Badge Constructions (SA) Pty Ltd v Rule Chambers Pty Ltd - [2009] SASC 384

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BADGE CONSTRUCTIONS (SA) PTY LTD v RULE CHAMBERS PTY LTD
[2009] SASC 384
Reasons of Judge Withers a Master of the Supreme Court
16 December 2009
PROCEDURE
Application to set aside Notice of Withdrawal of Offer.
Supreme Court Rules 2006 r 12, r 117, referred to.
Rule Chambers Pty Ltd v Badge Constructions (SA) Pty Ltd (16 March 2009, unreported, Full Court [2009] SASC 70); Taylor & Ors v Johnson (1982-1983) 151 CLR 422; Alghussein Establishment v Eton College [1988] 1 WLR 587; Cheall v Association of Professional Executive Clerical and Computer Staff [1983] AC 180; Rogers v The Queen (1994) 181 CLR 251; Walton v Gardiner (1992-1993) 177 CLR 378; State Bank of South Australia v Smoothdale No 2 Limited & Anor (1995) 184 LSJS 254; Australian Consolidated Investments Limited & Anor v England (1995) 183 LSJS 408, considered.

BADGE CONSTRUCTIONS (SA) PTY LTD v RULE CHAMBERS PTY LTD
[2009] SASC 384

JUDGE WITHERS. By an interlocutory application filed on 24 April 2009 – FDN 68 – the plaintiff sought the following orders:
1.That the Notice of Withdrawal of Offer filed by the Defendant on 7 May 2008 be set aside.
2.In the alternative to (1), that the Notice of Withdrawal of Offer filed by the Defendant on 7 May 2008 be struck out.
3.That judgment be entered for the Plaintiff in the sum of $300,000.
4.That the Defendant pay the Plaintiff’s costs of the action from 8 July 2008 to date, (excluding the costs of the appeal to the Full Court).
5.In the alternative to (4) that the Defendant’s solicitors pay the Plaintiff’s costs of the action from 8 July 2008 to date, (excluding the costs of the appeal to the Full Court).
6.That the Defendant pay interest on the judgment sum from 8 July 2008 at the rate prescribed by the Supreme Court Rules.
7.That the Plaintiff be granted an extension of time in which to bring this application.
The application was made pursuant to r 12, r 13 and r 117 of the Supreme Court Rules 2006.
The history of this matter relevant to this application is set out in the judgment of White J delivered as the judgment of the Full Court in Rule Chambers Pty Ltd v Badge Constructions (SA) Pty Ltd (16 March 2009, unreported, [2009] SASC 70). In his reasons for judgment, White J at paragraphs [4] to [8] noted:
[4] The respondent (“Badge”) instituted proceedings in this Court against the appellant (“Rule Chambers”). It claimed damages and other relief in respect of alleged breaches of a contract under which it had performed building work at the property of Rule Chambers at 19-21 King William Street, Adelaide. Rule Chambers denied liability and filed a counterclaim seeking damages in respect of the repudiation of the contract by Badge which it alleged.
[5] On 5 November 2007, Rule Chambers filed in the Court an offer to consent to judgment in favour of Badge in the sum of $300,000, inclusive of costs. This offer was filed under r 187 of the Supreme Court Civil Rules 2006 (“the 2006 Rules”). On 7 May 2008, Rule Chambers filed in the Court a withdrawal of its offer of settlement. It did so under r 187(7). However, apparently as a result of an oversight, Rule Chambers did not serve a copy of the withdrawal of the offer on Badge. Two months later, on 9 July 2008, Badge filed an acceptance of the offer of 5 November 2007. It was then acting under r 188.
[6] When Badge served a copy of its acceptance of offer on the solicitors for Rule Chambers, they drew its attention to the withdrawal and asserted that the November 2007 offer was no longer open to be accepted.
[7] A Master of this Court held that a withdrawal of an offer filed under r 187 does not become effective until the withdrawal is served on the opposing party. The Master was satisfied that Badge was unaware, at the time it filed its acceptance of the offer, that a withdrawal of the offer had been filed. He held that Badge had accepted the offer at a time when it remained open to acceptance and he entered judgment for Badge against Rule Chambers in the sum of $300,000, inclusive of costs. The Master also dismissed Rule Chambers’ counterclaim.
[8] Rule Chambers appeals against those orders. By reason of r 17(1) of the 2006 Rules, the appeal against the judgment of the Master lies to the Full Court.
