COOPER & OXLEY BUILDERS PTY LTD [2008] WASC 63

Reported Decision:	(2008) 36 WAR 514
Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2008] WASC 63
Case No:	ARB:10/2007	Heard:	12 DECEMBER 2007
Coram:	SIMMONDS J	Delivered:	1/05/08
No of pages:	42	Judgment Part:	1 of 1
Result:	Application dismissed
Category:	A
PDF Version

Parties:	COOPER & OXLEY BUILDERS PTY LTD (ACN 051 395 718) BUNNINGS GROUP LTD (ACN 008 672 179)
Catchwords:	Arbitration Offer of compromise in relation to claims to which Commercial Arbitration Act 1984 (WA) applies Commercial Arbitration Act s 34(6) and s 61(1)(ba) Offer expressed to be under O 24A Whether court has jurisdiction to make orders under Rules of the Supreme Court O 24A r 8 in case of failure to comply with the terms of the offer Practice and procedure Offer of compromise under O 24A Order 24A r 4 Whether rule applied to offer by claimant to accept payment Whether there was failure to comply with the terms of the offer Practice and procedure Offer of compromise under O 24A Order 24A r 8(1)(a) Whether there was 'special cause' to order otherwise than as there provided
Legislation:	Commercial Arbitration Act 1984 (NSW), s 34, s 39 Commercial Arbitration Act 1984 (Vic), s 34, s 38, s 39, s 47, s 61 Commercial Arbitration Act 1984 (WA), s 3, s 4, s 34, s 38, s 42, s 47, s 61 Commercial Arbitration Act 1990 (Qld), s 34 Interpretation Act 1984 (WA), s 66(1) Rules of the Supreme Court (Qld), O 26, O 85 Rules of the Supreme Court 1970 (NSW), Pt 22, Pt 52, Pt 72A Rules of the Supreme Court 1971 (WA), O 1, O 24, O 24A, O 81D Rules of the Supreme Court of Victoria 1985 (Vic), Ch I, O 22, Ch II, O 24 Rules of the Supreme Court of Victoria 1986 (Vic), Ch I, O 1, O 26, Ch II, O 24 Supreme Court (Miscellaneous Civil Proceedings) Rules 1998 (Vic), O 9 Supreme Court General Procedure Rules 2005 (Vic), O 26
Case References:	620 Collins Street Pty Ltd v Abigroup Contractors Pty Ltd (No 3) [2006] VSC 492 Berry v Coghill [1982] VR 955 Doric Building Pty Ltd v Marine and Civil Construction Co Pty Ltd [2006] WASC 12 Florida Investments Pty Ltd v Milstern (Holdings) Pty Ltd [1972] WAR 148 HW Wilson Pty Ltd v Pitman (Unreported, VSC, Library No 10696, 6 December 1990) In The Matter of York Street Mezzanine Pty Ltd (in liq) [2007] FCA 922 Keywest Construction Group Pty Ltd v Footscray Holdings Pty Ltd (Unreported, WASC, Library No 930078, 23 February 1993) Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 529 Little v State of Victoria [1998] 4 VR 596 Mideco Manufacturing Pty Ltd v Tait [1989] VR 50 Mohamed v Farah [2004] NSWSC 482 Nauru Phosphate Royalties Trust v Matthew Hall Mechanical and Electrical Engineers Pty Ltd [1994] 2 VR 386 Nesci v Nesci [2005] WASC 65 Perri v Coolangatta Investments (1982) 149 CLR 537 Port of Melbourne Authority v Anshun Pty Ltd [1980] HCA 41; (1980) 147 CLR 35 Re Crittendon; Ex parte Law Institute of Victoria [1958] VR 101 Tobin v Dodd [2004] WASCA 288 Transit Australia Pty Ltd v Crewford Australia Pty Ltd [1998] 1 Qd R 690 York Brothers (Trading) Pty Ltd v Five Star Cruises Pty Ltd (Unreported, NSWSC, 055110/92, 4 December 1992) Young v Combe (Unreported, NSWSC, Library No 3254, 29 July 1993)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : COOPER & OXLEY BUILDERS PTY LTD [2008] WASC 63 CORAM : SIMMONDS J HEARD : 12 DECEMBER 2007 DELIVERED : 1 MAY 2008 FILE NO/S : ARB 10 of 2007 MATTER : Commercial Arbitration Act 1985 BETWEEN : COOPER & OXLEY BUILDERS PTY LTD (ACN 051 395 718)

Applicant

BUNNINGS GROUP LTD (ACN 008 672 179)

Respondent

Catchwords:

Arbitration - Offer of compromise in relation to claims to which Commercial Arbitration Act 1984 (WA) applies - Commercial Arbitration Act s 34(6) and s 61(1)(ba) - Offer expressed to be under O 24A - Whether court has jurisdiction to make orders under Rules of the Supreme Court O 24A r 8 in case of failure to comply with the terms of the offer

Practice and procedure - Offer of compromise under O 24A - Order 24A r 4 - Whether rule applied to offer by claimant to accept payment - Whether there was failure to comply with the terms of the offer

Practice and procedure - Offer of compromise under O 24A - Order 24A r 8(1)(a) - Whether there was 'special cause' to order otherwise than as there provided

(Page 2)

Legislation:

Commercial Arbitration Act 1984 (NSW), s 34, s 39

Commercial Arbitration Act 1984 (Vic), s 34, s 38, s 39, s 47, s 61
Commercial Arbitration Act 1984 (WA), s 3, s 4, s 34, s 38, s 42, s 47, s 61
Commercial Arbitration Act 1990 (Qld), s 34
Interpretation Act 1984 (WA), s 66(1)
Rules of the Supreme Court (Qld), O 26, O 85
Rules of the Supreme Court 1970 (NSW), Pt 22, Pt 52, Pt 72A
Rules of the Supreme Court 1971 (WA), O 1, O 24, O 24A, O 81D
Rules of the Supreme Court of Victoria 1985 (Vic), Ch I, O 22, Ch II, O 24
Rules of the Supreme Court of Victoria 1986 (Vic), Ch I, O 1, O 26, Ch II, O 24
Supreme Court (Miscellaneous Civil Proceedings) Rules 1998 (Vic), O 9
Supreme Court General Procedure Rules 2005 (Vic), O 26

Result:

Application dismissed

Category: A

Representation:

Counsel:

Applicant : Mr P K Walton

Respondent : Mr S J Davis

Solicitors:

Applicant : Jackson McDonald

Respondent : Lander & Rogers

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

620 Collins Street Pty Ltd v Abigroup Contractors Pty Ltd (No 3) [2006] VSC 492
Berry v Coghill [1982] VR 955
Doric Building Pty Ltd v Marine and Civil Construction Co Pty Ltd [2006] WASC 12

(Page 3)

