Court examines settlement among Super Retail Group's senior executives
The Federal Court of Australia recently dealt with a dispute about whether settlement negotiations between senior executives and their employer resulted in a binding contract.
The dispute involved a chief legal officer and company secretary along with a general manager from a major publicly listed company.
The workers sought specific performance of what they argued was a binding settlement agreement reached on 6 May 2024. They maintained that when their legal representative accepted the employer's offer via email "subject to deed," this created an enforceable contract.
The case centered on whether the parties intended to create legal relations during their negotiations and what effect the phrase "subject to deed" had in the context of their communications.
The dispute began with a mediation in April 2024. The mediation agreement contained a specific term requiring that any settlement be documented and signed before parties left the mediation session.
Following the unsuccessful mediation, the employer made an ASX announcement about the dispute without naming the workers.
The workers responded by publishing a media statement through their lawyers. Subsequently, on 3 May 2024, the employer terminated their employment, claiming they had repudiated their contracts by authorising the media statement.
The parties then engaged in intensive negotiations at the employer's law firm's offices during early May 2024, with detailed file notes recording the discussions.
On 6 May 2024 at 6:12 pm, the workers' lawyer sent an email stating: "We refer to our discussions and the last offer conveyed by you on behalf of your clients yesterday. We are instructed to accept your offer subject to Deed. Please provide us with a draft of the proposed Deed."
Two minutes later, text messages were exchanged where the workers' lawyer reiterated: "our clients have now accepted the offer subject to deed." The employer's lawyer responded: "Thank you for your message. We will work on the documents now and revert asap."
These communications became central to determining whether a binding agreement existed.
The employer maintained that the agreement remained conditional on executing formal documentation.
The court noted this was consistent with how the parties had approached settlement from the beginning, as evidenced by their mediation agreement's requirement for written terms.
The sophistication of all parties was significant to the court's analysis. As stated in the judgment: "[The employer] is a publicly listed company with a market capitalisation (as of the date of this judgment) of $3.38 billion. [The workers] are highly accomplished, experienced and sophisticated commercial solicitors."
The court ultimately determined no binding agreement existed. The judgment explained: "This is not a case at the margins. The contention of [the worker] that an oral contract came into being cannot be accepted."
The court found that while parties had reached broad consensus, the agreement remained "subject to the execution of an instrument the drafting of which would serve to iron out all necessary further details."
The court dismissed the workers' claim for specific performance, finding that though the parties had reached an in-principle agreement, they had not formed a binding contract.
The court also explained that the phrase "subject to deed" maintained its traditional legal meaning as an overriding condition that what was agreed would form the basis for a future contract rather than an immediately binding agreement.
