Bartolo v Hancock - [2010] SASC 305

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
BARTOLO v HANCOCK
[2010] SASC 305
Judgment of The Honourable Chief Justice Doyle
5 November 2010
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - OFFER - GENERALLY
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - JUDGMENTS AND ORDERS
PROCEDURE - INFERIOR COURTS - SOUTH AUSTRALIA - MAGISTRATES COURT
MAGISTRATES - APPEALS AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT - NATURE OF APPEAL
Appeal against a decision of a Magistrate - offer to settle proceedings made on the first day of trial in the Magistrates Court - offer accepted on fifth day of trial - whether offer still open - whether offer only open for acceptance when announced in court - whether offer was a "here and now" offer - whether principles relating to offers made under the Magistrates Court (Civil) Rules 1992 relevant - whether offer amounted to an admission - whether Magistrate's decision was an interlocutory judgment - whether permission to appeal required - permission not required - appeal dismissed.
Magistrates Court Act 1991 (SA) s 3(1), s 40; Supreme Court Civil Rules 2006 r 288; Magistrates Court (Civil) Rules 1992 r 55, referred to.
Dysart Timbers Ltd v Nielsen [2009] 3 NZLR 160; Brdar v Kolo [2002] SASC 138; McLaren v Schuit (1983) 33 SASR 139, distinguished.
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Rule Chambers Pty Ltd v Badge Constructions (SA) Pty Ltd (2009) 261 LSJS 434, considered.

BARTOLO v HANCOCK
[2010] SASC 305
Magistrates Appeal: Civil

DOYLE CJ: Mr Bartolo sued Mr Hancock in the Magistrates Court. He claimed damages for breach of contract. The alleged breach was a failure to care properly for Mr Bartolo’s greyhounds. He also claimed damages for Mr Hancock’s failure to return the greyhounds. Mr Hancock denied the alleged breaches of contract. He filed a counterclaim for the cost of caring for certain greyhounds.
The case was listed for hearing before a Magistrate on 31 May 2010. Five days were allowed for the trial.
Before the trial began the parties negotiated on a without prejudice basis, but without success.
At the start of the trial, in answer to a question from the Magistrate about whether the negotiations had been successful, counsel for Mr Hancock said:
No your Honour I am instructed by my client to put his offer of an open offer to the court. His proposal is that both parties discontinue their claims and bear their own costs, walk away so to speak. My friend is obviously on notice that if that position is not bettered, the defendant will seek indemnity costs of the trial. If it is also the case that the plaintiff gets over the line, to use the colloquial, on liability but there is insufficient evidentiary material before your Honour for your Honour to make any more of an award of damages than nominal damages or some small amount that in fact should have been brought in the small claims jurisdiction, there will also be an application with respect to costs from my client.
Counsel for Mr Bartolo did not respond. He opened his case and the trial proceeded. Counsel for Mr Hancock said no more about the offer. She did not withdraw it then or later.
On the fifth day the defence case was well advanced. Counsel for Mr Bartolo then stated that Mr Bartolo accepted the offer made on the first day. He applied for an order dismissing the claim and counterclaim with no order as to costs.
Counsel for Mr Hancock denied that the offer was capable of acceptance.
The Magistrate ruled in favour of Mr Hancock. Mr Bartolo has appealed against that decision.
The issue is whether Mr Bartolo was entitled or able to accept Mr Hancock’s offer when he claimed to do so.
I will deal with this issue, then with some other matters that arose.
Submissions on Appeal
Mr Swan, counsel for Mr Bartolo at trial and on appeal, submits that the offer was an open offer, not subject to any express or implied condition. Ms Clark, also counsel at trial and on appeal, submits that the offer was to be understood as open for acceptance only when announced in court. She submits that by proceeding with the case Mr Bartolo rejected the offer. In any event, the offer had lapsed.
The meaning of the offer is to be determined objectively. That is, how would a reasonable person in the position of Mr Bartolo interpret and understand the offer? See Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at [40]. An objective approach is appropriate even though I am concerned with an offer rather than a contract. In answering this question one must have regard to the surrounding circumstances.
