Mr Malcolm Newbury v Sun Microsystems

JurisdictionEngland & Wales
JudgeMr Justice Lewis
Judgment Date22 July 2013
Neutral Citation[2013] EWHC 2180 (QB)
Date22 July 2013
CourtQueen's Bench Division
Docket NumberCase No: TLQ/12/1293

[2013] EWHC 2180 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Lewis

Case No: TLQ/12/1293

Between:
Mr Malcolm Newbury
Claimant
and
Sun Microsystems
Defendant

Edward Knight (instructed by Karslakes) for the Claimant

David Reade QC (instructed by Paul Hastings) for the Defendant

Hearing dates: 15 th July 2013

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Lewis
1

This is an application for a declaration that a claim and counter-claim were compromised on the terms set out in correspondence dated 3 June 2013. In essence, the Claimant says that a binding agreement was reached when the Defendant offered to settle on certain terms and those terms were accepted by letter of 3 June 2013. The Defendant says that their letter made an offer in principle, that the parties still had to negotiate other terms and conditions and that, in any event, any settlement was to be recorded in a suitably worded agreement and, until such a written agreement was reached, there was no binding contract.

THE FACTS

2

By way of background, the Claimant had issued a claim for contractual commission in the sum of US $2,028,760 that he said he was entitled to in relation to the financial year which ended on 30 June 2009. The Defendant counterclaimed for recovery of an alleged overpayment. Proceedings were issued in June 2011 and the trial was set down for 8 days to commence on the 12 June 2013.

3

On 3 June 2013, solicitors for the Defendant wrote to the Claimant's solicitors. The opening paragraph stated that the solicitors had taken their client's instructions and the letter set out their client's final position. The letter then dealt with the evidence on two of the matters that were contested between the parties in the proceedings. The letter then said this:

" Terms of the Offer

To reach a compromise between the parties, our client has agreed to make a further offer of settlement to the Claimant. The offer reflects the strength of its evidence on the QBM but does not seek to place a discount on the Claimant's assertion of revenue of $173 million.

Our client is willing to settle the entire proceedings by paying the Claimant within 14 days of accepting this offer, the sum of £601,464.98 (the " Settlement Sum") inclusive of interest by way of damages, by means of an electronic transfer into his nominated bank account, in full and final settlement of the Claim and counter-claim plus the sum of £180,000 in relation to his legal costs such settlement to be recorded in a suitably worded agreement.

This offer is open for acceptance until 5pm this evening after which it will be automatically withdrawn without further notice to you."

4

The parties agreed to extend the time for acceptance to 5.30 p.m. At 5.21 p.m., solicitors for the Claimant e-mailed a letter to the Defendant's solicitors. The letter, marked without prejudice save as to costs, said this:

"We thank you for your letter dated 03 June 2013.

We are instructed that the Claimant accepts the terms of your client's offer, being payment of the Settlement Sum of £601,464.98 plus £180,000.00 in relation to his legal costs.

We will forward a draft agreement for your approval on Tuesday 04 June."

5

On 4 June 2013, according to the witness statement of Ms Horne, the solicitor for the Defendant, there was a telephone call between her and the solicitor for the Claimant. She said that she was pulling a settlement agreement together. The Claimant's solicitor said he was working on that with counsel. Ms Horne said that they would need to cover off the issue of Oracle. I was told that Oracle was the parent company or owner of the Defendant and that the reference was intended to ensure that the agreement recorded that full and final settlement of the claim precluded any prospect of pursuing the claim against the parent company. There is no reference in Ms Horne's witness statement to any discussion during that telephone call of other matters needing to be dealt with or agreed.

6

On 5 June 2013, the Claimant's sent a letter, again marked without prejudice save as to costs, which said this:

"Further to our exchange of correspondence on 03 June 2013, we attach for your approval draft Order in Tomlin form recording the terms agreed. Please confirm your approval of the Order by signing and returning the same, by email in the first instance. Alternatively please revert with your proposed alterations or amendments for agreement."