Florida Investments Pty Ltd v Milstern (Holdings) Pty Ltd [1972] WAR 148
HW Wilson Pty Ltd v Pitman (Unreported, VSC, Library No 10696, 6 December 1990)
In The Matter of York Street Mezzanine Pty Ltd (in liq) [2007] FCA 922
Keywest Construction Group Pty Ltd v Footscray Holdings Pty Ltd (Unreported, WASC, Library No 930078, 23 February 1993)
Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 529
Little v State of Victoria [1998] 4 VR 596
Mideco Manufacturing Pty Ltd v Tait [1989] VR 50
Mohamed v Farah [2004] NSWSC 482
Nauru Phosphate Royalties Trust v Matthew Hall Mechanical and Electrical Engineers Pty Ltd [1994] 2 VR 386
Nesci v Nesci [2005] WASC 65
Perri v Coolangatta Investments (1982) 149 CLR 537
Port of Melbourne Authority v Anshun Pty Ltd [1980] HCA 41; (1980) 147 CLR 35
Re Crittendon; Ex parte Law Institute of Victoria [1958] VR 101
Tobin v Dodd [2004] WASCA 288
Transit Australia Pty Ltd v Crewford Australia Pty Ltd [1998] 1 Qd R 690
York Brothers (Trading) Pty Ltd v Five Star Cruises Pty Ltd (Unreported, NSWSC, 055110/92, 4 December 1992)
Young v Combe (Unreported, NSWSC, Library No 3254, 29 July 1993)

(Page 4)

SIMMONDS J

Introduction

1 This is an application by notice of motion in relation to an arbitration to which the Commercial Arbitration Act 1985 (WA) (CA Act (WA)) applies. The application is by the claimant in the arbitration, and is for judgment pursuant to Rules of the Supreme Court1971 (WA) O 24A r 8. Order 24A is for offers of compromise. Order 24A r 8 is for failures to comply with the terms of an accepted offer.

2 The principal issue raised by this application is whether O 24A r 8 is capable of application to a failure to comply with the terms of an accepted offer of compromise of claims in relation to an arbitration to which the CA Act (WA) applies. If O 24A r 8 is capable of such application, then the question arises of whether it applies, and, if it does apply, how it should be applied in this case.

3 As will become apparent, the principal issue is one on which there is no authority in this state squarely in point.

4 However, the CA Act (WA) provisions most directly relevant are for the most part shared with corresponding legislation of the other states and the Northern Territory that has been in force for over 15 years. Indeed each of the states and the Northern Territory has counterpart legislation to the CA Act (WA) which is substantially (but not entirely) uniform with the Western Australian legislation. There is authority on the corresponding provisions in that legislation.

5 However, there is no corresponding level of uniformity with respect to the rules relevant to the issues before me. Thus, there are difficulties with drawing out the relevance to the issue of the authority on that other legislation. Notwithstanding that difficulty, there is considerable assistance to be derived from at least some of those authorities.

6 In considering my judgment in this matter I was much assisted by written submissions and supporting materials provided to me following the hearing by the parties at my request. Those submissions and materials, which were substantial, were addressed to authorities from certain other states, as well as the evolution of the counterparts in the states and the Northern Territory to CA Act (WA), O 24A and O 81D, as well as certain other related provisions, past and present, in the Rules of the Supreme Court of this state. The submissions from the applicant were dated 24 January 2008, and those from the respondent were dated

(Page 5)

21 January 2008, although they were received in my chambers on 24 January 2008 under cover of a letter of that date. I have drawn on and quote from much of the material so provided.

7 For the reasons I set out below, I have reached the conclusion O 24A r 8 is not capable of the application I have referred to. In my view, offers of compromise of such claims may indeed be made 'under' or 'in accordance with' O 24A. That might be taken to mean that the offeror has made an offer by reference to the terms of O24A concerning the meaning of the offer, including its meaning for the position of the offeree in certain respects. However, the offer cannot be taken to be for the subjection of the parties to the procedure in O 24A r 8. An accepted offer may be enforceable in this court as an agreement for consideration. However, as was common ground before me, parties cannot through their contract provide for a special procedure like that in O 24A r 8 for the court to follow in case of default.

8 I begin by describing the background to and history and nature of the present application. I then review the relevant provisions of the CA Act (WA) and the Rules of the Supreme Court. I next turn to consider the issues as they emerge from the arguments of the parties with respect whether or not O 24A r 8 is capable of application in this case, and, if it is, whether or not in this case it applies, and, if it does apply, how it should be applied.

The background to the present application

9 This background is taken from the affidavit of Barry Edwards, a director of the applicant, sworn 6 September 2007 (the Edwards affidavit of 6 September 2007), and the affidavit of Michael John Champion, a partner in the firm of solicitors for the respondent, affirmed 27 September 2007 (the Champion affidavit of 27 September 2007). The account that follows appears to be common cause between the parties.

10 The applicant is a building contractor. The respondent is the well known retailer.

11 By points of claim dated 7 April 2006 the applicant, shown as 'Claimant', claimed against the respondent, shown as 'Respondent', a number of forms of relief in respect of a building contract entered into between the applicant and the respondent for the construction by the applicant of a Bunnings Warehouse in Kalgoorlie (the Building Contract). The forms of relief claimed included rectification of the Building Contract, extensions of time to the dates for practical completion under

(Page 6)

the Building Contract, and certain other non-monetary relief, as well as the following monetary relief (numbering as in the original):

(3) Delay costs in the sum of $85,883.00 plus GST as pleaded in paragraph 7, alternatively damages for delay as pleaded in paragraph 7.

(4) Delay costs in the sum of $180,453.00 plus GST under paragraph 9(6)(a).

(5) In the alternative to (3) and (4) delay costs in the sum of $229,260.00 plus GST under paragraph 9(6)(b).

(6) Alternatively relief under Section 82 and Section 87 of the Trade Practices Act equivalent to 51 days and 91 days extension of time as pleaded in paragraphs 7 and 9 and delay costs, alternatively damages for delay, as pleaded in paragraph 7 and 9 in the sum of $85,883.00 plus GST and $180,453.00 plus GST alternatively $229,260 plus GST by reason of the matters pleaded in paragraphs 7, 8 and 9.

…

(8) Payment of the unpaid balance of the Contract Sum of $120,501.80 plus GST as pleaded in paragraph 13.

(9) Payment of $246,950.00 being the amount of Cooper & Oxley's Bank Guarantee under paragraph 14

(10) Interest at the rate of 7% per annum compounding annually under paragraph 15 on the unpaid balance of the Contract Sum of $120,510.80 plus GST pleaded in paragraph 13 and on the amount of $246,950.00 being the value of Cooper & Oxley's Bank Guarantee pleaded in paragraph 14 and on the amounts awarded under paragraphs (3) and (4) or alternatively (5) and (6) from 27 January 2006 to the date of payment.

12 The claims for relief in the points of claim were carried forward in identical terms and with identical numbering in the amended points of claim dated 31 July 2007 in the arbitration.

13 By undated points of defence the respondent denied most of the allegations in the points of claim.

14 By undated points of counterclaim the respondent claimed a number of forms of relief, including an order for the payment of the balance, identified as $903,548.20, of the sum there referred to as the certified sum. This was the amount of a liquidated damages claim under the Building Contract totalling $1,272,000, less the unpaid balance of the

(Page 7)

value of work carried out by the applicant plus GST and less the sum of bank guarantees. There was also a claim for damages and interest.

