Basbuild Pty Ltd v Hall - [2014] SASC 44

SUPREME COURT OF SOUTH AUSTRALIA
(Appeals to a Single Judge: Civil)
BASBUILD PTY LTD v HALL & ANOR
[2014] SASC 44
Judgment of The Honourable Justice Blue
27 March 2014
PROCEDURE - COSTS - AGREEMENTS AS TO COSTS
PROCEDURE - COSTS - APPEALS AS TO COSTS - DISCRETION NOT EXERCISED
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PAYMENT INTO COURT, AND OFFERS TO SETTLE OR CONSENT TO JUDGMENT
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS
The appellants, Basbuild Pty Ltd, sued the respondents, Mr and Mrs Hall in the District Court for damages for wrongful termination of a building contract. In 2008, Basbuild filed a formal offer, pursuant to rule 187 of the District Court Civil Rules 2006 (SA), to settle the dispute for $40,000 plus costs of $3500. Basbuild's formal offer did not explicitly state the Halls could accept the offer of principal without also accepting the offer as to costs. In 2011, the Halls filed a formal acceptance of the formal offer.
Basbuild subsequently contended that the formal offer had been void for non-compliance with rule 187(3)(d) and applied for an order that there was no settlement or alternatively for an order that the Halls pay its costs of action incurred since it filed the formal offer. A District Court Master held that the formal offer was void because of non-compliance with rule 183(3)(d). On appeal, a District Court Judge held that, despite the non-compliance, the formal offer was capable of acceptance and was in fact accepted under rule 188(1)(d). Basbuild appeals against the interlocutory decision of the District Court Judge.
Held per Blue J (dismissing the appeal):
1. The formal offer was ambiguous as to whether it must be accepted in its entirety and therefore did not comply with rule 187(3)(d) (at [30]);
2. The formal offer was capable of acceptance in its entirety and was accepted by the Halls in its entirety under rule 188(1). It comprised a "formal offer of settlement" within the meaning of the Rules notwithstanding the non-compliance with rule 187(3)(d) (at [37]);
3. If the formal offer had not been effective, it would have been a procedural irregularity under rule 12 and would nevertheless have been valid by virtue of rule 12(1) (at [44]-[46]);
4. If there exists a discretion to make a different order as to costs than one reflecting the terms of the formal offer and acceptance, here is no reason to make a different order in the circumstances (at [55]);
5. If the formal offer had not been effective, no agreement for settlement would have arisen by way of accord and satisfaction at common law (at [67]-[68]).
6. The appeal is dismissed (at [69]).
District Court Civil Rules 2006 (SA) ss 4, 12, 117, 187, 188; Disctrict Court Act 1991 (SA) s 42; Rules of the Supreme Court 1965 (Tas) Order 24A, rule 3, referred to.
Heather v Vita Pacific Ltd (1996) 6 Tas R 120, discussed.
Ramsey…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Basbuild Pty Ltd v Hall

Details

AGLC: Basbuild Pty Ltd v Hall [2014] SASC 44
Case: [2014] SASC 44
Decision Date

CaseChat Overview and Summary

Basbuild Pty Ltd, the plaintiff, appealed against a decision of the District Court of South Australia which entered a consent judgment in their favour for $40,000 plus costs fixed at $3,500. The Halls, the defendants, had accepted a formal offer of settlement made by Basbuild. The court was required to decide whether the formal offer complied with rule 187(3)(d) of the District Court Rules, if not, whether the formal offer and acceptance were nevertheless effective to give rise to a consent judgment, and if not, whether compliance with rule 187(3)(d) should be dispensed with by the court pursuant to rule 117(2)(a). The court also had to decide whether, if the formal offer and acceptance were effective to give rise to a consent judgment, a different order as to costs should be made in the circumstances, and if the formal offer and acceptance were not effective to give rise to a consent judgment, whether they nevertheless gave rise to a contract compromising the action at common law.

The court found that the formal offer did not comply with rule 187(3)(d) as it did not specify the costs that the plaintiff claimed. However, the court found that the formal offer and acceptance were effective to give rise to a consent judgment. The court also found that there was no residual discretion to make a different order as to costs as the terms of the offer encompassed the issue of costs. The court dismissed the appeal and will hear the parties as to consequential orders.

