CROSER v FOCUS GENETICS LIMITED PARTNERSHIP (2548500) [2020] NZCA 367

CROSER v FOCUS GENETICS LIMITED PARTNERSHIP (2548500) [2020] NZCA 367 [26 August 2020]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA107/2020[2020] NZCA 367BETWEEN DAMIEN LEIGH CROSER and KIRSTENLOUISE CROSERAppellantsAND FOCUS GENETICS LIMITEDPARTNERSHIP (2548500)RespondentHearing: 20 May 2020Court: Brown, Simon France and Mallon JJCounsel: C M Stevens and T Mijatov for AppellantsD H McLellan QC and L C Sizer for RespondentJudgment: 26 August 2020 at 12.30 pmJUDGMENT OF THE COURTA The appeal is allowed.B The question of costs is reserved. Leave is granted for further submissionson costs, a timetable for which is set out at [103].____________________________________________________________________REASONS OF THE COURT(Given by Mallon J)Introduction[1] This appeal concerns whether the parties are bound by a settlement theyreached in correspondence where the agreed terms were "subject to documenting thevarious agreed terms". The settlement was reached in the lead up to a trial on a claimby the appellants (the Crosers) and a counterclaim by the respondent (Focus), arisingout of a contractual arrangement over which they had fallen out. The trial was vacatedwhen the settlement was reached.[2] The Crosers brought a claim in the High Court seeking to enforce thesettlement. Focus applied for summary judgment against the Crosers, contending itwas not seriously arguable that the parties were bound by the terms recorded in thecorrespondence. Justice Doogue in the High Court granted summary judgment,finding that the phrase "subject to documenting" indicated that the parties did notintend to be bound unless and until they executed a formal deed.1[3] The Crosers appeal the summary judgment. They contend the Judge failed toapply an earlier High Court finding in an interim injunction application that they hadan arguable case,2 reversed the onus of proof, overlooked matters which precludedsummary judgment, and erred in her objective assessment of the effect of thecorrespondence.[4] We consider the appeal should be allowed. We set out our reasons below.Background[5] The Crosers own and operate a sheep farm called Kiranda in South Australia.The farm has some 3,000 breeding ewes.[6] Focus is a limited partnership based in Napier, New Zealand, specialising inlivestock genetics. It commercialises its genetics by entering into arrangements tosupply genetic material (through sire livestock, semen or embryos) to breeders oflivestock and by participating in the sale of the progeny to third parties.[7] Focus supplies the genetic material from its New Zealand nucleus flocks(NZ Flocks). The NZ Flocks are comprised of two composite breeds of sheep —Highlander and FocusPrime — developed by interbreeding with other sheep andcareful genetic selection over many years. Sheep that are the product of Focus'1 Croser v Focus Genetics Ltd Partnership (2548500) [2020] NZHC 320 [Summary judgment].2 Croser v Focus Genetics Ltd Partnership (2548500) [2019] NZHC 2995 [Injunction judgment].breeding programme can be either elite sheep or multiplier (flock) sheep (commercialbreeding stock).[8] Focus and the Crosers entered into a "multiplier agreement" on 18 December2013. Their initial plan had been for Focus to provide rams which would be put overthe Crosers' commercial flock to produce progeny in accordance with Focus' breedingprogramme. Focus would then select the ram progeny for sale and the Crosers wouldhave a share in the proceeds.3[9] However, Focus could not supply sire rams because an outbreak of Johne'sdisease in Australia prevented the importation of sheep. Focus instead suppliedembryos from the NZ Flocks. The embryos were transferred to Australia, where theywere implanted into ewes in the Crosers' flock. This meant the progeny contained100 per cent genetic material provided by Focus. Later in the relationship Focus alsosupplied semen obtained from the NZ Flocks.4[10] Under the multiplier agreement, Focus owned and retained the intellectualproperty in the genetic material techniques, records and manuals involved in breeding.The Crosers collected data about the lambs born from these embryos and forwardedthis data to Focus. Initially, Focus submitted the data to a database in New Zealand— the Sheep Improvement Ltd (SIL) database. SIL calculates estimated breedingvalues (eBVs) which are used for breeding selection and selling. Because theNZ Flocks are fully recorded on this database, the eBVs for the Kiranda progenyincorporated relevant genetic information from the NZ Flocks. The information onSIL is not publicly available.[11] The Crosers found the collection of data labour-intensive and expensive andnot what they had envisaged. There were discussions in 2016 to 2017 between theparties to enter into a new agreement. From the Crosers' perspective, but disputed by3 The Crosers were required to destroy any ram progeny not selected. The Crosers owned andretained the female breeding stock but Focus had rights of purchase when the agreement ended orif the Crosers wished to sell them. The Crosers were required to ensure that any multiplier femalessold to anyone other than Focus were not used for commercial breeding.4 Under the multiplier agreement, Focus had the right to select sire rams, semen and embryos forsupply to the Crosers.Focus, this was to regularise what in fact had been the arrangements in practicewhereby they were breeders of elite progeny. A new agreement was never formalised.[12] In 2017 Focus put in place arrangements for the data of the progeny from therelationship (the Kiranda Flock) to be recorded on an Australian database calledLambplan which was managed by Sheep Genetics Australia (SGA). This databasealso calculates eBVs in the form of flock breeding values (FBVs) or Australianbreeding values (ASBVs). Whether sheep have FBVs or ASBVs depends on whetherthere is sufficient genetic linkage on Lambplan to other flocks to provide the higheraccuracy required for ASBVs. Australian breeders and purchasers rely on the FBVsor ASBVs when making breeding or purchasing decisions.[13] Owners of the data supplied to Lambplan can control the extent to which theirdata is publicly available. There is a dispute between the parties about the extent towhich the information supplied by Focus was accessible to the Crosers on Lambplan,whether Focus had the right to control what the Crosers could access on Lambplan,and what information the Crosers needed access to if the Crosers were to carry onbusiness as elite sheep breeders once the relationship came to an end.[14] It is not in dispute that the relationship between the parties soured. On 19 July2018 Focus gave notice of termination of the multiplier agreement. Pursuant to thatnotice, the agreement terminated on the earlier of the date rams born in 2018 had beensold or 31 December 2019.[15] In March 2019 the Crosers brought a High Court proceeding against Focus incontract, tort and under the Fair Trading Act 1986 (the underlying proceeding).The claim alleged the multiplier agreement had been replaced with an agreement inwhich the Crosers became elite sheep breeders with the encouragement and supportof Focus. It alleged various actions by Focus had caused them loss for which theyclaimed substantial damages.5 They also alleged Focus had wrongly terminated theiraccess to data on Lambplan and they sought an injunction requiring that access beprovided.5 Damages of at least AUD 1,724,479 were claimed as well as a further sum for general damages.[16] Focus counterclaimed for unpaid invoices.6 It also alleged the Crosers hadbreached duties owed to Focus which had caused them loss.7 It alleged the multiplieragreement continued to govern their relationship throughout its term. It sought toenforce the restraint of trade to which the Crosers were subject under that agreementand it sought orders requiring the Crosers to withdraw trade mark applications(for trade marks associated with Focus' trade marks) and not to use those trade marks.