The defendant/appellant Rule Chambers was successful in its appeal to the Full Court and the order of the Master that a withdrawal of an offer filed under r 187 does not become effective until the withdrawal is served on the opposing party was set aside.
In delivering its reasons the Full Court dealt with an argument as to estoppel, which was raised by the plaintiff/respondent at the hearing, and it found that the claimed estoppel failed. However, the Full Court in paragraphs [55] and [56] of White J’s judgment declined to deal with the issue of setting aside the Notice of Withdrawal of Offer. His Honour said:
[55] In its supplementary written submissions, Badge also contended that, in the event that this Court considered that either r 12 or r 117 permitted an order setting aside the notice of withdrawal filed on 7 May 2008 to be made, an order to that effect should be made. It submitted that the failure of Rule Chambers to serve a copy of the notice of withdrawal of its offer for a period of approximately two months should attract the exercise of the Court’s discretion and that justice required that the notice of withdrawal be set aside. Badge also sought permission to amend its notice of contention so as to raise this issue.
[56] The supplementary written submissions of Rule Chambers did not address this issue in any detail. In my opinion, it is inappropriate for an issue of this kind to be resolved under a notice of contention. If Badge wishes to pursue a claim that the notice of withdrawal of offer should be set aside, it should do so by a proper application and on proper notice to Rule Chambers.
A consequence of all this was the plaintiff’s interlocutory application – FDN 68.
The Evidence
Paragraphs 1 and 2 of the plaintiff’s application were argued before me on 3 November 2009. At that time the plaintiff read in support of its application the affidavits of Nicholas Anderson filed 21 July 2008 – FDN 52, 14 August 2008 – FDN 55, and 8 July 2009 – FDN 75. The plaintiff also relied on the affidavits of Jim Whiting filed 14 August 2008 – FDN 56, and 7 July 2009 – FDN 74. Additionally the plaintiff relied on the affidavit of Dale Fleming filed 14 August 2008 – FDN 57.
The defendant in opposition to the application relied on the affidavit of Ms Hynes filed 29 July 2008 – FDN 53, and the affidavits of David Bertram filed 30 July 2008 – FDN 54, 27 August 2008 – FDN 58, and 16 July 2009 – FDN 79. Following an argument permission was given to the plaintiff to cross-examine Mr Bertram on his affidavits FDN 54, FDN 58 and FDN 79. That cross-examination duly took place on 3 November 2009.
In giving his evidence Mr Bertram on occasions tended to avoid answering a question directly but would rather state what he perceived the defendant’s position to be on a particular issue. He was at times non-responsive to the question. On one occasion he sought to have explained to him how counsel’s question “fitted in” and what “counsel was trying to get at” by asking the question – see transcript pages 23 and 24. He did not impress as a witness who simply answered in a straightforward and direct manner the questions put to him. Many of the questions could have been answered with a simple “yes” or “no”.
However, in relation to a critical conversation that is alleged to have occurred on 5 May 2008 Mr Bertram was on this occasion quite open, direct, and consistent with his answers. He asserted that he had told Mr Whiting on that occasion that the offer to which Mr Whiting referred that had earlier been filed in November 2007 had been withdrawn. It was put to him that his words had been less certain in the sense that he said “I think that offer has been withdrawn”. Mr Bertram adhered firmly to his assertion that he had said to Mr Whiting that the offer had been withdrawn. He also denied that he had said to Mr Whiting “he would check” the status of the filed offer. He was unmoved on that – see transcript pages 10 to 11. I accept that he said to Mr Whiting that the offer had been withdrawn.
It was also clear from Mr Bertram’s evidence that he had instructed his solicitors on 14 December 2007 to withdraw the notice of offer that had earlier been filed. He had assumed that to have been done. When Mr Whiting put to him on 5 May 2008 that the offer was still on file, Mr Bertram thereafter made contact with his solicitor that day to check with her that the offer had been withdrawn in accordance with instructions. His solicitor asserts that the telephone contact occurred on 6 May 2008 – see Hynes’ affidavit FDN 53, paragraph 10. When asked for detail of the conversation with his solicitor he steadfastly declined to give same but rather did say on one occasion that he had made reference to their PI insurance. Following this conversation his solicitor confirmed with him on 7 May 2008 that another notice of withdrawal had been filed at the Court that day.
