Ball v Settlers House Pty Ltd

[2005] WASC 90

BALL & ORS -v- SETTLERS HOUSE PTY LTD & ORS [2005] WASC 90

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2005] WASC 90
Case No:	CIV:2567/2003	Heard:	4 MAY 2005
Coram:	MASTER SANDERSON	Delivered:	17/05/05
No of pages:	9	Judgment Part:	1 of 1
Result:	Application for special costs order dismissed
Category:	A
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Parties:	ADRIAN PATRICK SEYMOUR BALL JANET MARY BALL RALPH CEDRIC HORNE CYNITHIA JOYCE HORNE WILLIAM STANLEY PERRIMAN CARL JOSEPH REDMOND SETTLERS HOUSE PTY LTD (ACN 100 742 265) MARTIN DESMOND MULLINS KENNETH JOHN MULLINS
Catchwords:	Practice and procedure Costs when offer made under O 24A Whether circumstances such as to require special costs order
Legislation:	Nil
Case References:	Nil Morgan v Johnson; Green v Lovatt; Gambrill v Cook (1998) 44 NSWLR 578 Rush & Tompkins v Greater London Council [1989] AC 1280 Way v Swan Television and Radio Broadcasters Ltd (1991) 5 WAR 323

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : BALL & ORS -v- SETTLERS HOUSE PTY LTD & ORS [2005] WASC 90 CORAM : MASTER SANDERSON HEARD : 4 MAY 2005 DELIVERED : 17 MAY 2005 FILE NO/S : CIV 2567 of 2003 BETWEEN : ADRIAN PATRICK SEYMOUR BALL

JANET MARY BALL
First Plaintiffs

RALPH CEDRIC HORNE
CYNITHIA JOYCE HORNE
Second Plaintiffs

WILLIAM STANLEY PERRIMAN
Third Plaintiff

CARL JOSEPH REDMOND
Fourth Plaintiff

AND

SETTLERS HOUSE PTY LTD (ACN 100 742 265)
First Defendant

MARTIN DESMOND MULLINS
Second Defendant

KENNETH JOHN MULLINS
Third Defendant

(Page 2)

Catchwords:

Practice and procedure - Costs when offer made under O 24A - Whether circumstances such as to require special costs order

Legislation:

Nil

Result:

Application for special costs order dismissed

Category: A

Representation:

Counsel:

First Plaintiffs : Mr A R MacKinlay
Second Plaintiffs : No appearance
Third Plaintiff : No appearance
Fourth Plaintiff : Mr A R MacKinlay
First Defendant : Mr T J Kavenagh
Second Defendant : Mr T J Kavenagh
Third Defendant : Mr T J Kavenagh

Solicitors:

First Plaintiffs : MacKinlays
Second Plaintiffs : No appearance
Third Plaintiff : No appearance
Fourth Plaintiff : MacKinlays
First Defendant : Corser & Corser
Second Defendant : Corser & Corser
Third Defendant : Corser & Corser

(Page 3)

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Morgan v Johnson; Green v Lovatt; Gambrill v Cook (1998) 44 NSWLR 578
Rush & Tompkins v Greater London Council [1989] AC 1280
Way v Swan Television and Radio Broadcasters Ltd (1991) 5 WAR 323


(Page 4)

1 MASTER SANDERSON: This is the return of two chamber summonses. The first in time is a summons issued by the first and fourth plaintiffs, the second summons being issued by the defendants. Both summonses were listed for hearing together. In the event the defendants' summons was dealt with first. Both parties agreed that the decision on that summons would determine whether or not the plaintiffs' summons would proceed. The summons itself raises a short but important point to do with acceptance of an offer of settlement under O 24A. Before detailing precisely the relief sought by the defendants in the summons I should detail the background facts.

2 The plaintiffs and defendants have been in dispute for some time in relation to a property known as Settlers House in York. The precise details of that dispute are not presently of concern. On 24 December 2004 the defendants' solicitors wrote to the plaintiffs' solicitors offering to settle the action. Because of the importance of this letter I will quote it in full. The letter itself appears as "annexure DBM 1" to the affidavit of Daniel Bruce Moss ("Mr Moss") sworn 9 March 2005:

"Dear Sirs,

Ball, Horne, Perriman & Redmond v. Settler; House Pty Ltd & Mullins Supreme Court Action CIV 2567 of 2003 ('the Action')

This is an offer to settle the dispute between Carl Joseph Redmond ('the Plaintiff') on the one hand and Settlers House Pty Ltd, Martin Desmond Mullins and Kenneth John Mullins (collectively 'the Defendants') on the other.

