Case: Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353
Outcome: followed
AIPA's case was that, by the time of the terms of settlement (dated 4 August 2005), or at the latest by the time of the Explanatory Note (dated 28 September 2005), there existed a binding agreement between AIPA and Qantas concerning non-pertaining provisions. The agreement was said to fall within the first class referred to in Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353 at 360, or into the "fourth class", said to be identified by McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628. 73 In Masters v Cameron at 360, the High Court said: Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. At 360-361, the High Court went on to point out that, in each of the first two cases, there is a binding contract, but not in the third. 75 There must be some doubt as to whether a case described in these terms falls within a fourth class, additional to those described in Masters v Cameron . Assuming the existence of a binding agreement, it is always open to the parties to that agreement to vary it by adding additional terms. Viewed in that light, the so-called fourth class appears not to differ from the first or second classes referred to in Masters v Cameron . Although the New South Wales Court of Appeal upheld McLelland J's judgment, there is no reference in the judgment of McHugh JA, with whom Kirby P and Glass JA agreed, to Masters v Cameron , or to a "fourth class". In G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 635-636, McHugh JA said: If the parties agreed on additional terms, they would be added to the formal contract. If they did not, the formal contract would give effect only to the agreed terms and conditions of the correspondence. The case, therefore, is one where the parties were bound by the informal agreement but expected to make a further contract which by consent might contain additional terms: Sinclair, Scott &amp; Co Ltd v Naughton. 76 In the present case, there is no indication that either AIPA or Qantas gave expression to the possibility that there would be any need for them to agree to extra terms. The question in the present case is whether the case falls within the first or third category in Masters v Cameron . The attempt to rely on a fourth class seems to have been prompted by the fact that, following the signing of the Explanatory Memorandum, AIPA and Qantas did negotiate upon and apparently agree to an additional term, relating to the sharing between them of any liability that might arise from the transfer of terms that were formally in EBA6 into a document other than EBA7. 77 The contention that the terms of settlement amounted to a final agreement between the parties is difficult to sustain. It was not until after the terms of settlement had been signed and the parties had engaged in the task of converting them into detailed documents that attention was given by either party to identifying the non-pertaining provisions that ought to be removed, to ensure the certification of EBA7. There had been a concern on the part of some people within AIPA that cll 45 and 46 of EBA6 and the other provisions relating to those clauses would probably fall into that category, but there is no evidence that any negotiation took place about the content of any alternative document until after the terms of settlement had been signed. 78 By 28 September 2005, when the Explanatory Memorandum was signed, the provisions that would be transferred into another document had been identified, and were listed in the Explanatory Memorandum itself. Indeed, cl 2.5 of that document uses the past perfect tense, so as to convey to the reader that the memorandum of understanding is already in existence. Little, if any, weight can be attached to this fact in determining whether there was a final agreement. Clause 2.5 is inconsistent with cl 2.4 of the Explanatory Memorandum, which records merely that the parties "have agreed to transfer" the non-pertaining provisions into "a" memorandum of understanding. The statement in cl 2.5 that, in relation to the additional provisions there listed, this had already been done, was incorrect as a matter of fact.