15 On 27 July 2007 the applicant's solicitors served the respondent's solicitors with a document, dated 27 July 2007 and headed 'Offer of Compromise under Order 24A of the Rules of the Supreme Court 1971' (the Offer of Compromise), which read as follows:

1. This offer is made under Order 24A of the Rules of the Supreme Court 1971 (Western Australia).

2. This offer is made without prejudice.

3. The claimant offers to compromise all claims made in the Claimant's Points of Claim and the Respondent's Points of Counterclaim upon the following terms:

(a) The Respondent pay to the Claimant the sum of $100,000.00 in full and final satisfaction of all the claims made in the Points of Claim and Counterclaim.

(b) This offer of compromise is open for acceptance for a period of 30 days after service of this offer of compromise upon the Respondent.

16 In a letter dated 8 August 2007 to the solicitors for the applicant from the solicitors for the respondent (the Acceptance), after a reference to the Offer of Compromise, the following appears:

The respondent accepts the offer of compromise dated 27 July 2007.

17 On 6 September 2007 the applicant filed and served its application in these proceedings.

18 On 7 September 2007 a letter from the solicitors for the respondent to the solicitors for the applicants was delivered to the latter solicitors. That letter, under the heading 'Bunnings Group Limited v Cooper & Oxley Builders Pty Ltd Bunnings Warehouse – Kalgoorlie WA', enclosed a bank cheque for $100,000, which was referred to in the letter as 'representing settlement monies in this matter'. It is not in contest before me that this was the only tender of the sum referred to in the Offer of Compromise in purported payment thereunder, and that that tender, if within the time for payment under the Offer of Compromise, was payment for its purposes.

(Page 8)

The present application

19 The applicant's application in these proceedings was by notice of motion dated, as I have indicated, 6 September 2007, in which the applicant moved for the following orders 'pursuant to Order 24A r8(1) of the Rules of the Supreme Court':

1. The Respondent's Defence be struck out;

2. The Respondent's Counterclaim be dismissed;

3. Judgment be entered in favour of the Applicant for:

(a) payment of the sum of $85,883.00 plus GST under paragraph (3) of the Prayer for Relief in the Points of Claim (as amended);

(b) payment of the sum of $180,453.00 plus GST under paragraph (4) of the Prayer for Relief in the Points of Claim (as amended);

(c) payment of the unpaid balance of the contract sum of $120,501.80 plus GST under paragraph (8) of the Prayer for Relief in the Points of Claim (as amended);

(d) payment of $246,950.00 under paragraph (9) of the Prayer for Relief in the Points of Claim (as amended);

(e) interest at the rate of 7% per annum compounding annually on the sum of $120,520.80 plus GST and on the amount of $246,950.00 from 27 January 2006 to date of payment under paragraph (10) of the Prayer for Relief in the Points of Claim (as amended);

(f) the Respondent do pay the costs of the Applicant in respect of the arbitration including the costs of this application for judgement on an indemnity basis alternatively on the scale as between solicitor and client, to be taxed.

20 There were a number of affidavits filed in support of and opposition to the application. I return briefly to the following: in support of the application, the Edwards affidavit of 6 September 2007 and his affidavit of 12 October 2007 (the Edwards affidavit of 12 October 2007); and, in opposition to the application, the Champion affidavit of 27 September 2007 and his affidavit of 30 October 2007 (the Champion affidavit of 30 October 2007).

(Page 9)

The relevant provisions of the CA Act (WA) and the Rules of the Supreme Court

21 There are provisions in the CA Act (WA) with respect both to payment into court and to offers of compromise. Those provisions include ones with respect to the making of Rules of the Supreme Court in those respects.

22 The provisions in the CA Act with respect to payment into court and to offers of compromise are as follow, being s 34(1), (5) and (6) and s 61(1)(b) and (ba), as they were at most times material to these proceedings:

[S 34:]

(1) Unless a contrary intention is expressed in the arbitration agreement, the costs of the arbitration (including the fees and expenses of the arbitrator or umpire) shall be in the discretion of the arbitrator or umpire, who may -

(a) direct to and by whom and in what manner the whole or any part of those costs shall be paid;

(b) tax or settle the amount of costs to be so paid or any part of those costs; and

…

(5) Where a sum of money has been paid into the Court in accordance with rules of court in satisfaction of a claim to which an arbitration agreement applies, the arbitrator or umpire shall in exercising the discretion as to costs conferred on the arbitrator or umpire by subsection (1), take into account both the fact that money was paid into the Court and the amount of that payment.

(6) Where in accordance with rules of court an offer of compromise has been made in relation to a claim to which an arbitration agreement applies, the arbitrator or umpire shall, in exercising the discretion as to costs conferred on the arbitrator or umpire by subsection (1), take into account both the fact that the offer was made and the terms of the offer.

[S 61:]

(Page 10)

(1) Rules of court may be made under the

Supreme Court Act 1935

, for carrying the purposes of this Act into effect and, in particular, for or with respect to -

…

(b) the payment or bringing of money into and out of the Court in satisfaction of claims to which arbitration agreements apply and the investment of such money;

(ba) offers of compromise in relation to claims to which arbitration agreements apply;

23 The CA Act (WA) applies to 'an arbitration agreement … and to an arbitration under such an agreement' (s 3(2)), while an 'arbitration agreement' means 'an agreement in writing to refer present or future disputes to arbitration' (s 4(1) 'arbitration agreement').

24 It is not in dispute that the arbitration in this case is one to which the CA Act (WA) applies.

25 I leave aside CA Act (WA) s 42(3) relating to court ordered payment into court.

26 I note with respect to the phrase 'rules of court' in CA Act (WA) s 34(5) and (6) the following, from Interpretation Act 1984 (WA) s 66(1):

In a written law, 'rules of court' in relation to any court or tribunal, means rules made by the authority having for the time being power to make rules or orders regulating the practice and procedure of such court or tribunal.

27 There were formerly rules of the Supreme Court with respect to payment into court in O 24. Effective with the coming into force in 1991 of O 24A on offers of compromise, the principal rules of the former sort were replaced by the latter rules. However, there remain rules on payment into court in O 81D of the Rules of the Supreme Court on proceedings under the CA Act (WA), permitting a party to an arbitration agreement to make a payment into court: see O 81D r 12 - 15. There are no provisions in O 81D on offers of compromise.

28 For convenience, I set out the terms of O 24A. I will return to a number of the provisions of the order in due course.

1. Mode of making offer

(1) An offer of compromise is made to a party under this Order by serving a notice of the offer on the party.

(Page 11)

(2) A notice of offer shall -

(a) be in writing; and

(b) bear a statement to the effect that the offer is made under this Order.

2. Application

In any proceedings the plaintiff or the defendant may make to the other an offer to compromise any claim in the proceedings on the terms specified in the notice of offer.

3. Time for making or accepting offer

(1) An offer may be made at any time before the time prescribed by paragraph (8) in respect of the claim to which it relates.