Mr Bertram was cross-examined on his understanding of what needed to be done to withdraw a filed offer and particularly on the need for any notice of withdrawal to be both filed and served. A summary of his response was that he was unaware of the requirements in South Australia but left it to his solicitors to ensure that the instructions to withdraw the offer were complied with in an effective manner. I accept that Mr Bertram was at that time unaware of the obligation of a party under r 60 of the South Australian Supreme Court Rules to serve a copy of a filed document on another party. However, his solicitors were well aware of that obligation.
The plaintiff argued in support of its application that the failure by the defendant to serve on the plaintiff or its solicitors a copy of the notice of withdrawal filed on 7 May 2008 coupled with the failure of Mr Bertram to correct an obvious mistaken belief on the part of Mr Whiting revealed in an email of 14 May 2008 that the offer was still available to be accepted on the Court file amounted in all of the circumstances to an abuse of process or was in any event sufficient cause for the Court to make an order setting aside the notice of withdrawal pursuant to the provisions of r 117.
I note in relation to Mr Bertram’s affidavit FDN 58 that paragraphs 8, 9 and 10 have already been ruled inadmissible and I take no account of them.
In Mr Bertram’s affidavit (FDN 54) filed on 30 July 2008 at paragraph 7 he describes the meeting in May 2008 with Mr Whiting as follows:
7In late April, early May 2008 Jim Whiting, a director of the plaintiff, contacted me to arrange to have a casual cup of coffee whilst he was in Melbourne to discuss this litigation. During the course of the meeting, the following discussion took place, or words to the effect of:
7.1     Whiting: “Your $300,000.00 offer to settle is still filed at the courts”.
7.2     Bertram: “No, we withdrew it after the Lien case back in December”.
7.3     Whiting: “Well its still there”.
7.4     Bertram: “We instructed our lawyers to remove it, in any event we have significant damages in our favour for the losses we incurred as a consequence of the lien”.
7.5     The conversation moved on thereafter the exact content of which I don’t recall – the meeting was very short.
Mr Bertram then asserts in his affidavit that he thereafter contacted his solicitor asking her to check the position. She informed him on 7 May 2008 that a notice of withdrawal had been prepared on 17 December 2007 while she was on leave and that she had understood that it had been filed and served but could not locate any record to confirm that. Accordingly she had arranged for a copy to be sent to the Court that day. Nothing was apparently said about service of that copy.
In paragraph 9 of FDN 54, Mr Bertram describes receiving an email from Mr Whiting on 14 May 2008 in which it was asserted, amongst other matters, that the offer was “still filed in the Court”. He attests that he did not respond to that particular assertion as he had discussed the matter with his solicitor some days before and she had “again confirmed that the withdrawal had been lodged”. He attests that he sent a brief response to Mr Whiting on the same day stating “… still thinking about our position and will advise”. A copy of the email was attached to his affidavit and is set out in paragraph 57 (12) and (13) of these reasons.
In his affidavit filed on 16 July 2009 – FDN 79 – Mr Bertram confirms the meeting on 5 May 2008 and the conversation. He exhibits a copy of the email that he had sent on 14 December 2007 instructing his solicitors to withdraw the offer to the plaintiff as Exhibit “DB1”, being Document 79A. He attests to a further conversation with Mr Whiting in late January/early February 2008 about “trying to find a mechanism to resolve the dispute”. He recalls telling Mr Whiting that “… we had withdrawn the offer, and that in my view Badge owed money to Rule as a result of the liens appeal judgment” – see paragraph 6. No response is made to this assertion in any of the affidavits filed by Mr Whiting.
Mr Bertram exhibits to his affidavit (FDN 79) a further email sent on 6 May 2008 – Exhibit “DB3” – in which he instructed his solicitors to prepare a formulation of Rule’s claim against Badge and to invite the plaintiff to propose a sum that it would pay to settle that claim. In Exhibit “DB4”, being Document 79D, Mr Bertram exhibits a copy of the email of 14 May 2008. He explains his response to that email saying that he had not yet received the requested advice from his solicitors as to the quantification of Rule’s claim against Badge and for that reason he had responded by saying that they were still considering their position.
Mr Whiting’s version of what occurred at the meeting on 5 May 2008 is set out in his affidavit filed on 14 August 2008, being FDN 56. He says in paragraph 5:
5.One of the purposes of the meeting was to try and “talk the Defendant up” from their $300,000 position.
5.1.    At the start of the discussion I referred to the Defendant’s Filed Offer of $300,000.00 or thereabouts.
5.2.    Mr Bertram indicated that he thought that the Defendant’s Filed Offer had been withdrawn.
5.3.    I indicated that I understood that it was still on the table.
5.4.    Mr Bertram and I discussed the status of the offers briefly and generally but negotiations did not progress as Mr Bertram was unsure of the status of the Defendant’s Filed Offer.