The court's decision was based on the fact that the formal offer and acceptance were effective to give rise to a consent judgment, and that there was no residual discretion to make a different order as to costs as the terms of the offer encompassed the issue of costs. The court found that the formal offer did not comply with rule 187(3)(d) as it did not specify the costs that the plaintiff claimed, but this did not affect the effectiveness of the formal offer and acceptance in giving rise to a consent judgment. The court also found that compliance with rule 187(3)(d) should not be dispensed with by the court pursuant to rule 117(2)(a) as there were no exceptional circumstances.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The issues on appeal are:1.Did the formal offer comply with rule 187(3)(d)?2.If not, were the formal offer and acceptance nevertheless effective to give rise to a consent judgment?3.If not, should compliance with rule 187(3)(d) be dispensed with by the Court pursuant to rule 117(2)(a)?4.If the formal offer and acceptance were effective to give rise to a consent judgment, nevertheless should a different order as to costs be made in the circumstances?5.If the formal offer and acceptance were not effective to give rise to a consent judgment, did they nevertheless give rise to a contract compromising the action at common law?Background In June 2007, the Halls entered into a contract with Basbuild to build a home upon their land. As at March/April 2008, final council approval had not been obtained and construction work had not commenced. Each party purported to terminate the contract due to alleged breach and repudiation by the other party. On 1 May 2008, Basbuild issued an action in the District Court against the Halls claiming damages for breach and repudiation of contract of $67,500, inclusive of GST, representing profit lost on construction of the house. On the same date, Basbuild filed a formal offer of settlement under rule 187 (“the Formal Offer”) in the following terms (sic):OFFER OF SETTLEMENTThe Plaintiff’s OFFER pursuant to Rule 187 to settlement the action as follows:Payment in the sum of $40,000.00 inclusive of GST plus costs fixed in the sum of $3,500.00. On 15 December 2008, the parties attended a settlement conference at the District Court. There was a without prejudice discussion between the parties’ solicitors concerning settlement after the settlement conference. I address the contents of that discussion below. On 11 January 2011, the Halls filed and served a formal offer under Rule 187 offering to pay $25,000 plus costs fixed at $3,500. On 13 January 2011, the action was listed for trial in September 2011. There was a without prejudice discussion between the parties’ solicitors concerning settlement outside the listing conference. I address the contents of that discussion below. On 9 February 2011, the Halls filed and served a formal acceptance (“the Formal Acceptance”) of the Formal Offer in the following terms (sic):ACCEPTANCE OF OFFERThe First Defendant, DAVID HALL and the Second Defendant JOAN HALL, ACCEPTS pursuant to Rule 188 the offer made by the Plaintiff, BASBUILD PTY LTD filed on 1 May 2008 for payment of $40,000 (inclusive of GST) and legal costs of $3,500 and seeks judgment by consent in terms of that offer. On 9 February 2011, Basbuild’s solicitor sent an email to the Halls’ solicitor foreshadowing an application for an order that the Halls pay Basbuild’s costs of action incurred after 18 May 2008 (being 14 days after service of the formal offer). The Halls responded that the costs were fixed by the terms of the formal offer and formal acceptance at $3,500. In September 2011, Basbuild filed an interlocutory application seeking judgment for $40,000 inclusive of GST and an order that the Halls pay its costs on a solicitor/client basis on or after 15 May 2008. In November 2011, the Halls filed an interlocutory application seeking judgment in favour of Basbuild for $40,000, inclusive of GST, plus costs fixed at $3,500. In December 2011, Basbuild amended its interlocutory application to seek a determination that its Formal Offer did not comply with rule 187, the action had not been settled and therefore the action should proceed to trial. In the alternative, Basbuild sought the orders originally sought in September 2011.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

BLUE J

The communications between the solicitors are inconsistent with there being an offer by Basbuild which was on foot at common law in February 2011 to settle the action for $43,500 inclusive of costs.Conclusion I dismiss the appeal. I will hear the parties as to consequential orders.

Ratio Decidendi

Legal Principle Established

Established by: BLUE J

Basbuild puts two contentions why, even if there was a settlement under rule 187 and 188, a different costs order should nevertheless be made.Operation of rule 188(6) Basbuild contends that, on its proper construction, rule 188(6) applies when a settlement offer is not accepted within 14 days after service such that, when consent judgment is entered for the principal relief by reason of “late” acceptance of an offer, the plaintiff is entitled to its costs of action incurred after 14 days elapsed from the service of the formal offer on a solicitor/client basis. The Judge rightly rejected Basbuild’s contention. The first pre-condition for subrule 188(6) to operate is that a formal offer so far as it relates to principal relief is not accepted by the party to whom the offer is made. There is no reference to the offer not being accepted within 14 days after the date of service and no basis to read those words into the subrule. The second pre-condition for subrule 188(6) to operate is that the Court determines the relevant action on terms no more favorable than the terms of the offer. This refers to a contested determination and not to a consent judgment. Further, the existence of subrule 188(6A) as it was at the material times shows that a penalty might be applied in the case of late acceptance of a defendant’s offer but it was not contemplated that a penalty would apply in the case of late acceptance of a plaintiff’s offer.A residual discretion? Basbuild contends that, if judgment is otherwise to be entered in its favour for $40,000 plus costs fixed at $3,500, the District Court has a discretion to order the Halls to pay Basbuild’s costs incurred after 14 days had elapsed from service of the Formal Offer. Section 42(1) of the District Court Act 1991 (SA) (“the Act”) provides:(1) Subject to subsection (2) and the rules, costs in any proceedings in the Civil Division will be in the discretion of the Court and may be awarded against any person (whether a party to or a witness in the proceedings or not). Basbuild contends that costs are in the discretion of the Court and accordingly the Court can make an order for costs of the action to be taxed in its favour. Basbuild relies primarily upon section 42(1) of the Act and secondarily upon rule 263(1) of the Rules as implying that costs remain in the discretion of the Court notwithstanding the general rule. Section 42(1) of the Act is expressed to be subject to the Rules. The effect of rules 187 and 188, and in particular subrules 188(1) and (5) is that, when an offer of settlement relating to principal relief and costs is accepted in its entirety, a consent judgment will be entered administratively determining the action on a basis reflecting the terms of the accepted offer, namely for the principal relief and costs as specified. It may be that this leaves no room for a residual discretion of the Court to make a different order as to costs.[9] It is unnecessary to decide this question.[9] In Heather v Vita Pacific Ltd (1996) 6 Tas R 120 at 135-136, Zeeman J held that, in respect of an offer of compromise which had been accepted under Order 24A of the Rules of the Supreme Court 1965 (Tas), there was no residual discretion to make a different order as to costs when the issue of costs was encompassed in the terms of the offer. Zeeman J said “it would be entirely inconsistent with the scheme of O24A if a plaintiff who had accepted an offer could then be faced with an application by the defendant for costs. Such an application, if successful, would derogate from the compromise”.