(2) A party may make more than one offer.

(3) An offer may be expressed to be limited as to the time it is open to be accepted but the time expressed shall not be less than 28 days after it is made.

(4) An offeree shall, within 3 days after service, serve a written acknowledgment of receipt on the offeror.

(5) An offeree may accept the offer by serving notice of acceptance in writing on the offeror before -

(a) the expiration of the time specified in accordance with paragraph (3) or, if no time is specified, the expiration of 28 days after the offer is made; or

(b) the time prescribed by paragraph (8) in respect of the claim to which the offer relates,

whichever is sooner.

(6) An offer shall not be withdrawn during the time it is open to be accepted, unless the Court otherwise orders.

(7) An offer is open to be accepted within the period referred to in paragraph (5) notwithstanding that during that period the party to whom the offer (the 'first offer') is made makes an offer (the 'second offer') to the party who made the first offer whether or not the second offer is made in accordance with this Order.

(8) The time prescribed for the purposes of paragraphs (1) and (5) is -

(Page 12)

(a) where the trial is before a jury - after the Judge begins to sum up to the jury; or

(b) in any other case - after the Judge or Master gives his decision or begins to give his reasons for decision on a judgment (except an interlocutory judgment).

(9) Where an offer is accepted under this Rule, any party to the compromise may apply to the Court for such judgment or order as he may be entitled to and on the hearing of the application the Court shall give such judgment or make such order as it thinks fit.

4. Time for payment

An offer to pay a sum of money to a plaintiff shall, unless the notice of offer otherwise provides, be taken to be an offer to pay that sum within 28 days after acceptance of the offer.

5. Withdrawal of acceptance

(1) A party who accepts an offer may, by serving a notice of withdrawal on the offeror, withdraw the acceptance -

(a) where the offer provides for payment of a sum of money and the sum is not paid into Court within 28 days after acceptance of the offer; or

(b) where the Court gives leave so to do.

(2) On withdrawal of an acceptance all steps in the proceedings taken in consequence of the acceptance shall have such effect only as the Court may direct.

(3) On withdrawal of an acceptance or on the motion for leave to withdraw an acceptance, the Court may -

(a) give directions under paragraph (2);

(b) give directions for restoring the parties as nearly as may be to their positions at the time of the acceptance; and

6. Offer without prejudice

An offer made in accordance with this Order shall be taken to have been made without prejudice, unless the notice of offer otherwise provides.

7. Disclosure of offer to Court

(Page 13)

(1) No statement of the fact that an offer has been made shall be contained in any pleading or affidavit.

(2) Where an offer has not been accepted, then, except as provided by Rule 10(8), no communication with respect to the offer shall be made to the Court at the trial until after all questions of liability and the relief to be granted have been determined.

(3) This Rule shall not apply where a notice of offer provides that the offer is not made without prejudice.

8. Failure to comply with accepted offer

(1) Where a party to an accepted offer fails to comply with the terms of the offer, then unless for special cause the Court otherwise orders, the other party -

(a) shall be entitled to an order -

(i) where the party in default is the plaintiff, that the proceedings be dismissed; and

(ii) where the party in default is the defendant, that the defence be struck out,

and in either case to judgment accordingly; or

(b) may apply to the Court for such judgment or order as he may be entitled to and on the hearing of the application the Court shall give such judgment or make such order as it thinks fit.

(2) Where a party to an accepted offer fails to comply with the terms of the offer, and a defendant in the proceeding has made a cross-claim which is not the subject of the accepted offer, the Court may make such order or give such judgment under paragraph (1) and make such order that the proceeding on the cross-claim be continued as it thinks fit.

9. Multiple defendants

Where 2 or more defendants are alleged to be jointly or jointly and severally liable to the plaintiff in respect of a debt or damages and rights of contribution or indemnity appear to exist between the defendants, Rule 8 shall not apply to an offer unless -

(a) in the case of an offer made by the plaintiff - the offer is made to all defendants, and is an offer to compromise the claim against all of them;

(b) in the case of an offer made to the plaintiff -

(Page 14)

(i) the offer is to compromise the claim against all defendants; and

(ii) where the offer is made by 2 or more defendants - by the terms of the offer the defendants who made the offer are jointly or jointly and severally liable to the plaintiff for the whole amount of the offer.

10. Costs

(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.

(3) Paragraphs (4) to (6) apply to an offer which has not been accepted in the time prescribed by Rule 3(8).

(4) Where an offer is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains judgment on the claim to which the offer relates no less favourable to him than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled to an order against the defendant for his costs in respect of the claim from the date on which the offer was made, in addition to his costs incurred before that date, all such costs to be taxed on a party and party basis.

(4a) Paragraph (4) as it was before 1 March 2007 does not apply to an offer made by a plaintiff before 1 March 2007 unless the plaintiff obtains judgment on the claim to which the offer relates before 1 March 2007.

(5) Where an offer is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains judgment on the claim to which the offer relates not more favourable to him than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled to an order against the defendant for his costs in respect of the claim up to and including the day the offer was made, taxed on a party and party basis, and the defendant shall be entitled to an order against the plaintiff for his costs in respect of the claim thereafter, taxed on a party and party basis.

(Page 15)

(6) For the purpose of paragraph (5), where the offer was made on the first or a later day of the trial of the proceedings, then, unless the Court otherwise orders, the plaintiff shall be entitled to his costs in respect of the claim up to 11 a.m. on the day following the day on which the offer was made, taxed on a party and party basis, and the defendant shall be entitled to his costs in respect of the claim thereafter, taxed on a party and party basis.

(7) Where a plaintiff obtains judgment for the payment of a debt or damages and -

(a) the amount for which judgment is given includes interest or damages in the nature of interest; or

(b) by or under any Act the Court awards the plaintiff interest or damages in the nature of interest in respect of the amount,

then, for the purpose of determining the consequences as to costs referred to in paragraphs (4) and (5), the Court shall disregard so much of the interest as relates to the period after the day the offer was made.

(8) For the purpose of paragraph (7), the Court may be informed of the fact that the offer was made, and of the date on which it was made, but shall not be informed of its terms.

(9) Paragraphs (4) and (5) shall not apply unless the Court is satisfied by the party making the offer that the party was at all material times willing and able to carry out what the party offered.

29 I also note O 1 r 3(1), which is as follows:

(1) Subject to the provisions of this Order, these Rules shall have effect in relation to all proceedings in the Supreme Court.

30 It will be apparent that the applicant in the present application has invoked O 24A r 8(1)(a).

The issues

31 It appears to have been common cause that the principal issue in the these proceedings was whether or not O 24A r 8 was capable of application to an accepted offer of compromise in relation to claims made in an arbitration to which the CA Act (WA) applies. The applicant agreed that if that rule was incapable of such application, the application should be dismissed. There was no question in this case of any order being sought with respect to the accepted offer of compromise as a compromise

(Page 16)

to which that rule did not apply. However, I will have occasion to refer to that position again, below.