5.5.    Mr Bertram said that he would check what the Defendant’s offer was.
Mr Whiting exhibited some contemporaneous notes of the 5 May 2008 meeting as Exhibit “JW-1” to his affidavit, or document 56a, which tends to confirm the assertion in paragraph 5.5.
Mr Whiting attests that on 9 May 2008 he called his solicitors and asked them to check on the status of the defendant’s filed offer. He attests that he was subsequently advised that the defendant’s filed offer was still available to be accepted. Mr Anderson in his affidavit FDN 75, at paragraph 6, confirms that advice. He does not attest to any enquiries he made before giving the confirmation. Neither Mr Whiting nor Mr Anderson gave evidence about what information was given to Mr Anderson if any about the 5 May 2008 meeting. This led to Mr Whiting’s email of 14 May 2008 to Mr Bertram, to which reference has earlier been made. He attests in paragraphs 10, 11 and 12 of his affidavit that he believed that the defendant’s filed offer was still on file and open to be accepted and that this position had been confirmed by Mr Bertram by his response to the 14 May 2008 email. He says that in that belief he instructed his solicitors on 4 July 2008 to file an acceptance of the offer. In my view, it is reasonable to infer that his belief was engendered more by the advice he had received from his solicitor on 7 May 2008 than by the non-responsive reply to the email of 14 May 2008 particularly in light of the conversation on 5 May 2008.
In his affidavit filed on 7 July 2009 – FDN 74 – Mr Whiting reiterated the matters contained in his earlier affidavit. He confirmed that from 14 May 2008 his actions were based on his understanding that a formal offer of settlement filed by the defendant on 5 November 2007 and served on the plaintiff on 9 November 2007 was still available to be accepted. He recorded that on 12 June 2008 the plaintiff had been ordered to provide particulars of the variations which formed the basis of the majority of its claims. It was his assessment that interlocutory issues and arguments and costs of preparation for trial could persist for a long time. As a result he gave instructions to the plaintiff’s solicitors to accept the filed offer. Mr Whiting was not called for cross-examination.
The Plaintiff’s submissions
The plaintiff in argument relied principally on r 117(1) of the Supreme Court Rules 2006, which provides as follows:
117 (1) The Court may make any order it considers necessary for the proper conduct of a proceeding or otherwise in the interests of justice.
Plaintiff’s counsel also noted a reliance on r 12, which provides:
12    (1) A procedural irregularity does not make an action or proceeding void.
(2)     If a party commits a procedural irregularity in bringing or in the conduct of an action or proceeding, the Court may, on its own initiative or on application by a party –
(a)     dismiss the action or proceeding; or
(b)     set aside a particular step in the action or proceeding.
Sub-rule (3) of that rule requires any application for the benefit of the Rule to be made within 28 days after the date when the procedural irregularity should have become apparent to the applicant.
The plaintiff in its interlocutory application FDN 68 sought an extension of time within which to bring the r 12 application. In support of that particular application the plaintiff’s solicitor filed an affidavit on 8 July 2009 – FDN 75 – setting out in a chronological fashion the steps that had occurred since the plaintiff had filed its notice of acceptance of offer. He explained that the plaintiff had concentrated initially on pursuing its argument on the legal effect of r 187. Further the Full Court had left open the issue of an application to set aside the notice of withdrawal. After losing the argument on the r 187 point the plaintiff took the step that it did in filing interlocutory application FDN 68. The plaintiff did not pursue the r 12 application with any vigour at argument but rather relied on the broad powers available to the Court under r 117. In my view r 117 is the appropriate rule to consider in the circumstances of this matter.
In support of the plaintiff’s overall application counsel argued that the Court had the power to make orders in the interests of justice. The Full Court in its decision in this matter had not in any way confined the scope of that power. He argued that the circumstances in respect of this matter were an abuse of process or at the very least a misuse of the Rules such as to warrant the Court exercising its powers to correct the situation.
The plaintiff argued that it was not necessary for an abuse of process to be established for the provisions of r 117(1) to apply. Rather the Court was able to apply that rule in the event that the interests of justice called for that to be done. The plaintiff argued that the basis for setting aside this Notice of Withdrawal of Offer which had not been served was either an ill-usage of the Rules or an abuse of process. An order setting aside the notice was also justified by the principle that a litigant should not be permitted to benefit from its own wrong.