[17] Close to trial, the parties engaged in settlement negotiations. In an exchangeof correspondence, they reached agreement on a sum of money to be paid and adescription of the data to which the Crosers would have access, with thecorrespondence recording it was "subject to documenting the various agreed terms".They also agreed the Crosers would withdraw trade mark applications they had made.The Crosers' lawyers sent an email to the court, copied to Focus' lawyers, advisingthat the trial fixture was to be vacated.[18] When the parties came to document the agreement reached, Focus sought toadd a qualification to the data definition. The Crosers rejected this qualification.Focus claimed it was not bound by the agreement reached in the correspondencebecause "subject to documenting" meant the parties did not intend to be bound unlessand until a formal contract was negotiated.[19] The Crosers brought a fresh proceeding to require Focus to perform theagreement they say was reached in the exchange of correspondence (the enforcementproceeding). They also sought an interim injunction to obtain access to the data.[20] On 18 November 2019 Churchman J in the High Court granted an interiminjunction in favour of the Crosers, requiring Focus to (amongst other things) causeSGA to make publicly available certain data relating to rams to be sold by the Crosers.8This Court has since partially stayed the judgment and granted leave to appeal againstpart of the judgment.96 The claim was for invoices totalling AUD 56,078.97.7 Damages of approximately $570,000 were claimed as well as a further sum for general damages.8 Injunction judgment, above n 2.9 Focus Genetics Ltd Partnership (2548500) v Croser [2019] NZCA 639.[21] Focus applied to strike out the Crosers' proceeding and sought summaryjudgment in its favour. On 28 February 2020 Doogue J in the High Court grantedsummary judgment in favour of Focus, finding that the parties did not intend to bebound unless and until they executed a formal deed finalising all outstanding mattersbetween them.10 The Crosers appeal the judgment of Doogue J.The data and other context[22] Before turning to the negotiated terms recorded in the correspondence it ishelpful to have an understanding of the information about the Kiranda Flock that wason Lambplan and what access the Crosers had to it. Detailed affidavit evidence aboutthis was filed in the High Court by Marius Van Niekerk, Focus' genetic databaseadministrator and the person who was responsible for uploading all the data to SIL andLambplan.[23] Mr Van Niekerk explained that the data or information on Lambplancomprised:(a) Breeding and index values: these are the FBVs or ASBVs that arecalculated for a range of traits including birth weight, weaning weight,fat depth, eye muscle depth, wool weight, fibre diameter, reproductiveperformance and worm egg count. Traits can be combined to give asingle value.(b) Raw data: this is measurements taken on the farm (for example,weights at various ages, body condition scores and fleece weights),test results and other information (for example, gender, birth date andbreed).(c) Pedigree information: this is the sheep's forebearers recorded as anidentification number. This information is displayed as a family tree.If the forebearers of a sheep are recorded in Lambplan with their ownFBVs or ASBVs, the identification number is displayed on the family10 Summary judgment, above n 1.tree as a link that users can click on. That takes the user to that sheep'sFBVs or ASBVs and family tree. If the forebearer of a sheep is notseparately registered and recorded on Lambplan, then the identificationnumber is recorded but there is no link to the forebearer.(d) Linkage: this describes the link between related sheep, when the rawdata of one sheep is relevant to the calculation of eBVs for the othersheep. Linkage improves the accuracy of the eBVs and is necessary forthe generation of ASBVs.[24] Mr Van Niekerk explained that Focus registered the Kiranda Flocks onLambplan on 20 June 2016 for the Highland and FocusPrime breeds. This involvedturning the raw data as reported by the Crosers into data capable of input intoLambplan and uploading it. Focus also uploaded the pedigree information in the formof the identification number for the sheep's parents. Where the parent was from theNZ Flocks, there was no clickable link on the identification number becauseMr Van Niekerk did not transfer the dataset to Lambplan to enable this to occur untilSeptember 2018 (that is, after Focus terminated its relationship with the Crosers).Up until 2019, the eBVs for the Kiranda Flock were FBVs only.[25] Mr Van Niekerk also explained that Lambplan has three default settings:(a) Full public access: all sheep in a flock are publicly listed, searchableand viewable.(b) Current drop only: the eBVs for the current drop of lambs on the farmand for their parents (one generation).(c) Private: access is for the breeder only by log in.[26] The Crosers say there was full public access on Lambplan to the Kiranda Flockuntil Focus changed it to private access. Their evidence about this is somewhat limitedin detail although affidavit evidence in support was filed by Gerald Martin, a retiredSouth Australian sheep producer and consultant with significant involvement inLambplan over the years. He said that to be on Lambplan the sheep must havepedigree data identified at least to the extent of their parents, and this can be identifiedfor as many generations as there is data.[27] From Mr Van Niekerk's evidence, it seems that there may have been a periodwhere there was public access to the Kiranda Flock information on Lambplan and thiswas changed to "current drop" in July 2017. Regardless, according toMr Van Niekerk's evidence, at no time before September 2018 was it possible to clickon the parentage identification number where the parent was from the NZ Flocks toobtain the eBV for the parent, and nor was the raw data for the NZ Flocks availableon which the eBVs were calculated, because the data from the NZ Flocks had not yetbeen transferred. Between September and November 2018, the eBVs for the currentdrop of the Kiranda sheep was publicly accessible and those values were calculatedwith reference to linkages to the New Zealand dataset. In November 2018 it waschanged to "private" so that only Focus could access the information.[28] The evidence in the High Court discussed whether the Crosers needed accessto the eBVs of the forebears of the Kiranda progeny. Focus' evidence was that withthe raw data on the Kiranda sheep and the identification numbers for their parentage,the Crosers could build up their own dataset going forward. Its evidence also madethe point that linkage information improved the accuracy of the eBVs but did notnecessarily result in higher values. Mr Martin's evidence, in contrast, was that withoutthe linkage information, the Crosers' elite sheep operation would be a fraction of itscurrent size.[29] The evidence before the Court also discussed the motivations for why Focusdid not provide (Focus' evidence) or stopped providing (the Crosers' evidence) accessto the pedigree information. Focus' view was that it was intellectual property it haddeveloped over many years and its business depended on being able to control itscommercialisation. The Crosers saw it as unfairly enabling Focus to advantage theother Australian breeders to which Focus supplied rams, embryos or semen over theCrosers when they had become elite breeders.The negotiation[30] A two-week trial on the underlying proceeding was scheduled to commence on14 October 2019. In August and early September 2019 a settlement offer and acounter-offer were made. In late September 2019 the Crosers and their lawyer,Ms Anagnostou, met with Mr McMechan (general counsel for Landcorp, the ownerof Focus) and Mr Creswell (general manager of Focus) to discuss settlement.No settlement was reached but the parties continued their discussions incorrespondence.