32 If O 24A r 8 was capable of application to accepted offers of compromise in relation to claims in arbitrations to which the CA Act (WA) applied, it appears to have been common ground both that the offer in question had to be one made 'under' or 'in accordance with' O 24A, and that the offer of compromise here was an offer of compromise 'under' or 'in accordance with' O 24A.

33 However, assuming O 24A r 8 was capable of application, there was a contest as to whether or not there was, in the language of O 24A r 8(1), a failure 'to comply with the terms of the offer'.

34 On the same assumption, and further assuming there was a 'failure to comply with the terms of the offer', there was a contest as to whether or not this was a case in which the court should conclude there was a 'special cause' within O 24A r 8(1), to order that the orders sought by the applicant should not be granted.

35 Finally, there was a contest over whether or not the present application was brought in the proper form.

36 I deal with those issues in that order.

Does O 24A r 8 apply?

37 I discuss here the question in the terms put to me by the applicant. Those terms were whether or not O 24A r 8 is capable of application, to accepted offers of compromise in relation to arbitrations to which the CA Act (WA) applies, by virtue of CA Act (WA) s 61(1)(ba) and s 34(6). The applicant submits it is capable of such application; the respondent submits it is not. I also discuss below the question whether or not the rule is capable of application by virtue of CA Act (WA) s 47.

38 It does not appear to have been submitted to me that O 24A applies of its own force. In any event, in view of O 1 r 3(1), and Keywest Construction Group Pty Ltd v Footscray Holdings Pty Ltd (Unreported, WASC, Library No 930078, 23 February 1993), which I discuss below, I consider any such submission could not succeed.

39 Keywest is authority in this court that O 24A had no application to offers made in relation to claims in an arbitration under the CA Act (WA) when that legislation lacked s 61(1)(ba) and s 34(6) in their present forms. However, on authority in this court decided since the introduction of those

(Page 17)

provisions in those forms, in relation to the decision of an arbitrator as to costs, the arbitrator under CA Act (WA) s 34(6) is to take account of an offer of compromise made in accordance with rules of court in relation to a claim to which an arbitration agreement applies that was not accepted. In that authority the court proceeded on the basis that the offer had been made 'pursuant' to O 24A. Indeed, it was put to me at the hearing that there is a practice in this state for parties to make such offers.

40 There is also authority from New South Wales and Victoria that the effect of the equivalents in those states to CA Act (WA) s 34(6) was that it was possible to make an offer of compromise 'under' or 'in accordance with' those states' counterparts to O 24A in relation to claims the subject of arbitration to which those states' equivalents of CA Act (WA) s 34(6) applied. Those authorities were decided at a time when those states had counterparts in comparable forms to O24A and to O 81D. Those are the only such authorities either counsel or I could find.

41 I turn now to consider this body of authority, and its relevance to the issue before me, beginning with the Western Australian authorities, after a brief review of the legislative history of CA Act (WA) s 34(6) and s 61(1)(ba).

42 Provision for an arbitrator to take account of an offer of compromise in the exercise of the arbitrator's discretion as to costs was introduced into the CA Act (WA) as s 34(6) in its present form by Act No 43 of 1997 (WA), which came into force on 6 January 1998. Prior that time the only provision requiring the arbitrator to take into account a matter in the exercise of that discretion was CA Act (WA) s 34(5) as it is now, with respect to money paid into court in accordance with rules of the court.

43 At the same time as CA Act (WA) s 34(6) was introduced into the legislation in its present form, s 61(1)(ba) was also added to the Act.

44 As I have indicated, Keywest is authority in this court that O 24A had no application to offers made in relation to claims in an arbitration under the CA Act (WA) at the time when that legislation lacked s 61(1)(ba) and s 34(6) in their present forms. Keywest was an appeal in an arbitration under the CA Act (WA). The respondent in the arbitration through its solicitors had delivered to the claimant a written offer of compromise of the claimant's claim and the respondent's counterclaim, for a sum of $80,000, to be paid by the respondent to the claimant. The offer, of 7 November, was stated to be 'made by the respondent under O 24 of the Supreme Court Rules' and to be open to be accepted for 28 days, that

(Page 18)

being the minimum period for an offer under O 24A by O 24A r 3(3). The claimant's solicitors responded to the offer by stating that the provisions of O 24A were 'not applicable to arbitration proceedings', drawing the attention of the solicitors for the respondent to the payment-in procedures in O 81D, and stating by way of conclusion that the offer of compromise was 'invalid and of no effect'. No steps were ever taken to accept the offer. The arbitrator made an interim award of slightly over $81,000 in favour of the claimant, which was a sum greater than that stipulated in the offer of compromise but substantially less than that claimed. Subsequently the arbitrator awarded the claimant its party-and-party costs to be taxed by a taxing officer on the Supreme Court scale but with the removal of 'the limits on all the allowances in the Fourth Schedule'. The appeal was against the costs determination.

45 Anderson J said this with respect to the offer of compromise (Keywest 13 - 14):

I turn now to consider the effect of the offer to compromise. It purported to be an offer to compromise under 24A. That rule does not apply to commercial arbitrations. Instead, the appropriate rule is O 81 r D. So much is conceded by the appellant. The appellant concedes that the coercive provisions of O 24A do not apply, in particular the provisions of r 10(5):

[O 24A r 10(5) as above is reproduced, up to the words 'taxed on a party and party basis']

However, the appellant contends that nevertheless, although purporting to have been made under the wrong provision in the Rules, the offer should be regarded as an open offer and the kind of offer about which Lord Goddard said in

Lewis v Haverfordwest Rural District Council

[1953] 2 All ER 1599 at 1600 that it was 'an excellent reason for refusing costs to the applicant'. There are two reasons why this submission must be rejected in this particular case. In the first place, the offer was in fact less favourable to the subcontractor than was the award. The offer was for $80,000. The award was for slightly in excess of $81,000. In the second place, the offer made no reference to costs which by the time of the offer must have been very very substantial. Whether the provisions of O 24A, relating to costs, would be regarded as having been incorporated as a matter of contract in the event of acceptance of the offer is an open question - a question upon which there is much to be said on each side. However the arbitrator awarded costs on the basis that the limits contained in the Fourth Schedule should be lifted. It is impossible to construe the informal offer of 7 November as an offer to pay costs on that basis. For these reasons, I am of the opinion that the fact of the offer did not in this case furnish a proper reason why the successful subcontractor should have been deprived of the costs incurred after the date of the offer.

(Page 19)

46 There appears to be only one other authority in which there is a reference to the applicability or otherwise of O 24A to offers of compromise in relation to claims in an arbitration to which the CA Act (WA) applies that either counsel or I could find. That authority is Doric Building Pty Ltd v Marine and Civil Construction Co Pty Ltd [2006] WASC 12. That decision came after the coming into force of the present CA Act (WA) s 34(6).