It was put that Mr Whiting did not know that a notice of withdrawal had been filed or that the filed offer had been withdrawn. That was already a finding of Judge Burley. I see no reason to disturb that finding. I agree that on the evidence before me that was his belief. The reasonableness of that belief is challenged by the defendant. Further evidence has been provided by Mr Bertram in his cross-examination which confirms his affidavit evidence as to the words said by him at the meeting on 5 May 2008. His evidence relating to that meeting was consistent with his affidavit evidence. That does not mean that Mr Whiting knew that the offer was no longer able to be accepted. He was clearly mistaken in his understanding as was his solicitor. He accepted the advice of his solicitor of 9 May 2008 in preference to the assertion made by Mr Bertram on 5 May 2008 that the offer had been withdrawn. He asserts that his mistaken belief was known to Mr Bertram by reason of the email of 14 May 2008. In my view, the reasonableness of Mr Whiting’s assertions must be considered in the light of Mr Bertram having told Mr Whiting on 5 May 2008 that the offer had been withdrawn, which statement was consistent with the alleged earlier conversation in January/February 2008.
Secondly, the plaintiff argued that at the time of the email of 14 May 2008 there had in fact been a Notice of Withdrawal of Offer filed at the Court on 7 May 2008 and that Mr Bertram knew this because it had been confirmed to him by his solicitor. On the basis of Mr Whiting’s evidence and the terms of the email, plaintiff’s counsel argued that the Court should find that Mr Bertram knew or should have known of Mr Whiting’s mistaken belief. One of the possible explanations advanced for his reply to Mr Whiting’s email was that Mr Bertram was alive to the advantage of learning whether or not Badge in its mistaken belief would try to accept the offer and that he therefore unfairly took advantage of that mistaken belief by not correcting it. It was argued that if that were to be the finding then that would be an obvious case of abuse of process. I agree that would be a case of abuse of process but, in my view, that possible explanation is not an appropriate finding. Another equally possible explanation is that Mr Bertram’s reply exhibited the same characteristics of excessive caution and non-responsiveness demonstrated to a degree in his cross-examination.
It was argued that in any event the present circumstances produce a serious injustice and that the Court should conclude on the basis of Mr Bertram’s evidence that he was alive to the advantage of this mistaken belief to the detriment of the plaintiff. On either finding the Court should exercise its discretion to set aside the filing of the Notice of Withdrawal of Offer in the interests of justice.
Next it was argued on the part of the plaintiff that in the face of a known mistake on the part of Mr Whiting demonstrated in the email of 14 May 2008 there was silence by the defendant. Accordingly, in considering the matter the Court should be mindful of the principles in Taylor & Ors v Johnson (1982-1983) 151 CLR 422 at 432, where a majority of the High Court comprising Mason ACJ, Murphy and Deane JJ said:
The particular proposition of law which we see as appropriate and adequate for disposing of the present appeal may be narrowly stated. It is that a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension. …
The plaintiff argued that this was an analogous situation. Mr Bertram knew of the mistaken belief of Mr Whiting that there still existed an offer capable of acceptance in the Court. Therefore Mr Bertram in those circumstances was under a duty to correct that mistaken belief and his failure to do so amounted to a serious injustice which the Court should not allow to stand. It was argued that even if the Court were to find that an ulterior motive or collateral purpose did not exist on Mr Bertram’s part, then in any event it was apparent on the evidence that he knew that if Mr Whiting filed a response to the offer, which he mistakenly believed was on file and to which he had made reference on two occasions within 9 days, that would expose the plaintiff’s position. I note that White J in his reasons in this matter at paragraphs 22 to 25 found “common law principles of contract” to be of limited use in the circumstances then being considered.
Next it was argued that the failure to serve the Notice of Withdrawal of Offer was a chronic failure that continued for over two months. The defendant is responsible for the conduct of its agents and solicitors. Yet notwithstanding this failure the defendant at the final stage of this abuse or misuse of the Rules is insisting on taking advantage of its own default.