The trial was about to begin. The costs that each party would incur would increase with each day of the trial. Mr Hancock would pay much more by way of costs on day five than he would on day one. It was one thing to pay his own costs to day one, but another thing to pay his own costs to day five.
I consider that this kind of offer (mutual withdrawal with no order as to costs) would ordinarily be understood by a reasonable recipient as open for acceptance only for a very short time. This kind of offer is made to end the dispute then and there, without either party incurring further costs. Such an offer would usually be understood to reflect a wish by the offeror to avoid further expenditure on the basis that the further expenditure was likely to be unwarranted having regard to the likely recovery by either party, without in any way being precise about what that recovery was likely to be.
To treat the offer as open for acceptance (unless withdrawn) until the end of the case is to treat Mr Hancock as willing to let the case run and incur liability for an increasing amount for costs even though the result of a later acceptance (mutual withdrawal) could have been achieved on day one.
I have no hesitation in rejecting Mr Swan’s submission. It is contrary to my own understanding of the meaning of such an offer. It is not a matter of implying a term limiting the offer so much as understanding the offer. To my mind the context makes it clear that the offer was a “here and now” offer. Its aim was to dispose of the case then and there.
In Dysart Timbers Ltd v Nielsen [2009] NZSC 43; [2009] 3 NZLR 160 the Supreme Court of New Zealand dealt with a dispute similar to the present dispute. The issue was whether a settlement offer was able to be accepted, having regard to the circumstances in which the purported acceptance occurred. The majority of the Court preferred the approach of asking whether, there being no express term in the offer limiting its duration, it could be said that the basis on which the offer was made had “fundamentally changed”: at [4] Elias CJ and Blanchard J; at [26] Tipping J and Wilson J. I do not consider that their Honours intended to say that this was the approach always to be taken in such cases. In the present case I consider it more helpful to focus on the meaning of the offer, determined objectively. In a case like the present, the issue of what would amount to a fundamental change of circumstances turns on the meaning of the offer.
It is not to the point that an acceptance on day five means that Mr Bartolo also incurs additional costs. In my opinion any reasonable person in his position would understand that the purpose of the offer is to contain costs by ending the dispute then and there.
Nor is it to the point that under r 55 of the Magistrates Court (Civil) Rules 1992 (Magistrates Court Rules) an offer to consent to judgment has been interpreted as remaining open until judgment, unless withdrawn or varied: Brdar v Kolo [2002] SASC 138 at [16]. The regime under the Magistrates Court Rules for offers to consent to judgment is a regime created by the Magistrates Court Rules. There are clear differences between this kind of regime and the common law principles relating to the formation of contracts: see Rule Chambers Pty Ltd v Badge Constructions (SA) Pty Ltd [2009] SASC 70; (2009) 261 LSJS 434 at [24] and [25] White J with whom Duggan and Bleby JJ agreed. The regime established by the Rules throws no light on the meaning to be attributed to an offer which is governed by common law principles.
Mr Swan submits that the offer by Mr Hancock amounted to an admission upon which Mr Bartolo could claim a judgment. He submits that the offer is an admission to the effect that Mr Hancock’s counterclaim is worth no more than Mr Bartolo’s claim. He referred to McLaren v Schuit (1983) 33 SASR 139 at 155 where White J treated a settlement offer made by letter as amounting to an admission of fact. In some cases that may be an appropriate approach. But in this case I am unable to draw any admission of liability out of the offer. To my mind the offer reflects no more than an attempt to dispose of the matter on a broad axe basis, and to limit further costs.
The statement by Mr Hancock’s counsel that if Mr Bartolo did not better the offer Mr Hancock would seek indemnity costs is of no particular significance. It does not imply that the offer is to remain open until judgment. Even if counsel had made it quite clear that the offer had to be accepted then and there or would be withdrawn, the same warning could have been given. Mr Hancock’s claim to indemnity costs would have been made on the basis that Mr Bartolo had not bettered the offer made, and that has nothing to do with the question of how long the offer was open for acceptance. There is no need to make any comment on the question of whether a claim for indemnity costs would have succeeded.