[31] On 30 September 2019 Ms Anagnostou wrote to Buddle Findlay, the solicitorsrepresenting Focus in the underlying proceeding. The letter proposed an agreementthat:(a) The Crosers owned all the sheep at Kiranda, including the progeny ofthe Kiranda sheep, and Focus had no options to purchase them.(b) The Crosers would not use, and would keep confidential, Focus'"breeding programmes, genetic material techniques, records, manuals,procedures, techniques, methods, brands, tradenames, trade marks,logos and devices".(c) Focus would provide "all of the data in relation to all of their sheep"(meaning "the sheep born between 2014 and 2018 that were not borninto the Crosers' commercial operation, including the sheep which theCrosers no longer own"). This applied to the "data collected on thesheep, including the data in relation to third party tests of suchcollection".(d) The Crosers owned this data and Focus would inform Lambplan thatthe Crosers owned all data in relation to the "Kiranda Highlander" and"Kiranda Focus Prime" sheep.(e) Focus waived any right to pursue the Crosers for the outstandinginvoices, which totalled AUD 56,078.97.(f) Neither party would be subject to a restraint of trade.(g) Focus waived its rights to a percentage of the profits from the Octobersales of Kiranda sheep and had no claim on profits from future sales.(h) Focus would pay the Crosers AUD 500,000.(i) The usual terms of confidentiality applied and there was no admissionof liability. Each party released the other from existing or future claimsrelating to the subject matter of the underlying proceeding.(j) Within two days of Focus providing the data to the Crosers, advisingLambplan of the Crosers' ownership and paying the compensation,"provided that a Deed of Settlement and Release" had been executed inaccordance with the above terms, the parties would file a notice ofdiscontinuance in the Court with no issue as to costs.[32] Mr McMechan made a counter-offer of $405,000 for compensation the sameday, stating "[o]ther terms would be as per your letter and our discussions, subject tome clarifying and us agreeing on the appropriate definition of 'data'". Ms Anagnostoureplied the same day, saying "[i]f we agree on the cash amount, we can work out themost elegant way of framing the definition of data – I think that we are both on thesame page there". She said that $500,000 was the appellants' final offer, otherwisethey would go to court.[33] On 1 October 2019 there was a further exchange of emails. Mr McMechansaid Focus might be able to offer more money if the appellants could accept less.Ms Anagnostou replied that $500,000 was the final offer.[34] Mr McMechan then replied, saying he had "had a chance to discuss internallyand [was] authorised to make the following offer". This was a payment of $437,500and the following in relation to data:Focus agrees to provide all data in relation to any sheep (born between2014-18 inclusive) belonging to the Crosers that is held by Focus Genetics LPand its subsidiaries, including pedigree information and all raw data(measurements, test results etc) held in respect of those sheep. Focus willwarrant that the information provided will be all information held by Focus inrelation to the Crosers' sheep but will provide no other warranty in relation tothe data.Focus agrees to transfer any ownership interest in that data to the Crosers.Focus will procure the transfer of all unique sheep identification numbersrelating to the Crosers' sheep in Lambplan. Focus will not provide access toany data/records within Lambplan.[35] Mr McMechan referred to a discussion with Ms Anagnostou about why the lastpart of this data offer was different to the Crosers' proposal. He said this was because: transferring access from Focus to the Crosers within Lambplan will providethe Crosers with access to a wider set of data than that agreed above. Transferof the unique identifiers is necessary so that the Crosers can continue to useLambplan for those particular sheep and it would be up to the Crosers todevelop their own records within Lambplan with their data.[36] Mr McMechan concluded by saying:Other terms are as set out in correspondence between us.Please let us know if this offer is acceptable to the Crosers and we can thenmove to document the terms in a settlement agreement.[37] The email correspondence indicates there was then a further telephonediscussion between Mr McMechan and Ms Anagnostou. Mr McMechan then sent anemail referring to this discussion and confirming that Focus was prepared to round upits payment to $450,000 in the interests of reaching a full and final settlement.He asked that Ms Anagnostou "confirm by return that we have agreement, subject todocumenting the various agreed terms".[38] Ms Anagnostou replied the same day saying:We accept your offer to settle on the terms of the below emails read togetherwith our letter to you of yesterday's date (for the avoidance of doubt, usingyour definition of data).On the basis of this agreement, we'll draft a deed of settlement and release,and [we] will notify the Court in the morning that the fixture can be vacated.Thank you for working with us towards settlement over the past few days.[39] The next morning, 2 October 2019, Mr McMechan replied:Great to have agreement, thank you ...One point to clarify/add please – as we've discussed, just ensuring that theFocus TM point (not covered in your letter but agreed in earlier exchanges) isalso covered off in the settlement deed please.We look forward to receiving the draft deed of settlement.[40] Ms Anagnostou replied that "[w]e are fine to give up the trademarks. It wasimplied I think in our 30/9 letter but granted not explicit". She said she would have adraft deed ready for the next day. Mr McMechan's response was that this was"[a]ll good, thank you" and asked her to send the draft deed to Buddle Findlay.[41] In the morning of 2 October 2019, counsel for the Crosers informed the Courtthat the matter "was settled last night" and the fixture could accordingly be vacated.Counsel's email also advised that a notice of discontinuance would be filed indue course. This email was copied to Buddle Findlay.[42] On 4 October 2019 Ms Anagnostou sent a draft deed of settlement toBuddle Findlay. The draft provided:(a) The deed was in full and final settlement.(b) The Crosers own all the Kiranda sheep (defined as sheep born on theproperty of Kiranda) and Focus had no options or other rights in respectof them or any future progeny of the Kiranda sheep.(c) The Crosers would not use, and would keep confidential,Focus' breeding programmes, genetic material techniques, records,trade marks among other information, but this did not prevent theCrosers from breeding, marketing and selling Kiranda sheep.(d) The Crosers were to withdraw their trade marks for"Kiranda Highlander" and "Kiranda Focus Prime" and to directLambplan to change these names to a name that did not breach itsundertaking in (c).