Reference was made to authorities supporting the proposition that it is improper for a litigant to seek to take advantage of its own wrong. In Alghussein Establishment v Eton College [1988] 1 WLR 587, the Court referred to instances where courts had stated that proposition. That matter related to a contract dispute. The court referred with approval to the words of Lord Diplock in Cheall v Association of Professional Executive Clerical and Computer Staff [1983] AC 180, where in referring to the New Zealand Shipping case [1919] AC 1, he said:
In the course of the speeches, which are not entirely consistent with one another, reference was made by all their Lordships to the well known rule of construction that, except in the unlikely case that the contract contains clear express provisions to the contrary, it is to be presumed that it was not the intention of the parties that either party should be entitled to rely upon his own breaches of his primary obligations as bringing the contract to an end, ie, as terminating any further primary obligations on his part then remaining unperformed. This rule of construction, which is paralleled by the rule of law that a contracting party cannot rely upon an event brought about by his own breach of contract as having terminated a contract by frustration, is often expressed in broad language as: ‘A man cannot be permitted to take advantage of his own wrong.’
It was submitted that in this matter where the defendant in seeking to insist on the effectiveness of its notice of withdrawal pursuant to r 187 notwithstanding its non-service and the failure to correct the plaintiff’s mistaken belief it was trying to convert the rule into an instrument of injustice and was seeking to “take advantage of his own wrong”.
The plaintiff cited the case of Australian Consolidated Investments Limited & Anor v England (1995) 183 LSJS 408, where at 438 in considering the argument of estoppel or representation by silence, Doyle CJ said:
Another approach is to say that it is a case of estoppel by silence, ACIL having refrained from correcting what it knew to be a false assumption on SECL’s part (that both parties intended the DDR to discharge the senior debt and that it would so provide) when it was under a duty to do so.
His Honour noted further that “ … SECL gave its assent to the DDR without creating further difficulties for ACIL, and surrendered the blocking or bargaining position which it had in relation to the PICL settlement”.
Finally, his Honour said:
In my opinion, ACIL should be held to the assumption that it had induced or permitted (when it was under a duty to speak), that the DDR was intended to and did provide for the extinguishment of ACIL’s senior debt.
It was argued that this reflects the situation in this case and that Rule should be kept to the assumption or inducement that it permitted or created in Badge, namely that an offer remained on the Court file that was able to be accepted. It should not be permitted to withdraw from that. Counsel for the plaintiff argued that the judgment of the Full Court in the ACIL matter (1996) 189 LSJS 146, gave authority to the proposition that the surrendering of a bargaining or blocking position was capable of giving rise to an estoppel. In this particular matter the Full Court has already rejected the estoppel argument and it is not relevant to my decision.
Counsel for the plaintiff then referred to Rogers v The Queen (1994) 181 CLR 251 and Walton v Gardiner (1992-1993) 177 CLR 378 in support of the argument that an abuse of process had occurred in this matter and that abuse of process is not only as between parties but also contains an element of public interest. In Walton v Gardiner, at 392, the majority said:
The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. …
Further, it said:
… The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v. Chief Constable of the West Midlands Police [[1982] AC 529, at p 536] as “the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people”. (My italics.)
In Rogers v The Queen (supra) at 256, Mason CJ, referring to statements made in the House of Lords and the New Zealand Court of Appeal, said:
… These statements indicate that there are two aspects to abuse of process: first, the aspect of vexation, oppression and unfairness to the other party to the litigation and, secondly, the fact that the matter complained of will bring the administration of justice into disrepute.
McHugh J in considering abuse of process in that matter at 286 said:
Inherent in every court of justice is the power to prevent its procedures being abused [Hunter v Chief Constable of the West Midlands Police, [1982] AC 529, at p 536]. Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court’s procedures are invoked for an illegitimate purpose; (2) the use of the court’s procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court’s procedures would bring the administration of justice into disrepute. Many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court’s process. …
It was argued by plaintiff’s counsel that the circumstances of this matter fitted comfortably into each of the three heads of abuse of process described by McHugh J. The plaintiff’s argument on abuse of process seems to be very similar to the italicised words in Hunter v Chief Constable (supra).
It was further argued that it was a strong policy of the law to encourage out of court settlements and that this proposition was supported by State Bank of South Australia v Smoothdale No 2 Limited & Anor (1995) 184 LSJS 254 at 260. I have some difficulty in deriving that proposition from a reading of that matter. However, I accept that the law encourages parties to resolve their own disputes and facilitates that policy by providing within its procedures for civil dispute resolution by settlement conferences and the capacity to file and serve notices of offer and acceptance. The court also has power to refer matters to mediation and for alternate methods of resolution.
The plaintiff argued that it had suffered as a result of the defendant’s conduct from a terminal loss of its bargaining position. The conduct complained of was the defendant’s failure to serve the notice of withdrawal and the failure to correct the plaintiff’s misapprehension when it knew or ought to have known of same.
