A claimant who signed a $100,000 settlement at a court-ordered mediation cannot walk away from it, a Victorian County Court has ruled - even though the deal was only labelled "in-principle" and the formal paperwork was never signed.
The September 10, 2026 ruling in Loyola v QBE Insurance (Australia) Limited turned on a question that regularly surfaces in mediated insurance disputes: when does a handwritten agreement scribbled at the end of a long mediation day become a done deal?
The underlying claim was a disability insurance dispute. The claimant had sued QBE in August 2024 over a policy that provided benefits if the policyholder became partially or totally unable to work. The matter was headed for trial in September 2025, but the parties first sat down for a court-ordered mediation in July 2025.
At that session, with both sides represented by lawyers, the parties signed a handwritten agreement. QBE would pay $100,000, all-inclusive, to settle the case. A second clause said the deal would be "subject to the parties executing a further document formalising the settlement including terms of release, discharge, confidentiality, non-disparagement, and other terms to be agreed." A third clause provided for the case to be formally dismissed once the money landed.
After the mediation, QBE's lawyers sent a five-page draft deed of settlement and release to the claimant's then-solicitors. The court found that the deed, while polished, did not go beyond what the handwritten agreement already covered - it simply restated the same terms in formal language.
The claimant's lawyers flagged one issue: the draft deed had the case being dismissed before payment, when the mediation agreement said payment came first. QBE fixed it. No other objection was raised.
Then the relationship between the claimant and his lawyers broke down. The solicitors told QBE they could not get their client's instructions and soon after withdrew from the case. The claimant became self-represented.
Nearly a year later, in July 2026, QBE applied to the court to enforce the mediation settlement. The claimant opposed it, arguing no binding deal had been struck. He pointed to two things: the agreement was described as "in-principle," and clause 2 referred to "other terms to be agreed" - which, in his view, meant the parties had only sketched out a framework, not locked in a final bargain.
The court disagreed. Applying the High Court's well-known Masters v Cameron test - which asks whether parties intended to be immediately bound by their agreement or only once a formal contract was signed - the judge found the mediation agreement was "clear and unambiguous." The essential terms were all there: a fixed dollar amount, inclusive of costs, with confidentiality and non-disparagement conditions to be wrapped into a formal deed.
The critical gap in the claimant's case was that he could not point to any specific term that still needed to be hammered out after the mediation. The court noted that the formal deed sent by QBE did not introduce any new condition or requirement beyond what the handwritten agreement already contained. And the claimant's own former lawyers, who reviewed the deed, raised no substantive objection to it beyond the payment-sequencing correction.
On the "in-principle" label itself, the court held it simply meant the parties had agreed on the fundamentals of the settlement. The label alone did not prevent the deal from being binding. In other circumstances an in-principle agreement might leave enough loose ends to avoid creating a contract, but not here - everything of substance had been nailed down.
The court also noted what it described as the claimant's apparent "buyer's remorse." At some point after the mediation, the claimant became unhappy with the advice he had received and with the settlement amount. But subjective dissatisfaction, the court held, could not undo an agreement that was objectively binding.
The ruling echoed a similar 2024 NSW Supreme Court decision, Kwu v State of New South Wales, where a claimant tried to escape a mediation settlement after his lawyers withdrew. In that case, too, the court found the parties were bound regardless of the claimant's sense of pressure from his own legal team.
QBE has been invited to file proposed orders within 14 days. The case will then be listed for argument on costs, with QBE flagging a costs claim and the claimant's former lawyers asserting what is known as a "fruits of litigation" lien - essentially a claim over the settlement sum to recover their unpaid fees.
For claims teams and coverage professionals, the practical takeaway is clear: a handwritten mediation agreement can lock the parties in, even if it is labelled "in-principle" and even if the formal deed never gets signed. What matters is not the label but whether, on a fair reading, anything of substance was actually left to sort out.