Finally, the fact that counsel for Mr Hancock described the offer as “an open offer” is of no relevance. I consider that “open” is used in the sense of making it plain that the offer is not “without prejudice”, although as the offer was made in court it was unnecessary to do so. The word “open” does not amount to a statement that the offer is open for acceptance until final judgment.
Mr Hancock’s Applications
Ms Clark abandoned an application for an order striking out the appeal as incompetent. By s 40 of the Magistrates Court Act 1991 (SA) (the Act) a party to a civil action may appeal “against any judgment given in the action”. “Judgment” is defined in s 3(1) of the Act to mean “a judgment, order or decision and includes an interlocutory judgment or order...”. I consider that the Magistrate’s decision was an interlocutory judgment. When Mr Swan accepted the offer he applied, in effect, for orders dismissing the claim and counterclaim and orders as to costs. Those orders, if made, would have had the effect of terminating the proceedings. It does not follow that the Magistrate’s decision was a final order.
Ms Clark submitted that Mr Bartolo required permission to appeal. Section 40(2) of the Act provides:
(2)If the rules of the Supreme Court provide that an appeal from a judgment of a particular class can only be brought with the permission of that Court, the right of appeal is limited accordingly, but in any other case an appeal lies as of right.
Ms Clark submits that under the Supreme Court Civil Rules 2006 (Supreme Court Rules) an appeal against an interlocutory judgment given by a Judge of the Supreme Court requires permission to appeal. She submits that accordingly the Supreme Court Rules provide that an appeal of the relevant class, an appeal against an interlocutory judgment, can only be brought with permission, and accordingly permission is required for an appeal against an interlocutory judgment by a Magistrate. I do not accept that submission. On its face, r 288 of the Supreme Court Rules does not require the grant of permission. I do not consider that s 40(2) of the Act supports the comparative approach that Ms Clark relies upon. The sub-section means that if the Supreme Court Rules require a grant of permission for a particular kind of appeal, identified by the relevant rule, then that kind of appeal can be brought only with permission of the Court.
Ms Clark applied for an adjournment of the appeal until the transcript of the trial in the Magistrates Court was available, and further for an order that transcript be provided to Mr Hancock without him having to pay the ordinary fee because he could not afford to pay the fee. During the hearing I refused each of those applications. The application to have the transcript typed up came too late. It was not, in any event, necessary to have the transcript. Nor was I satisfied that a basis for a waiver of the fees was made out.
Ms Clark applied for an order extending the time for the institution of a cross-appeal. At the close of the plaintiff’s case she had applied for an order staying the proceedings on the basis that they were an abuse of process and on the basis that Mr Bartolo could prove an entitlement to nothing more than nominal damages. I refused the extension of time. In my opinion the application had come too late. Once the Magistrate gives judgment, if the judgment is adverse to Mr Hancock, he can raise any of these matters by way of appeal, if they are good points. I doubt whether they are. The Magistrate was not obliged to hear a submission that the proceedings were an abuse of process when that submission went to the object of the proceedings and to the strength of the plaintiff’s case, and in circumstances where Ms Clark asserted an entitlement, should the application fail, to proceed with the defence case. The Magistrate was entitled to require her to elect to call no evidence, if she were to make the application.
As to the application based on an assertion that the plaintiff could prove nothing more than an entitlement to nominal damages, I consider that that application was misconceived. The Magistrate was not obliged to entertain it at that stage, and indeed should not have done so. It is not clear what the application meant. It seems to be an invitation to the Magistrate to enter judgment for the plaintiff against the defendant for a nominal amount. If the defendant wished to present his case by way of counterclaim, the submission made by Ms Clark had to await the conclusion of that case.
Orders
I dismiss the appeal. It is not necessary to make orders relating to the various applications by Ms Clark, the orders having been made during the course of the appeal. I will hear the parties on the question of costs.