7

Attached to the letter was a draft Order recording that the proceedings in the claim were stayed save for the purpose of carrying the terms into effect and stating that the Defendant was to pay to the Claimant his costs in the agreed sum of £180,000. The schedule to the order first set out the sum, £601,464.98, to be paid to the Claimant, secondly it said that the Defendant would pay the sum of £180,000 in costs to the Claimant, thirdly it provided for transfer to be made of the sum £601.464.987 to the account of the Claimant by 5.30 p.m. on Monday 17 June 2103 and gave details of the account and fourthly it provided for payment of the £180,000 to be paid to the Claimant's solicitors and gave details of their account.

8

There was a further e-mail at 11.41 on 5 June 2013 where the Claimant's solicitors referred to the draft Tomlin order and indicating that they wished to tell the Listing Office that the case had been settled and seeking the Defendant's agreement to that course of action. The Defendant's solicitor replied saying she had had the order for one and a half hours and needed time to review it properly and indicating that she thought it premature to notify the Listing Office. At 3 p.m., the Defendant's solicitor sent an e-mail to the Defendant's solicitor which said this:

"Please see my preferred approach. I have discussed it with David Reade but I do need to take instructions this evening-particularly around payment timing. Can you possibly confirm this afternoon if the attached is acceptable or if you have any comments? Then I am hoping we can finalise and sign tomorrow morning."

9

Attached to that was a draft order with amendments which did not contain any substantive terms but referred to the claim being stayed on the terms set out in a waiver deed. Also attached was a document entitled draft waiver agreement. That sought to provide for payment to be made within 14 days of date of the agreement. It dealt with the position in relation to taxation and national insurance contributions. It included an obligation on the Claimant not to discuss or divulge the existence or the contents of the order, the agreement or negotiations to any one, subject to certain exceptions.

10

At 17.01, the solicitors for the Claimant replied, marking the reply as without prejudice, saying:

"Dear Suzanne,

The draft Tomlin Order records the terms of settlement as stated in your firm's letter dated 3 June 2013. With respect, the draft Consent Order and Deed of Waiver do not.

Our client would agree to a Consent Order directing payment of the Settlement Sum as well as the agreed sum for Costs. Otherwise, your client is requested to agree the draft Tomlin Order as drawn."

11

Ms Horne, the Defendant's solicitor replied at 17.10 on 5 June 2013 saying this:

"Dear David,

The offer made on 3 June states that the settlement was to be set out in a "suitably worded agreement". What I have sent across to you is such an agreement. We did not agree to an order where the schedule can be disclosed as a matter of public record or states that your client receives a contribution to his costs. The purpose of the structure is to keep the terms confidential. If your client has specific comments I am happy to consider them but otherwise these are the terms of the offer."

12

The Claimant contends that a binding contract was entered into when the Claimant accepted the Defendant's offer by the letter timed at 17.21 p.m. on 3 June 2013. Those documents contain an agreement which was intended to bind the parties. The agreement was to be recorded in a suitably worded agreement, that is, in an agreement which reflected the agreed terms. The execution of such an agreement, however, was not a condition of the agreement coming into effect.

13

The Defendant contends that a concluded agreement was not reached between the parties in the correspondence dated 3 June 2013. The Defendant says first, that their letter of 3 June 2013 was not an offer capable of acceptance, but was an offer seeking to resolve a dispute by indicating the figures they were prepared to agree. The letter was, however, agreement in principle only and depended on agreement on other matters. Alternatively, the Defendant contends that the offer was subject to execution of a suitably worded agreement and, until that agreement was reached, there was no binding agreement between the parties.

THE LAW

14

Subject to one point, the parties are agreed on the legal principles that govern the resolution of this dispute. These principles, derived from earlier authorities, are helpfully set out in the judgment of Males J. in Air Studios (Lyndhurst) Limited T/A Entertainment Group v Lombard North Central PLC [2012] EWHC 3162 (Q.B.) at paragraphs 5 to 12. They are as follows:

"5. In deciding whether the parties have reached agreement, the whole course of the parties' negotiations must be considered and an objective test must be applied: Chitty on Contracts, 31st edition (2012), Vol 1, paras 2–028 and 2–029. Once the parties have to all outward appearances agreed in the same terms on the same subject matter, usually by a process of offer and acceptance, a contract will have been formed. The subjective reservations of...

