryledar Pty Ltd v Euphoric Pty Ltd at 658 [272] per Campbell JA. -- 34 of 34 --