(e) On the transfer and ownership of data, Focus agreed:(a) No later than 10 October 2019, to provide [the Crosers] all datain relation to all Kiranda Sheep (and therefore including any andall Kiranda Sheep born after 2014) that is held by [Focus], itssubsidiaries and/or any of their contractors, including pedigreeinformation and all raw data (including but not limited tomeasurements and test results including TSU sample results)("the Data"). [Focus] will warrant that the information providedwill be all information held by [it] or its subsidiaries in relation tothe Kiranda Sheep but provides no other warranty in relation tothe Data;(b) No later than 10 October 2019, to procure the transfer to[the Crosers] of all unique sheep identification numbers relatingto all the Kiranda Sheep which have such Lambplan unique sheepidentification numbers;(c) That it transfer to [the Crosers] any interest it may have in theData; and(d) No later than 10 October 2019, to procure the transfer of allunique sheep identification numbers relating to theKiranda Sheep in Lambplan.(f) Focus waived its right to invoiced sums totalling $56,078.97 and to itspercentage share of the sale receipts from the October 2019 sales ofKiranda Stud Rams and agreed it had no claim on future sales.(g) Neither party was subject to a restraint of trade.(h) Focus was to pay $450,000 to the Crosers by 10 October [2019] withoutan admission of liability.(i) Within two days of completion of (d), (e) and (h), a notice ofdiscontinuance with no issue as to costs would be filed.[43] The draft also contained standard clauses, including release, governing law andentire agreement clauses.[44] On 8 October 2019 Mr McMechan sent back an edited version of the draft deedand noted that there was "an outstanding point under the data clause that I need tocome back to you on". Mr McMechan explained that he was waiting to hear backfrom Focus on this point and he would revert once he had done so. The edits weremainly in the nature of tidying up some of the drafting. The edit to the data definitionincluded the words "[t]o avoid doubt, Data does not include [ ]" and Mr McMechannoted that Focus "would like to be clear about what is and is not in scope. Proposedwording TBC".[45] On 9 October 2019 Ms Anagnostou replied with a further version of the deed,largely adopting Mr McMechan's drafting changes and adding a minor change.Further she noted in her covering email that "[a]s we've not heard from you on thedata we've removed your change, but if you propose to clarify what 'all the data'means, we'll consider that".[46] Mr McMechan sent back an edited version of the deed. It changed the date bywhich the appellants needed to direct Lambplan to change the name of their sheep toavoid using the respondent's intellectual property. More significantly, it added to thedata clause, for Ms Anagnostou's consideration, "[t]o avoid doubt Data does notinclude pedigree or parentage information relating to any New Zealand sheep used inthe breeding programme under the Sheep Agreements".[47] On 11 October 2019 Ms Anagnostou replied by email, forwarding the "emailcorrespondence articulating the terms of the settlement, which terms include that[Focus] is to provide our clients with all data, including pedigree information".She said:On this basis, we can't accept your carve out at clause 2.4(a) of the draftsettlement deed, which is contrary to what was agreed. Our next draft of the settlement agreement will reflect what was agreed. [48] Later on in the day, Ms Anagnostou forwarded the draft with minor changesand removing "the carve out you inserted on the data so that the definition of Data isconsistent with what was agreed via email". Mr McMechan replied, disagreeing thatthe qualification was inconsistent with what had been discussed or agreed.He explained:As per our correspondence on settlement our agreement is subject todocumenting the various terms. What we are trying to do is clarify what is inand out of scope to avoid a later dispute about what constitutes "data". you've latched on to the wording "all data including pedigreeinformation" without taking into account the prior words or the followingparagraphs which provides context as to what that means. We are offering toprovide all data in relation to the Crosers sheep (being those born on Kiranda2014-2018). We are not providing NZ pedigree or parentage data. As notedin the email, the very reason we do not agree to provide the Crosers withaccess to Lambplan is because that would provide them with access to a"wider set of data than that agreed above". As has been the case from day 1of this dispute, Focus is not prepared to hand over all data (its core IP).We discussed – and I thought agreed – this when we met in Adelaide.[49] From that point, negotiations broke down, with the parties disagreeing onwhether an agreement had been reached earlier. The Crosers commenced theproceeding that has led to this appeal.The lawContract formation[50] Electricity Corporation of New Zealand Ltd v Fletcher Challenge Energy Ltdidentified the prerequisites to formation of a contract as:11(a) an intention to be immediately bound at the point when the bargain issaid to have been agreed; and(b) an agreement, express or found by implication, or the means ofachieving an agreement, on every term which was legally essential tothe formation of the agreement or which was regarded by the parties asessential to their agreement.[51] Whether the parties intended to enter into a contract and had succeeded indoing so are to be determined objectively.1211 Electricity Corporation of New Zealand Ltd v Fletcher Challenge Energy Ltd [2002] 2 NZLR 433(CA) at [53].12 At [54].[52] Electricity Corporation of New Zealand Ltd v Fletcher Challenge Energy Ltdalso discussed the evidence that was relevant when considering whether a contract hasbeen formed. In contrast with when the court is interpreting a formed contract, whendeciding whether a contract has been formed the matrix of facts includes thestatements the parties made in their negotiations and the drafts of the intendedcontractual document.13 It is also permissible to consider that "one party told the otherthat the otherwise apparently binding contract was not in fact to be binding" and "tolook at subsequent conduct of the parties towards one another, including what theyhave said to each other after the date of the alleged contract".14 The Court expressedreservations about whether direct expressions of subjective intent were relevant,but did not reach a firm view about that.15[53] Subsequently, in Tower Insurance Ltd v Nicon Ltd, this Court said:16[33] It is settled law that the determination of whether parties haveintended to enter into a contract requires an objective assessment. It is not aquestion of deciding the credibility of their competing claims as to their actualintentions. It is also settled law that in undertaking that objective assessment,the Court may have regard to the context or purpose of the document, itswording and the subsequent conduct of the parties as well as what they saidboth before and after the document was signed.(Footnotes omitted.)The context and type of transaction[54] The context and type of the transaction can be important elements of the factualmatrix in determining whether an agreement was intended to be binding.17 As thisCourt discussed in Smada Group Ltd v Miro Farms Ltd, there are a series of cases inthis Court holding that "the usual inference in the case of the sale and purchase of landis that the parties intend to be bound only by a formal document signed by bothparties".18 This inference may arise expressly (by the use of a phrase such as "subjectto contract") or impliedly. This inference has also been applied when parties are13 At [54]–[55].14 At [55]–[56].15 At [56].16 Tower Insurance Ltd v Nicon Ltd [2019] NZCA 332.17 See Jeremy Finn, Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law ofContract in New Zealand (6th ed, LexisNexis, Wellington, 2018) [Burrows] at 278–280.18 Smada Group Ltd v Miro Farms Ltd [2007] NZCA 568 at [15]–[27].negotiating a complex business transaction involving substantial sums that wouldnormally be embodied in a formal contract.19[55] As it was put in Smada Group Ltd v Miro Farms Ltd:[27] In order for the inference to be engaged, there needs to be someevidence that the parties were contemplating being bound by the ordinary andcustomary method of obtaining agreement – which is the signing of adocument. Both the words used in the agreement and the factual matrix arerelevant in making this determination.