The defendant’s submissions
For the defendant counsel argued that it was important that the evidence of Mr Bertram as to the coffee meeting of 5 May 2008 be considered carefully. Mr Bertram’s evidence was that he had told Mr Whiting that the offer had been withdrawn. Counsel argued that this was the best evidence and confirmed his affidavit evidence. It was the only oral evidence as to same. He noted that Mr Whiting in his affidavits did not deny that Mr Bertram had said what Mr Bertram asserts he said, but rather sought to place a different light on a general conversation.
It was submitted that the email from Mr Whiting of 14 May 2008 did not call for a response from Mr Bertram to each of the particular propositions or assertions therein contained. Mr Bertram’s response was appropriate having regard to the fact that he was waiting advice from his solicitors as to the formulation of a claim to be put to Badge.
Defendant’s counsel argued that the Notice of Withdrawal of Offer had been filed in accordance with the Rules and was effective on being filed. The Full Court had so ruled. The defendant was entitled to rely on the Rules. The failure to serve the notice was an oversight but not of sufficient gravity to bind the defendant to an offer which it had formally withdrawn and which it believed no longer represented a fair resolution of the issues between the parties.
Defendant’s counsel acknowledged that if there had been a deliberate deceit on the part of the defendant not to serve the Notice of Withdrawal of Offer then that would be a different situation but the evidence did not justify such a finding. He argued that there was no suggestion that the defendant’s decision to file a Notice of Withdrawal of Offer was wrong or illegitimate in any way. The failure to serve it did not bring the administration of justice into disrepute. It was an error and no more. Counsel submitted that the plaintiff had not established that there was any staged, deliberate approach by Mr Bertram establishing some ulterior or collateral purpose necessary to provide an adequate foundation for a finding of abuse of process.
It was argued that the fresh evidence from Mr Bertram was such that the Court was no longer bound by the findings of Judge Burley on the affidavit material when the matter was before him.
In considering the interests of justice the Court also had to consider the interests of the defendant. It had withdrawn its offer. It now had a view that it was entitled to damages from the plaintiff. It would not be able to pursue its claim if the plaintiff’s application were to be successful.
Defendant’s counsel argued that there was no terminal loss of bargaining power on the plaintiff’s part by it having indicated it was presently prepared to accept the offer of $300,000.00. He noted that it was well understood that parties’ bargaining positions change throughout the course of litigation as matters occur and develop. Indeed, it was apparent from the evidence that the defendant’s own bargaining position had changed on its own assessment of the competing claims following the decision of the Full Court supporting the illegality of the liens.
Accordingly, it was submitted that there was simply insufficient material put forward by the plaintiff to justify a finding of abuse of process or circumstance sufficient to deprive the defendant of its right to have its case heard and determined at trial.
Findings
There are some matters that are clear from the evidence and I so find:
(1)A notice of offer was filed by the defendant in November 2007 and served on the plaintiff’s solicitors on 9 November 2007.
(2)On 7 December 2007 the Full Court delivered a decision the effect of which was that the plaintiff was not entitled to maintain liens on the property in respect of its claimed entitlements.
(3)On 14 December 2007 Mr Bertram emailed the defendant’s solicitors confirming instructions to immediately withdraw from the Court the filed offer of $300,000.00.
(4)It appears that while a notice of withdrawal was prepared by the defendant’s solicitor in December 2007 it was neither signed nor filed nor served at that time.
(5)There was a meeting on 5 May 2008 initiated by Mr Whiting with Mr Bertram with a view to the plaintiff “talking up the defendant’s offer”.
(6)At that meeting Mr Bertram and Mr Whiting discussed the status of the filed offer. I find that Mr Bertram said that it had been withdrawn.
(7)Notwithstanding this Mr Bertram checked the position on 5 or 6 May 2008 with his solicitors and learned that they were uncertain as to whether a notice of withdrawal had been filed.
(8)On 7 May 2008 a Notice of Withdrawal of Offer was filed at the Court. Mr Bertram was so advised on 7 May 2008.
(9)The Notice of Withdrawal of Offer was not served on the plaintiff’s solicitors nor were they notified of it until 10 July 2008 which was after the plaintiff had filed a Notice of Acceptance of Offer.
(10)Mr Whiting on 9 May 2008 requested his solicitors to check the status of the defendant’s filed offer – FDN 56, paragraph 7. There is no evidence as to what if any information he gave those solicitors as to the 5 May 2008 meeting.