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5 cases
  • Mr Philip Seeney and Another v Gleeson Developments Ltd and Another
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    • Queen's Bench Division (Technology and Construction Court)
    • 16 Noviembre 2015
    ...for its execution, then the normal inference was that the parties were not bound unless and until the agreement was signed. (b) In Newbury v Sun Microsystems [2013] EWHC 2180 (QB), Lewis J was dealing with the settlement of litigation in which the offer, which was accepted, noted that the t......
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    ...intend to be bound invoke the objective test so as to bind the other party to the contract." 169 130. On the other hand, Lewis J in Newbury v Sun Microsystems [2013] EWHC 2180 (QB) at [28] held that the parties' subjective understanding is irrelevant: "The existence of a binding agreement n......
  • David Mark Kyte v The Commissioners for HM Revenue and Customs
    • United Kingdom
    • Chancery Division
    • 18 Mayo 2018
    ...in written communications, to have regard to what the parties said or did after the date of the acceptance that is relied upon. ( Newbury v Sun Microsystems [2013] EWHC 2180 QB per Lewis J at [27]). 16 A summary of the principles can be found in the judgment of Lord Clarke giving the judgme......
  • Fay Elizabeth Crabbe v Edward Lindsay Townsend
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    • Chancery Division
    • 7 Octubre 2016
    ...of deciding whether a contract was concluded on that date or not. This issue was considered by Lewis J in Newbury v Sun Microsystems [2013] EWHC 2180 (QB). The facts are not material. The statement of principle on the issue I am now considering was at [27] and was in these terms: "First, wh......
  • Request a trial to view additional results
7 firm's commentaries
  • Commercial Bulletin No. 100 - September 2013
    • United Kingdom
    • Mondaq United Kingdom
    • 1 Octubre 2013
    ...on the subject of subjective devaluation. Beware of not making an offer "subject to contract" Malcolm Newbury v Sun Microsystems [2013] EWHC 2180 (QB) Where a settlement offer was made and accepted subject to recording the terms in "a suitably worded agreement", a binding agreement was made......
  • English Contract Law: Your Word May Still be Your Bond
    • United Kingdom
    • JD Supra United Kingdom
    • 14 Marzo 2014
    ...to contract,’ a formal signature on a written contract was not required. Somewhat similarly, last year in Newbury v. Sun Microsystems [2013] EWHC 2180 (QB), an application was brought for a declaration that a claim and counter-claim were compromised on the terms set out in certain correspon......
  • Negotiating Contracts: Why 'Subject To Contract' Matters
    • United Kingdom
    • Mondaq United Kingdom
    • 30 Septiembre 2013
    ...being accepted or whether they are merely the first step in the negotiation process. The recent decision in Newbury v Sun Microsystems [2013] EWHC 2180 (Newbury case) not only ruled on the intention of the parties generally, but the specific wording that was used in correspondence when the ......
  • 'Subject To Contract' – The Importance Of Those Words In Negotiations
    • United Kingdom
    • Mondaq United Kingdom
    • 29 Noviembre 2013
    ...v Sun Microsystems [2013] EWHC 2180 (QB) The importance of ensuring the parties' intentions are clear during the contractual negotiation process has been reiterated in a recent decision by the High Sun made an offer to settle just before trial - by paying £601,464.98 within 14 days of accep......
  • Request a trial to view additional results
1 books & journal articles
  • The Certainty of Settlement
    • South Africa
    • Stellenbosch Law Review No. , May 2019
    • 27 Mayo 2019
    ...113 38. 114 38. 115 38.116 See the Engl ish High Court c ases AB v CD Ltd [2013] EWHC 1376 (TCC) and Newb ury v Sun Microsystems Ltd [2013] EWHC 2180 (QB) that de monstrated the imp ortance of clarity i n offers being made betwee n the partie s in order to prov ide the requi red cert ainty ......

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