[56] Even when this inference arises, other evidence may show that there was adifferent intention. Burrows summarises this point:20As we may expect, there will be cases where the courts will not draw theinference that the parties intended to so delay their contractual liabilities.This may be because the way in which the agreement was concluded indicatesthat the agreement was intended and expected to have effect immediately, orbecause the form of words actually used indicates that some contractual effectwas to be given to the preliminary agreement, or both.(Footnote omitted.)[57] For example, it may be that, although the parties initially intended to be boundonly once a formal contract was executed, matters changed during the negotiations.As it was put by Somervell LJ:21If in a complicated commercial transaction of this kind parties do finallybecome ad idem, their intentions on this point might well take a new turn.One can imagine, for example, a case in which parties had contemplatedsignature of a document up to the time when they were ad idem, but, when allpoints were finally agreed, an exchange of telegrams might make it clear thatthey were at that stage agreeing to be bound in advance of signature of theformal document. 19 Burrows, above n 17, at 279, citing Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd [1981]2 NZLR 385 (CA), which involved negotiations over an agreement for manufacturing anddistribution of supplies of emulsion-producing guns where the negotiations ended with anapproval of a draft agreement conditional on some additional matters and a request for "the finaldraft for execution".20 Burrows, above n 17, at 279.21 Sociedade Portuguesa de Navios Tanques Ltda v Hvalfangerselskapet Polaris A/S [1952]1 Lloyd's Rep 407 (CA) at 417. Cited with approval in Concorde Enterprises Ltd vAnthony Motors (Hutt) Ltd, above n 19, at 389.[58] Further, after a consensus intended to be binding is reached, adding the words"subject to contract" does not alter the fact that a contract has already been formed.As it is put in Burrows:22If an informal or preliminary agreement was intended to be binding from thetime it was made, it will not be rendered ineffective because one party's legaladvisers propose the execution of a more formal document to remove legalimpediments left unaddressed in the informal agreement.(Footnote omitted.)[59] In the Court below, the parties referred to, and the Court relied on, a decisionof the High Court of Australia from the 1950s, Masters v Cameron, which discussedhow "subject to contract" cases may belong to one of three classes:23(a) The parties have reached finality on the terms of their bargain andintend to be immediately bound to the performance of those terms, butat the same time propose to have the terms restated in a form which willbe fuller or more precise but not different in effect.(b) The parties have agreed upon the terms of their bargain and intend nodeparture from or addition to that which their agreed terms express orimply, but have made performance of one or more of the termsconditional upon the execution of a formal document.(c) The intention of the parties is not to make a concluded bargain at all,unless and until they execute a formal contract.[60] The High Court of Australia discussed that, in the third of these, the partiesmay have made their negotiated agreement subject to contract either because they havedealt only with the major matters and contemplate that others will or may be regulatedby provisions to be introduced into the formal document, or simply because they wishto reserve to themselves a right to withdraw at any time until the formal document is22 Burrows, above n 17, at 280.23 Masters v Cameron (1954) 91 CLR 353 at 360. These categories have been considered helpful inRPNZ Ltd v Real Estate Institute of New Zealand Inc HC Auckland CIV-2003-404-527,15 September 2005 at [29]; and Northern Dairylands Ltd v Maxted HC WhangareiCIV-2004-488-402, 20 December 2007 at [62].signed.24 If that is the true construction of the evidence, then the parties are not bound.If that is the position, then a party is free to retire from the contract if "on looking atthe formal contract, he finds that though it may represent what he said, it does notrepresent what he meant to say".25[61] The case before the Court was an example of this third category. It involved aland transaction expressed to be "subject to the preparation of a formal contract of salewhich shall be acceptable to my solicitors on the above terms and conditions".26The Court considered the natural meaning of "subject to contract" in this contextprima facie meant that what had been agreed did not constitute a contract, but was theintended basis for a future contract.27 This decision aligns with the approach that hasbeen taken in New Zealand to negotiations over the purchase of land.[62] Focus' submissions also referred to the decision of this Court in Dryden vHemingway.28 In that case, there were negotiations between Ms Dryden and herformer employer to buy the employer's shares in a company in financial difficulty.As the negotiations progressed there were phrases such as "details which we can out","arranging contract with lawyers" and "subject to formal documentation". This Courtconsidered that the parties indicated by these phrases that they did not intend to bebound up to that point until formal documents were executed. The final version of anagreement being negotiated was never signed and there was a conflict in the evidenceabout why that was. The onus was on the appellant to show some later change ofintention than that indicated by the negotiations and she had not done so.29The High Court decision[63] The statement of claim alleged a settlement agreement was reached betweenthe parties on 1 October 2019.30 It alleged the common intention of the parties was24 At 361.25 At 362, quoting Rossiter v Miller (1878) 3 App Cas 1124 at 1152.26 At 359.27 At 362–363.28 Dryden v Hemingway CA70/95, 15 November 1995.29 At 6–7.30 The pleaded particulars of that agreement were the settlement offer from Mr McMechan to theCrosers' lawyers by emails dated 1 October 2019 at 9.15 pm and 6.26 pm (the emails discussed at[34]–[37]), and acceptance of the offer by the Crosers' lawyers in an email dated 1 October 2019at 10.21 pm (the email at [38] above).that the agreement was binding on them immediately and its terms would be recordedin a formal document afterward. It alleged the agreement was reconfirmed incorrespondence between the parties on 2 and 3 October 2019. It alleged that Focusrepudiated the agreement by failing to provide the data and execute the deed. It soughtan order requiring Focus to perform the agreement.[64] In the High Court Focus contended that it was entitled to an order striking outthe claim or for summary judgment because:(a) objectively assessed, there was no intention to be bound unless a formalcontract was executed; and(b) the terms of its offer were insufficiently certain to constitute anagreement because there was uncertainty as to the meaning of "data",which was an essential issue for both parties, and there was alsouncertainty as to the "other terms" in the correspondence that were tobe included.