47 Doric was also an appeal in an arbitration under the CA Act (WA). The claimant had made an 'offer to compromise' on 5 May 2004 'pursuant to O 24A of the Rules of the Supreme Court': [80] (Hasluck J). By the offer the claimant advised the respondent, which had made a counterclaim, that the claimant was prepared to accept the sum of $390,000 exclusive of GST in full and final settlement of all disputes between the two in the arbitration proceedings and all claims the claimant considered it might have in the arbitration proceedings. This offer was not accepted. The arbitrator subsequently dismissed the respondent's counterclaim and made an award in favour of the claimant of $716,573 plus interest. He also ordered the respondent to pay the claimant's costs on the Supreme Court scale on a party and party basis to 5 May 2004 and thereafter on an indemnity basis, with certain inclusions and exceptions not here material. Leave to appeal the arbitrator's award under CA Act (WA) s 38(5) was sought on a number of grounds, two of which were that, respectively, the arbitrator erred in treating the O 24A offer before certain possible claims and payments had been finalised, and consequently he had erred in finding the claimant was entitled to costs incurred after 5 May 2004 taxed on an indemnity basis.

48 Hasluck J concluded that it was not appropriate to grant leave to appeal as the arbitrator's view that the possible claims and payments did not have an effect on the present liability to pay the sum awarded was not shown to be an error 'of law of the kind required to satisfy the criteria in [CA Act (WA) s 38(5)]': Doric [178]. Further, his Honour stated that even if leave were granted, the appeal would be dismissed as he was not persuaded the arbitrator had erred in law in the respects claimed: [179].

49 I note that in Doric the possible application of O 24A in relation to a claim in arbitration proceedings under the CA Act (WA) was not the subject of any of the grounds of appeal, and appears not to have been the subject of argument in that case. There is no reference to Keywest in Doric, and no indication that it was cited to the court.

(Page 20)

50 I further note that there appears to have been no argument in Doric addressed to the indemnity basis for the costs order. Order 24A r 10(4), as it was at the time of that case, differed from the current form of that rule, which makes no reference to indemnity costs, by making a provision for such costs of the plaintiff after the date on which the offer was made. I return to that earlier form of the rule below.

51 The matter of the possible application of a rule like O 24A to claims to which legislation like the CA Act (WA) applies but where there is no provision for offers of compromise in special rules like O 81D is the subject of discussion in two authorities from other states. Those authorities address that matter on the law when their equivalents to CA Act (WA) included an equivalent to s 34(6), when their rules included a general rule for offers of compromise, equivalent to O 24A, and when their special rule for arbitrations under their equivalent to CA Act (WA) provided for payments into court, but not for offers of compromise, in relation to claims in arbitrations under that legislation.

52 The earlier of the two authorities is Mideco Manufacturing Pty Ltd v Tait [1989] VR 50. It is the most extended discussion of the matter I have described that the parties or I have been able to locate.

53 Mideco was an application by the respondent for leave to apply to the Supreme Court of Victoria under Commercial Arbitration Act 1984 (Vic) s 39 (CA Act (Vic)) for determination of certain questions of law, one aspect of which was whether an offer of compromise made by the claimant to the respondent was capable of being an offer of compromise under the then Victorian counterpart to O 24A, Rules of the Supreme Court 1986 (Vic) Ch I O 26 (Ch I O 26 (Vic)). The respondent had made an 'offer of compromise' to the claimant in the arbitration in the sum of $45,000 together with costs and disbursements on a party and party basis to remain open for 14 days. That period was the minimum period under Ch I O 26.03(3) (Vic) for an offer of compromise, which may be compared with the 28 day period provided for under the Western Australian O 24A r 3(3). The offer concluded with '[i]n accordance with the Rules we require written confirmation of service from you of this offer of compromise'. I note that there was no counterpart in Ch I O 26 (Vic) to the Western Australian O 24A r 3(4), requiring the offeree within three days after service to serve a written acknowledgement of receipt on the offeror.

(Page 21)

54 In the event the offer was not accepted, and the arbitrator made an interim award of $33,092.63, a sum 'considerably' less than the amount claimed, and also less than the offer amount.

55 Gobbo J in Mideco noted in his reasons that the CA Act (Vic) had been amended, to introduce a new s 34(5A) and to remove the rule making power in s 61, by Supreme Court Act 1986 (Vic). Those amendments came into force on the same day, 1 January 1987, as Ch I O 26 (Vic) came into effect. CA Act (Vic) s 34(1) and (5A) were in the same terms as CA Act (WA) s 34(1) and (6), respectively, while the previous s 61 of the former Act was materially in the same terms as CA Act (WA) s 61 as originally enacted.

56 Gobbo J in Mideco said this, at 55 - 56 (emphases added), as to whether or not the offer of compromise was 'capable of amounting to an offer of compromise within ch I O 26', commencing with a quotation from Interpretation of Legislation Act1984 (Vic), which it may be observed is very similar to Interpretation Act s 66(1) earlier set out:

Reference needs to be made also to s38 of the

Interpretation of Legislation Act 1984

which defines Rules of court as follows: -

'"Rules of court", in relation to any court, means rules made by the authority having power to make rules or orders regulating the practice and procedure of that court.'

If one puts that definition into s34(5A) that means that there is an offer of compromise where it has been made in accordance with rules made by the Judges of the Supreme Court, they being the authority having the power to make rules or orders regulating the practice and procedure of that court.

There is added force given to the argument as to the application of O 26 by the fact that s34(5A) came into force on the same day as O 26 was first introduced into the Supreme Court Rules.

In addition, at the same time as the new Supreme Court Rules came into force, the power in s61 of the Commercial Arbitration Act to make rules as to the conduct of arbitrations was removed: see the Schedule to the Supreme Court Act 1986.

It was argued that the phrase 'Rules of court' in s34(5A) must mean appropriate Rules of court. Moreover, the subsection, it was said, postulates rules that are expressly or impliedly applicable to arbitrations, in much the same way as rules for payment in arbitration proceedings form part of Chapter 2 of the Rules of the Supreme Court. It was also argued that the rules must refer to rules made for arbitrations, otherwise the phrase 'Rules of court' could comprehend rules of any court, including the Federal Court or the Magistrates' Court.

(Page 22)

It was argued that the wording of r1.05(1) of Chapter 1 of the Rules of the Supreme Court made it clear that those rules applied only to civil proceedings in the Court and thus could not apply to arbitrations. It was also argued that if the applicant's view were adopted, it could mean that other quite inappropriate provisions of Chapter 1 would apply to arbitrations. Finally, it was put that O 26 was difficult, if not practically impossible, to apply to arbitrations.

In my view, the foregoing arguments should be rejected. The critical question is not whether the rules themselves make O 26 applicable to arbitrations. Plainly, r1 05 does not. The question rather is whether s34(5A) of the Commercial Arbitration Act must be taken to mean that an offer of compromise made in accordance with the relevant Rules of Court was to be taken into account. In this sense, the Act overrides the rules. This statutory direction is peculiar to offers of compromise, so it cannot be said that this view means that other rules in Chapter 1 become applicable. It is true that the verbiage of r26 is such that it is difficult to apply to arbitrations. No doubt rules may be made by the Court to deal specifically with arbitrations, or specifically referring to the applicability of some portions of those rules. But that does not mean that s34(5A) is to be treated as having no capacity to bring existing rules as to offers of compromise into operation with such modifications as are appropriate.