This is an offer pursuant to Order 24A Rules of the Supreme Court and please consider this statement as a statement pursuant to Order 24A rule 1(2)(b).

We are instructed to advise that this offer has been prepared based on the following relevant factors.


· The Plaintiff decided to resort to legal action rather than to negotiate an acceptable outcome and he must accept the consequences of the decision to litigate

· If the offer is not accepted then considerable legal costs will be incurred by all with each party only being able to recover approximately 60% of the costs they incur

(Page 5)

· The offer is made pursuant to Order 24A of the Supreme Court rules which provides that if the Plaintiff does not accept this offer, and the Plaintiff obtains Judgment on his claim not more favourable to the Plaintiff than the terms of this offer, then, unless the Court otherwise orders, the Plaintiff shall be entitled to an order against the Defendant for the Plaintiff's costs up to and including the date of this letter, taxed on a party and party basis, and the Defendants shall be entitled to an order against the Plaintiff for the Defendants' costs thereafter, taxed on a party and party basis.

· At the mediation Mr Keogh indicated that irrespective of the outcome of the mediation, it was intended to make a complaint to the Australian Securities and Investment Commission in relation to the defendants' conduct which will, in the event, mean that the Defendants will incur further substantial legal costs.

· The following arrangements are identical to the arrangements made with the owner of the other units other than the payout figures which differ. In that regard we enclose a copy of a sample of those documents.

The defendants offer to settle the dispute on the following basis:

1. The Defendants will pay to the Plaintiff the sum of $3,073.27.

2. The Plaintiff will lease his units ('the Units') at Settlers House to the First Defendant with effect from 1 January 2005 for 4 years at a rent of $550 per month per unit for January 2005 and thereafter at $575 per month per unit. Rent shall be reviewed in accordance with the attached lease agreement. To facilitate a settlement the First Defendant will pay the first 2 months rent in advance on 1 January 2005, namely $2,250.

3. Accordingly on settlement the Plaintiff will receive $5,323.27.

4. The Unit Management Agreement made between the Plaintiff and Defendants will forthwith come to an end.

(Page 6)

5. The Plaintiff is at liberty to sell the Units. If within 1 year the Plaintiff sells any Unit on market (which means by public auction or private treaty after reasonable marketing) at a gross selling price of less than $65,000, the First Defendant will pay to the Plaintiff the difference between the gross selling price and his gross purchase price of $57,500. If any Unit is so sold at more than a gross selling price of more than $65,000, the Plaintiff shall be entitled to keep the difference.

6. The Plaintiff releases and discharges the Defendants from all actions, suits, causes of action, claims, demands, damages and costs whatsoever (whether at common law, in equity or under any statute) past, present and future and howsoever arising which the Plaintiff may have had, may now have or but for the acceptance of this offer may have at any future time in respect of or in connection with the subject matter of the Action.

7. The Defendants jointly and severally release and discharge the Plaintiff from all actions, suits, causes of action, claims, demands, damages and costs whatsoever (whether at common law, in equity or under any statute) past, present and future and howsoever arising which the Defendants may have had, may now have or but for the acceptance of this offer may have at any future time in respect of or in connection with the subject matter of the Action.

8. The Plaintiff shall within 7 days of acceptance of this offer, discontinue his action against the Defendants on the basis that the Plaintiff and the Defendants will each bear their own costs.

This offer may only be accepted in writing from you to us to be received by us by 31 January 2005.

Yours faithfully,

Corser & Corser"

3 There are two points to note about this letter. The first is that it is an offer made pursuant to O 24A of the Rules. This was not an attempt to negotiate a settlement independent of the Rules which while it may well

(Page 7)

have been effective was not subject to the provisions of O 24A. Second, by par 8 of the offer the defendants purported to deal with the question of costs. They anticipated that part of the bargain was that each party would bear their own costs. On 14 January 2005 the third defendant filed a Notice of Intention to Act in Person and on 19 January 2005 the second defendants did likewise.