[65] The Crosers contended Churchman J's earlier finding on the injunctionapplication, that there was an arguable case of a binding agreement, was fatal to Focus'applications. They also contended that summary determination was not appropriatebecause the pleading disclosed a tenable case for breach of contract and because therewere factual disputes on important questions. The factual disputes were said to includethe meaning of Mr McMechan's "[g]reat to have agreement" email and whatconstituted "all data". The Crosers submitted Mr McMechan should becross-examined on his later attempt to recast what these meant.[66] The Judge rejected the submission that Churchman J's earlier finding wasbinding. She considered the decision was not final because it was always open forFocus "to argue later that there was no such finding available to the Court on closerexamination".3131 Summary judgment, above n 1, at [43].[67] The Judge rejected the submission that there was conflicting evidence thatmade summary determination inappropriate. She noted that the Crosers asserted therewas a binding agreement on the face of the written correspondence.32 She said thismust be determined on an objective assessment of the correspondence and their expost facto assertions as to what their correspondence or conduct was intended to meanwere not relevant.33 This meant it was not necessary for there to be a credibilityfinding on Mr McMechan's "[g]reat to have agreement" email (as the Crosers hadsubmitted) and what was meant by "all the data" was able to be determined summarilyon the basis of the correspondence.34[68] The Judge then considered whether, objectively, the parties intended to bebound at the conclusion of their exchange of correspondence. She referred to bothElectricity Corporation of New Zealand Ltd v Fletcher Challenge Energy Ltd andMasters v Cameron.[69] The Judge reasoned that the correspondence did not clearly set out all the termsof the offer to settle:35(a) The email from Ms Anagnostou of 30 September 2019 was evidence ofthe parties still needing to confirm the definition of data. This reflectedthat "the relevant terms would be fully negotiated and set out in aformal agreement at a later date".(b) Mr McMechan's email of 1 October 2019 explained that Focus wouldnot simply provide the Crosers with access to the existing Lambplandata because this would provide them with "access to a wider set ofdata than that agreed above". The email did not explain what the widerset of data was. "The uncertainty" in this email on an important issueshowed it was not objectively intended to be "a carefully drafted termwith immediate binding effect" and reinforced that it was to be more32 At [45].33 At [46], citing Electricity Corporation of New Zealand Ltd v Fletcher Challenge Energy Ltd,above n 11, at [31].34 At [47]–[49].35 At [70]–[75].fully articulated in a formal agreement. The Crosers "provide[d] noexplanation" as to what the wider set of data was to which they werebeing denied access.(c) The exchange of correspondence was not comprehensive.For example, Mr McMechan asked Ms Anagnostou to clarify that thetrade mark issue would be covered off in the settlement agreement.Further, Mr McMechan's offer had been accepted on the basis of his"uncertain reference to terms as set out in earlier correspondence".[70] The Judge considered the fact that the settlement was of complex intellectualproperty litigation, with significant issues about the definition and ownership of dataand third-party interests, crucial elements only partially discussed and uncertainty asto the terms agreed to, indicated that the parties did not intend to be legally bound.36She considered the trial was vacated because both parties expected matters would beconcluded satisfactorily in an agreement.37 The Judge made an order dismissing theCrosers' claim.38AnalysisEarlier High Court finding[71] In his decision on the injunction application, Churchman J said, "I find that the[Crosers] have an arguable case that they reached a binding settlement agreement with[Focus]".39 In the summary judgment decision, Doogue J distinguished that findingbecause it was made "in the context of applying the balance of convenience test" andwas "far different to the test to be applied in the summary judgment context".40[72] The Crosers take issue with the formulation of words the Judge used todistinguish Churchman J's finding. As we read those words in their context, weconsider the Judge meant that an arguable case for the purposes of then deciding where36 At [76].37 At [78].38 At [81]. Although she did not say so, it is implicit in her approach that she granted Focus' summaryjudgment application. She did not make an order striking out the claim.39 Injunction judgment, above n 2, at [35].40 Summary judgment, above n 1, at [42].the balance of convenience lay was different to deciding whether there was an arguablecase in the context of a summary judgment application. We agree with the Judgeabout this.[73] The more important point is that the Judge was correct to reject the Crosers'submission that this finding created an issue estoppel preventing Focus fromeffectively relitigating the issue.41 We agree with Focus that, as an interim injunctionis subject to review, rescission and variation and the injunction was given "pendingfurther order of the Court",42 it lacks the necessary finality to be a final judicialdetermination which is required for issue estoppel.43Onus of proof[74] When discussing the jurisdiction to grant summary judgment, the Judge saidthat, "unless [the] Crosers can show a clear incontrovertible binding contract on theface of the settlement correspondence, the application for strike out or summaryjudgment application will succeed".44 The Crosers submit that, in this statement,the Judge incorrectly imposed the onus of proof on them and imposed a higherstandard than the balance of probabilities. The Crosers submit this error permeatedthe judgment, evidenced by the Judge's later comment that:[73] Crosers say that the alleged agreement includes "all data" and yetprovide no explanation as to what they say constitutes the wider set of data towhich access was not being provided. Nor do they explain what data in theLambPlan dataset was excluded from the offer.[75] We agree that the Judge appears to have erroneously put the burden onthe Crosers. Her statement requiring the Crosers "to show a clear incontrovertiblebinding contract" may have been a slip, given that she had earlier correctly set out thetest for summary judgment.45 However, the Judge's reasoning at [73] suggests the41 Shiels v Blakeley [1986] 2 NZLR 262 (CA) at 266 and 268.42 Injunction judgment, above n 2, at [70].43 Weta Estate Ltd v Savvy Vineyards 4334 Ltd [2019] NZCA 437 at [24]; and Carl Zeiss Stiftung vRayner & Keeler Ltd (No 2) [1967] 1 AC 853 (HL) at 927.44 Summary judgment, above n 1, at [39]45 At [37]. We disagree with Focus' submission that the Judge was referring to an evidential burdenarising because Focus had provided a complete answer to the Crosers' claim and that the Crosershad not put forward any fact that might contradict Focus' answer. In fact, the Crosers had filedevidence about what "all the data" would be and why that was important to them in the context.reversal of the onus may have permeated the judgment. On appeal this Court isrequired to reach its own view on whether Focus is entitled to summary judgment.In doing so, any reversal of the onus in the Court below is remedied.Relevance of the factual matrix[76] The Crosers submit that, in confining her assessment to "on the face of thesettlement correspondence", the Judge erred in her approach.46 We agree. As set outearlier, it is well established that the matrix of facts is relevant (including the contextor purpose of the document) as is the subsequent conduct of the parties and what theysaid both before and after the document was signed.