I have accordingly concluded that, as a result of s34(5A), O.26 is capable of applying to arbitration proceedings.

The second part of the first main question depends on whether the letter of 21 December 1987 is capable of amounting to an offer of compromise within O 26.

There are many parts of the verbiage of O 26 that make it difficult to apply it to arbitrations. For a start, the definitions in O 26 of 'plaintiff' and 'defendant' are not apposite. There are many provisions other than O 26 which are geared to verdicts and judgments rather than awards that pose some difficulty in application, even with modification. All of this may make an argument for rules expressly tailored to arbitrations. In addition, r26 08 [which I take to be a reference to r26 08(3), corresponding as I will indicate below to O 24A r 10(5)], which deals with the costs consequences of failure to accept an offer of compromise cannot apply in terms literally to arbitrations, for it is in the nature of a formula rather than a guideline. But the tenor of the concluding words of s34(5A) appears to be referring to guidelines rather than any kind of a strict formula. I am of the view that an offer of compromise can still be made in accordance with O 26 even though not all the provisions of O 26 can readily apply. It is significant that s34(5A) in effect recognises this, since it does not postulate automatic application of the rules but merely directs the arbitrator to take them into account.This may be taken as meaning that to the extent that the rules apply, they are to be taken into account. The one matter, however, that must be met if the subsection is to apply, is that there must be an offer of compromise in accordance with the rules.

(Page 23)

The respondent argued that the letter here could not be said to be an offer in accordance with the rules in that it failed to comply in a number of critical respects. These were the non-compliance with r26 03 and the failure to comply with O 27 dealing with the content of court documents.

As to the latter, there are many respects in which the present letter does not comply with O 27. All these are matters of form, and non-compliance is able to be dispensed with by the Court in the ordinary course of a civil proceeding. R2 04 of Chapter 1 of the Rules provides as follows: -

'The Court may dispense with compliance with any of the requirements of these Rules, either before or after the occasion for compliance arises.'

But the Court is not involved in the application of the offer to an arbitral award. That is a matter for the arbitrator and it is very doubtful whether the arbitrator has the power to dispense with the requirements of the Rules of the Court. I am of the view, however, that an offer can be made 'in accordance with' the rules, even where it is not in strict compliance with the rules. A mere irregularity, such as the size of the paper used, was not intended, in my view, to preclude an offer falling within s34(5A).

But of more substantive importance is the obligation to make the offer in writing and to have it contain a statement that it is served in accordance with the rules. Equally important is the obligation in the rules (see r26 03(3)) that the time specified for acceptance shall not be less than 14 days after service. This latter obligation was, in my view, met in this letter. As to the statement of service, that is very much more debatable. The letter contains a heading 'offer of compromise' but the reference to the rules is restricted to requiring acknowledgment of service.

I have concluded that the offer of compromise in the present case does not meet the obligation I have referred to, in that it does not contain a statement that it is served in accordance with Pt2 of O 26 of the Rules. This does not mean that the offer is wholly ineffective, but it does mean that it cannot properly be described as being an offer of compromise made in accordance with the rules, within the strict meaning of s34(5A).

57 I note that 'r1.05(1) of Chapter 1 of the Rules of the Supreme Court' appears to correspond to the Western Australian O 1 r 3(1), while there appears to be no provision in this State corresponding to 'O 27'.

58 It will be seen from the second set of words from Mideco emphasised above that Ch I O 26 (Vic) was not considered to be applicable of its own force to offers of compromise in relation to claims made in arbitrations under the CA Act (Vic). This was so notwithstanding that the power to make rules in the provision in the CA Act (Vic) s 61 corresponding to CA Act (WA) s 61 as it was at that time had been

(Page 24)

removed from the Victorian legislation, and that the Victorian equivalent to O 24A had come into force at the same time as the Victorian equivalent to CA Act (WA) s 36(6).

59 Rather, the application of Ch I O 26 (Vic) was considered to be the result of CA Act (Vic) s 34(5A). That provision, in the passage quoted as part of the third set of emphasised words above, 'does not postulate automatic application of the rules but merely directs the arbitrator to take them into account'.

60 Further, such was considered to be the effect of s 34(5A) notwithstanding that, as indicated in the third set of words from Mideco emphasised above, 'not all the provisions of O 26 can readily apply'.

61 Finally, the matter of how, under CA Act (Vic) s 34(5A), 'in accordance with rules of court an offer of compromise has been made in relation to a claim to which an arbitration agreement applies' is explained (at least in part) in the fourth set of words from Mideco emphasised above. The offer in that case, as is indicated from the concluding sentence in those emphasised words, was not so 'made'. Thus, it appears from Mideco that, even although an offer of compromise otherwise within Ch I O 26 (Vic) could not give rise to the consequences in r 26.08(3) because of the inconsistency there referred to between that provision and s 34(5A), that did not prevent such an offer being one to which the latter provision related. I note that Ch I r 26.08(3) (Vic) was in identical terms to O 24A r 10(5), except that in the former the 'date the offer was served' was used instead of the 'date the offer was made' in the latter.

62 I note that CA Act (Vic) s 34(5A), like CA Act (WA) s 34(6), does not in terms require the arbitrator to take account of 'rules', but rather the 'fact the offer was made and the terms of the offer'. In my view the reference in Mideco to the provision as one that 'directs the arbitrator to take [the rules] into account' should be read as directing him to do so by reference, among other things, to the way Ch I O 26 (Vic) makes relevant to costs the fact an offer was made and its terms.

63 I also note that no reference is made in Mideco to the Supreme Court (Commercial Arbitration) Rules 1985 (Vic), which substituted a new O 24 in Rules of the Supreme 1985 (Vic) Ch II(Ch II O 24 (Vic)), or to the form of that new order as it existed at the time material for the purposes of that decision. That new order contained among other provisions Ch II O 24 r 9 - 12 (Vic), on payment into court of a sum of money in satisfaction of a claim to which an arbitration agreement applied; it did

(Page 25)

not contain any provisions as to offers of compromise. At the time of the introduction of the new Ch II O 24 (Vic) there was a provision in the

Rules of the Supreme Court 1985

(Vic) Ch I, O 22 (former Ch I O 22 (Vic)), corresponding to the former O 24 in the Rules of the Supreme Court in this state, having to do with payments into court. At the time of

Mideco

it appears that former Ch I O 22 (Vic) was no longer in force, while Ch II O 24 (Vic) was in force, in the same terms, as O 24 of the

Rules of the Supreme Court 1986

(Vic) Ch II.