4 The first and fourth plaintiffs' solicitors responded by letter dated 31 January 2005. Once again the letter is of importance and I will quote it in full (it appears as "annexure DBM 3" to the affidavit of Mr Moss).

"Dear Sir

BALL & OTHERS v SETTLERS HOUSE PTY LTD & MULLINS SUPREME COURT ACTION CIV 2567 OF 2003

___________________________________________________

We refer to your clients' without prejudice offers pursuant to Order 24A of the Supreme Court Rules addressed to Mr Redmond and Mr and Mrs Ball and sent to us on 24 December 2004.

We advise that we have been instructed to accept the terms of your clients' offers on behalf of the first and fourth plaintiffs. However, we draw your attention to Order 24A Rule 10(2) and note that paragraphs 6, 7 and 8 of the offer insofar as they relate to costs are of no effect for any purpose under Order 24A.

In the circumstances, we advise that we will be forwarding to you a draft bill for taxation. Upon receipt of that bill, please let us know whether your client is prepared to settle the matter of costs without having to resort to the additional expense of taxation.

We look forward to your response.

Yours faithfully

(Signature)

MACKINLAYS"

5 Order 24A deals with offers to compromise. Rules 1 through to 9 deal with the mechanics of making an offer, the way in which it is to be

(Page 8)

accepted, the consequences of failure to comply with an offer and various other matters. Order 24A r 10 deals with costs. Relevant for present purposes are r 10(1) and (2). These rules are in the following terms:

"(1) Upon the acceptance of an offer of compromise in accordance with Rule 3(5), the plaintiff may, unless the Court otherwise orders, tax his costs in respect of the claim against the defendant up to and including the day the offer was accepted and, if the costs are not paid within 4 days after the signing of a certificate of the taxation, enter judgment against that defendant for the taxed costs.

(2) If a notice of offer contains a term which purports to negative or limit the operation of paragraph (1), that term shall be of no effect for any purpose under this Order."

6 Given the wording of O 24A r 10(2) counsel for the defendants was prepared to accept that after the exchange of letters there was a binding settlement agreement but the terms as to costs were of no effect. It is to the credit of the first and fourth plaintiffs' solicitors that when they responded to the offer they drew the attention of the defendants' solicitors to the provisions of r 10(2). But it is doubtful whether or not their doing so made any difference to the parties' respective positions. There is no doubt an O 24A offer was made and that it was accepted. That means that any reference to costs in the agreement was to no effect. Given the terms of the first and fourth plaintiffs' solicitors letter there was an agreement and the defendants were not in a position to withdraw their offer once the provisions of r 10(2) were drawn to their attention.

7 Against that background the defendants issued a chamber summons seeking the following relief:

"1. As a result of the compromise of the action as between the First Plaintiffs and the Defendants there be no order as to costs.

2. As a result of the compromise of the action as between the Fourth Plaintiff and the Defendants there be no order as to costs.

3. Alternatively, the Plaintiffs have leave to discontinue the action and the action is hereby discontinued.

4. There be no order as to costs."

(Page 9)

8 In making this application the defendants were relying upon the wording of r 10(1). That rule allows a party accepting an offer to tax his costs in respect of the claim "unless the Court otherwise orders". It was the defendants' position that in this case, the Court would otherwise order. Essentially what was submitted was that the terms of the offer were clear – each party was to pay their own costs. That it was said was a fair bargain and that essentially was the deal which had been accepted by the first and fourth plaintiffs. That being so, the defendants ought not now have to pay the first and fourth plaintiffs' costs.

9 I am not satisfied that this is a case where a special costs order ought be made. The operation of O 24A is clear. A party who seeks to avail themselves of its terms, with the intent that the consequences of the failure to accept an offer may encourage the other party to settle, must as a general rule accept the consequences of making an offer. Of course costs are always a matter of discretion and doubtless r 10(2) is worded as it is to preserve that discretion. But in my view there is nothing in this case which would remove it from the ordinary run of the mill cases such as to require a costs order which would subvert the operation of r 10(1). In particular, there can be no suggestion of sharp practice on the part of the first and fourth plaintiffs' solicitors. They acted entirely properly and in the best interest of their client. Perhaps all that needs to be said is that if an offer of settlement is to be made under O 24A then care needs to be taken particularly with respect to costs.

10 I would dismiss the defendants' chamber summons. I will hear the parties as to the precise form of orders and as to costs.