[77] Extensive evidence was filed by both parties about the data available onLambplan, the extent to which the Crosers had access to this, and what informationwas needed by breeders and was important to purchasers. The Judge did not discussthis evidence because she confined herself to the face of the written correspondence.As with the reversal of the onus, this error is remedied by this Court reaching its ownview on whether Focus is entitled to summary judgment.Subjective intentions[78] The Crosers submit the Judge was wrong to dismiss their submission that therewere conflicting evidence and credibility issues that made summary determinationinappropriate. We consider the Judge was correct to dismiss the submission in so faras it suggests that the credibility of one party's claim as to their actual intentions isrelevant. It is not. For example, the credibility of Mr McMechan's affidavit evidenceabout what he meant by his "Great to have agreement" email did not need to be testedat trial.[79] On appeal, the Crosers submit that Focus adduced so much ex post factoevidence intended to qualify the meaning of the contract that the Judge may have beeninfluenced by it. They submit they should have had the benefit of testing the case at46 At [39].trial. We do not accept this submission. The Judge expressly noted this evidence wasnot relevant and her analysis shows that she did not rely on it.47Objective assessment[80] We agree with the Judge that the fact there were complexities in what theparties were endeavouring to settle is a factor on its own that might suggest the partiesenvisaged they would only be bound once the terms of a formal document recordingthat settlement were finalised and signed.[81] However, this factor needed to be viewed in the context of the upcoming trialand the desire of both parties to achieve a settlement before that trial and thereby avoidthe costs and risks associated with the trial. This context provided a strong incentivefor both parties to compromise their positions. That incentive would dissipate if theparties were free to walk away from their agreed compromise after the fixture wasvacated if the terms of a formal document were not agreed upon. This is quite differentfrom a negotiation over a land purchase or a commercial arrangement which does nothave that litigation context.[82] We disagree with the Judge that there is any significance in the indication inMs Anagnostou's 30 September 2019 email that some drafting was still required onthe data definition. That email was part way through the exchange that led to theagreement between the parties. The next day Mr McMechan had obtained instructionsabout what Focus was offering on the data and Ms Anagnostou had respondedaccepting "your definition of data". Ms Anagnostou's words suggest she consideredthere was now clarity on the data to which the Crosers would have access.[83] We agree with the Judge that Mr McMechan's 1 October 2019 email did notdefine what was meant by the "wider set of data" to which the Crosers were not tohave access. We disagree that this indicates the parties did not intend to be bound.What was meant by the "wider set of data" needed to be considered in the context ofMr McMechan's data proposal as a whole, and the evidence before the Court aboutwhat information was held by Focus, what information was recorded on Lambplan,47 At [46].what information was or was not accessible by the Crosers before the relationshipterminated, what data the Crosers would need access to if they were to operate as elitebreeders, and Focus' intellectual property interests in the data it held on the NZ Flocks.[84] In other words, the data proposal made by Mr McMechan may seem unclearand non-comprehensive on the face of the correspondence to someone without therelevant context, but the parties were negotiating a settlement against the backdrop oftheir relationship and their respective interests now that the relationship was at an endand litigation was pending.[85] On the face of the correspondence Mr McMechan's data definition was:(a) to provide "all data" in relation to the Crosers' sheep including"pedigree information and all raw data";(b) to provide the Crosers with the unique sheep identificationnumbers; and(c) not to provide the Crosers with access to the data and records onLambplan because that would provide the Crosers with a "wider setof data".[86] In making this offer, Mr McMechan explained it would enable the Crosers todevelop their own records within Lambplan with the data on their sheep. He alsoexplained that he was not providing the Crosers with access to the data and recordson Lambplan.[87] The evidence from Mr Van Niekerk discussed above provides relevant contextfor understanding this offer. To recap: Focus held raw data (such as measurementsand tests results) collected on the Kiranda Flock by the Crosers; Focus submitted thisdata to SIL to calculate eBVs; Focus also provided the raw data on the Kiranda Flockto Lambplan to enable FBVs to be calculated; pedigree information was displayed onLambplan only as an identification number because Focus did not provide Lambplanwith data on the NZ Flocks until after the agreement with the Crosers was terminated;and only after the NZ Flocks data was provided were ASBVs calculated.[88] If that evidence is correct, then Mr McMechan's offer covered the three sets ofinformation it and Lambplan held: the raw data on the Kiranda Flock; the pedigreeinformation (comprising only the identification number before termination); and thewider data (the data relating to the parents of the Kiranda Flock).[89] The Crosers' evidence contests Focus' evidence about what was accessible onLambplan. The Crosers also contest that Focus had the right to control that access —the Crosers say that they were the breeders of the sheep and as such it should havebeen them controlling the Lambplan access. They also contest Focus' evidence thatthey could continue as elite breeders if they only had the raw data on the Kiranda Flockand the identification numbers for the parents. The correct view on this may berelevant when interpreting what the settlement agreement meant if the Court were tofind there was an intention to be bound. For present purposes, the point is that theapparent lack of clarity or incompleteness on the face of the correspondence did notin itself indicate that the parties intended they would be bound only if a formal contractwas signed. There was relevant context against which the data definition agreed to inthe correspondence was to be understood.[90] We also disagree with the Judge that the exchange of correspondence was notcomprehensive because the trade mark issue needed to be covered off in the settlementagreement. Mr McMechan's offer on 1 October 2019 included "other terms as set outin the correspondence between us" and Ms Anagnostou's email on the same dayaccepted this offer "on the terms of the below emails read together with our letter toyou of yesterday's date".[91] Through this exchange, Ms Anagnostou's 30 September 2019 letter wasincorporated in the settlement the parties reached subject to the compromise laterreached on the money and the agreement reached on the data definition. This letterhad proposed that the Crosers would not use Focus' "brand, tradenames [and]trade marks" amongst other things. This was against the backdrop of Focus'counterclaim for orders that the Crosers not use Focus' trade marks (FocusPrime andHighlander) and that they withdraw their applications to register trade marks (KirandaFocus Prime and Kiranda Highlander).