(11)On 9 May 2008 Mr Whiting’s solicitors advised him that the offer to their knowledge had not been withdrawn and that the plaintiff could accept it if it chose so to do – FDN 75, paragraph 6. There is no evidence of any enquiries being made of the Court or of the defendant’s solicitors at that time as to the status of the offer.
(12)On 14 May 2008 Mr Whiting forwarded an email to Mr Bertram referring to the meeting of 5 May 2008 and saying:
Following our Coffee’s the other week you were going to consider the matter further.
Have you or do you want to do so.?
Your offer is still filed in the court for your Imformation [sic].
I would prefer to not have to waste both our monies on this matter and move onto other opportunities
however I will leave that decision to you.
Thanks,
Jim Whiting
Managing Director
(13)The response of Mr Bertram to Mr Whiting on 14 May 2008 was:
Jim,
Still Thinking about our position and will advise
Regards,
David Bertram
(14)On 25 June 2008 orders were made for the plaintiff to provide various particulars by way of a Scott Schedule. The plaintiff through Mr Whiting formed the view that the action was likely to take a considerable period of time and be very costly – see Mr Whiting FDN 74.
(15)On 4 July 2008 Mr Whiting instructed the plaintiff’s solicitors to accept the defendant’s filed offer. There is no evidence from the plaintiff that its solicitors had been told that an assertion had been made by the defendant that the offer had been withdrawn.
(16)On that day the plaintiff’s solicitor enquired of the Supreme Court Registry to “double check that the offer had in fact been filed … and if so, the date upon which it had been filed” – see Anderson FDN 75, paragraph 7 and FDN 55, paragraph 8.
(17)The plaintiff’s solicitors on 4 July 2008 were advised in a telephone call by a Court Registry staff member that a filed offer had been made on 5 November 2007 and that he was not at liberty to disclose the content but there was a filed offer dated 5 November 2007 – see FDN 55, paragraph 8.
(18)The plaintiff’s solicitors did not seek to clarify the status of the offer with the defendant’s solicitors.
(19)On 7 July 2008 the plaintiff filed the Notice of Acceptance of Offer and sought a consent judgment which documents were served on the defendant’s solicitors on 8 July 2008.
(20)On 10 July 2008 the defendant served on the plaintiff’s solicitors the Notice of Withdrawal of Offer.

I find that the failure to serve the Notice of Withdrawal of Offer was a breach of the requirements of r 60 of the Supreme Court Rules. In that sense it was a procedural irregularity within the meaning of r 12. As the defendant has not asserted or demonstrated that it would suffer any prejudice by an extension of time being granted to pursue the r 12 application, I grant an extension of time within which to bring the application under r 12. However, for the reasons set out herein I refuse the application to set aside the filing of the notice pursuant to the provisions of r 12.
I find that there was no ulterior motive or purpose on the part of the defendant or its solicitors in its failure to serve the Notice of Withdrawal of Offer but that the failure was a result of an inadvertent error on the part of its solicitors. I find that there was no ulterior motive or purpose on the part of the defendant in its response on 14 May 2008 to the email from the plaintiff. There was no plot on the part of the defendant or its solicitors to deliberately keep the plaintiff unaware of the filed notice of withdrawal with a view to the plaintiff possibly revealing its bargaining position or for any other purpose.
I find that the enquiries made by the plaintiff about the status of the filed offer prior to filing its Notice of Acceptance of Offer were not as extensive as they might have been bearing in mind that the evidence of the plaintiff’s solicitor was that the only notice of offer that was served on him was undated and unsealed – see FDN 55 – and that the evidence of Mr Whiting was that it had been alleged to him that the offer had been withdrawn. Enquiry could have been made of the defendant’s solicitors and more extensively of the Court. In any event, I find that the defendant is not responsible for any misunderstanding that the enquiry with the Court may have created in the mind of the plaintiff.
I find that the exposure by the plaintiff of its bargaining position by filing a Notice of Acceptance of Offer could not properly be described as a terminal breach and loss of its bargaining position.
For the foregoing reasons in my view the circumstances of this matter do not amount to an abuse of process nor are they such that the Court should exercise its powers under either r 12 or r 117 to set aside the notice of withdrawal. Nor do the interests of justice call for such an order to be made.
For the foregoing reasons, the plaintiff’s application in paragraphs 1 and 2 of FDN 68 is refused.
I will hear the parties as to costs. I certify fit for counsel