[92] Mr McMechan's email on 2 October 2019 sought clarification about the"Focus TM point". Ms Anagnostou confirmed that the Crosers would "give up thetrademarks". Given the Crosers' applications incorporated "Focus Prime" and"Highlander" trade marks, she understandably regarded this as implicit in the proposalset out in her 30 September 2019 letter. The confirmation this would be covered inthe draft deed, in our view, is equally consistent with an intention to be bound onlywhen a deed was finalised and executed, as it is with an intention to be boundimmediately and the terms of the agreement to be restated in a form which will befuller or more precise but not different in effect.[93] We also disagree that important elements were left unresolved. The key issuesin the litigation were money, access to data, the trade marks and whether the Croserswere bound by the restraint of trade. Of those issues, the trade marks and restraint oftrade were not difficult to resolve — they were part of Ms Anagnostou's proposal on30 September 2019 and required no further discussion. The toing and froing in thenegotiation was over the money and the data. By the time of Mr McMechan's "[g]reatto have agreement" email, the money and what was called the "data definition" wereagreed.[94] Other relevant context not considered by the Judge includes that thenegotiations were between lawyers and that Mr McMechan's proposal for the data wasmade only after he had obtained internal instructions about that. That suggests athought out offer that was made with authority.[95] Further, when Mr McMechan sought to amend the draft deed he purported todo so "to avoid doubt" and so as "to be clear about what is and is not in scope".This suggests that Mr McMechan was not purporting to renegotiate what had beenagreed but was looking to tidy up the wording of what had been agreed for improvedclarity.[96] Focus submits that the draft deed demonstrates that the parties only intendedto be bound when the deed came into force. Focus refers to: cl 2, which provided thatthe claims would be settled by entry into the deed; cl 3, which recorded that the deedwas a complete defence to any actions, suits or proceedings without reference to anyearlier settlement; and cl 7, which is an entire agreement clause. In our view theseprovisions are all neutral as to whether there was an intention to be bound to thesettlement reached in the correspondence. If there was such an intention, but also anagreement that the settlement would be more formally documented without alteringthe terms already agreed, the clauses Focus has referred to are consistent with theparties intending the formal document to govern their settlement once it was executed.[97] Focus submits the data definition included in the draft deed was different fromthe data definition that Ms Anagnostou had agreed to in the email correspondence andthis shows the parties did not intend to be bound in that correspondence. Focus saysthese were material changes but that does not appear to be so:(a) Focus refers to an amendment from data for the sheep "belonging to theCrosers" to sheep "born on the property of Kiranda". Focus submitsthis change meant the Crosers would be entitled to the data for all sheepsold from 2014. However, that may have been what was envisagedwith the "belonging to the Crosers" wording, remembering that theCrosers considered the multiplier agreement had been replaced, andthat they had become breeders of elite sheep.(b) Focus refers to an amendment from "sheep born between 2014-2018inclusive" to "sheep born after 2014". Focus submits this change meantthat if a sheep was born after 2018, the Crosers would obtain data forit. However, the Crosers say there were no sheep born after 2018 fromthe NZ Flocks as the relationship had been terminated by then.(c) Focus refers to an amendment from "all raw data (measurements, testresults etc)" to include "measurements and test results including TSUsample results". Focus submits this change meant that "raw data"would include "TSU sample results". However, the "etc" indicated thatraw data did include more than "measurements" and "test results" andFocus does not suggest that "TSU sample results" are not properlydescribed as, or encompassed by the term, "raw data".(d) Focus refers to an amendment from transferring "any ownershipinterest" it had in the data to requiring Focus to transfer "any interestthat it may have in the Data". Focus submits that this change meantthat if Focus had any interest short of ownership in the data, it wouldbe obliged to transfer that interest to the Crosers. However, this changemay simply reflect that the Crosers considered Focus to have wronglyclaimed ownership in the data because the multiplier agreement hadbeen replaced.(e) Lastly, Focus refers to the change in the warranty from "all informationheld by Focus" to "all information held by the Defendant or itssubsidiaries". Focus submits this extended the warranty but it is notclear that it did so in any material way.[98] These changes, as with other changes made to clauses in the deed which Focusreferred to, appear to be consistent with an intention to tidy up the wording of whathad been agreed without changing its substance. Some of them were said to be"for clarification". Certainly, we are not satisfied Focus has shown they were materialchanges. This is supported by the fact that they caused neither party any concern inthat they were not changes that were resisted when proposed.[99] The Judge granted summary judgment in favour of Focus on the first of thetwo prerequisites to formation of a contract (intention to be bound). Part of her reasonsfor that concerned her view as to the lack of clarity of what was agreed and that notall crucial elements had been agreed. These reasons overlap with the secondprerequisite (agreement on every essential term). We consider that Focus has failed toestablish that it was not seriously arguable that this prerequisite was met.The exchange of emails on 1 October 2019 expressly incorporated the earliercorrespondence. This included Ms Anagnostou's letter of 30 September 2019 whichset out a comprehensive set of terms for an agreement. There could be no confusionabout what was and was not incorporated from that. The terms proposed inMs Anagnostou's letter were all incorporated except as varied by the latercommunications on the money and the data. They were ultimately all included in thedraft deed and Focus has not pointed to anything new and material in that draft.[100] In summary, we consider Focus has failed to establish that the Crosers' claimfor enforcement of a settlement agreement reached in the correspondence was notseriously arguable. For completeness, we also consider the Crosers' pleading set outa tenable claim so that a strike out would not have been appropriate either. The resultis that it will be a matter for trial whether a settlement agreement was reached in thecorrespondence. We note that the Crosers' pleading does not currently plead what itcontends is the objective meaning of the data definition recorded in thecorrespondence. As matters stand, therefore, there is the prospect that the enforcementproceeding will not resolve the dispute between the parties whatever its outcome.Result[101] The appeal is allowed.[102] The respondent sought to be heard further on costs following our decision.Although not this Court's usual approach, we agreed that the parties would have thisopportunity. We can indicate that our preliminary view is that costs should follow theevent with costs in this Court for a standard appeal on a Band A basis plus anydisbursements and with costs in the High Court to be determined in that Court.However, we reserve our decision on costs.[103] The parties have leave to file submissions of no more than four pages on thematter of costs. The respondent is to file submissions within ten working days of thejudgment. The appellant will then have five working days to reply.Solicitors:Succeed Legal, Wellington for AppellantsBuddle Findlay, Wellington for Respondent