64 The other authority in the category in which I have placed Mideco is York Brothers (Trading) Pty Ltd v Five Star Cruises Pty Ltd (Unreported, NSWSC, 055110/92, 4 December 1992). York Brothers was an application for leave to apply under Commercial Arbitration Act 1984 (NSW) (CA Act (NSW)) s 39 for determination of certain questions of law. The question was whether an arbitrator had the power under CA Act (NSW) s 34 to award a claimant costs to be taxed or settled on an indemnity basis. CA Act (NSW) s 34(1) on the arbitrator's discretion as to costs was in the same terms as CA Act (WA) s 34(1). Cole J in York Brothers referred to the fact that 'apparently there was some doubt', in view of CA Act (NSW) s 34(1), whether or not the reference there 'only to party and party and solicitor and client costs excluded a power in an arbitrator to award costs on an indemnity basis'.

65 At the time of York Brothers there were rules of court as to arbitrations under the CA Act (NSW) and the Supreme Court Rules 1970 (NSW) pt 72A (pt 72A (NSW)), which included, in pt 72A div 2, rules on payment into court. Those rules had come into force on 12 July 1985. There were, however, no rules in pt 72A (NSW) as to offers of compromise at the time of York Brothers.

66 Also at the time of York Brothers there were rules on offers of compromise, in Supreme Court Rules (NSW) pt 22 (pt 22 (NSW)) read with pt 52 (pt 52 (NSW)) r 17, corresponding to those in O 24A. Part 22 (NSW) had come into force on 23 July 1989.

67 Finally, at the time of York Brothers, CA Act (NSW) s 34(6) was in identical terms to CA Act (WA) s 34(6).

68 Cole J in York Brothers, in the course of answering the question for determination in that case in the affirmative, referred to CA Act (NSW) s 34(6) and pt 22 (NSW), but not pt 72A (NSW), as follows:

Since s 34 was initially enacted there has been enacted by virtue of Act no 100 or 1990 an amendment which introduced subs 6 in the following form:

(Page 26)

'Where in accordance with rules of court an offer of compromise has been made in relation to a claim to which an arbitration agreement applies the arbitrator or umpire shall in exercising the discretion as to costs confer on the arbitrator or umpire by subs 1 to take into account both the fact that the offer was made and the terms of the offer.'

The rules of the court referred to in subs 6 include Pt 52 r 17 which deals with offer of compromise. It is clear from Pt 52 r 17 that where an offer of compromise is made and where it is made by a plaintiff and not accepted by the defendant and the plaintiff obtains an order or judgment on the claim to which the offer relates no less favourably to him than the terms of the offer, then unless the court otherwise orders the plaintiff shall, subject to r 24, be entitled to an order against the defendant for his costs in respect of the claim from the day on which the offer was made, taxed on an indemnity basis.

The effect of the introduction of s 34 subs 6 of the Commercial Arbitration Act 1984 is to incorporate that power as a power which the Arbitrator now has.

69 I note that, at the time of York Bros,the provision in O 24A, O 24A r 10, corresponding to pt 52 (NSW) r 17, provided for indemnity costs in the same way its NSW counterpart did: see O 24A r 10(4) as amended by Supreme Court Amendment Rules (No 6) 1991 (WA) (on offers made by a plaintiff and not accepted by a defendant). That Western Australian provision for indemnity costs was removed by Supreme Court Amendment Rules 2007 (WA) which produced the current form of that rule.

70 I consider that York Brothers, which makes no reference to Mideco, is to the same effect in the respect that most directly concerns me. That respect is that it was the effect of the equivalents at the times of those decisions to CA Act (WA) s 34(6) to direct the arbitrator in the exercise of his or her discretion as to costs to take certain matters into account. This was to occur where in accordance with rules of court an offer of compromise had been made in relation to a claim to which an arbitration agreement applied. The matters to be taken into account were the fact the offer had been made and the terms of the offer. This account was to be by reference, among other things, to the ways the equivalents in those states to O 24A r 10 made relevant to costs the fact that offer had been made and its terms. York Brothers indicates that that effect was not dependent on the date of coming into force of the equivalent to s 34(6) nor on the date of coming into force of the rules on offers of compromise.

(Page 27)

71 York Brothers was considered in 620 Collins Street Pty Ltd v Abigroup Contractors Pty Ltd (No 3) [2006] VSC 492. 620 Collins St was an application under CA Act (Vic) s 38 for leave to appeal against an order of an arbitrator for indemnity costs in part, on two grounds, one of which was that the arbitrator had no power to award indemnity costs. I note that the only material changes in the legal context in Victoria since the decision in Mideco had been two.

72 One was that Ch I O 26 (Vic) had become Supreme Court (General Civil Procedure) Rules 2005 (Vic) O 26 (new O 26 (Vic)), which differed from the previous order as to costs for the plaintiff for an offer not accepted by the defendant in providing in certain circumstances for costs on an indemnity basis. The relevant provisions in the new O 26 (Vic), r 26.08(2), (7) and (8), were as follows:

(2) Where an offer of compromise is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains a judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled -

(a) if the claim of the plaintiff is for damages for or arising out of death or bodily injury, to an order against the defendant for the plaintiff's costs in respect of the claim taxed on an indemnity basis;

(b) in the case of any other claim of the plaintiff, to an order against the defendant for the plaintiff's costs in respect of the claim up to and including the day the offer was served taxed on a party and party basis and for the plaintiff's costs thereafter taxed on an indemnity basis.

…

(7) Paragraphs (2) and (3) shall not apply unless the Court is satisfied by the party serving the offer of compromise that that party was at all material times willing and able to carry out the party's part of what was proposed in the offer.

(8) Where the plaintiff obtains judgment for the recovery of a debt or damages, and the amount of the debt or the damages was not in dispute, but only the question of liability, paragraph (2) shall not apply unless the Court is satisfied that the plaintiff's offer was of a genuine compromise.

73 The first mentioned sub-rule was the only reference in the new O 26 (Vic) r 26.08 to indemnity costs.

(Page 28)

74 The other material change was that Ch II O 24 (Vic) had become Supreme Court (Miscellaneous Civil Proceedings) Rules 1998 (Vic) O 9 (O 9 (Vic)) r 9.09 - 9.16, which differed from the previous rules in making provision for offers of compromise. The rule as to costs where an offer was not accepted was O 9 (Vic) r 9.15 as follows:

In any exercise of discretion as to costs the arbitrator or umpire shall consider whether the party serving an offer of compromise was at all material times willing and able to carry out his or her part of what was proposed in the offer.

75 York Brothers had been relied upon by the arbitrator in making the costs award, and the court was invited find 'the facts in the York Bros case are distinguishable' or to find that the case was wrongly decided and 's 34 subs 6 informs but does not enlarge' the discretion to award costs granted by s 34(1). However, as I read the decision in 620 Collins St the court did neither, but rather concluded the arbitrator had no power to award indemnity costs. This conclusion was on the following basis, which appears to explain York Brothers in terms of the law in NSW at the time of that decision: 620 Collins St [28], [29] (Osborn J):

76 In my view when the Rules are viewed as a whole it is apparent:

(a) that chapter II makes discrete provision for offers of compromise in commercial arbitrations;

(b) no rule as to indemnity costs is specified by such provisions;

Further, there can be no implication that the rules contained in rule 26.08 of chapter I apply when:

(a) rules 9.05–9.16 of chapter II create a separate code with respect to offers of compromise in commercial arbitrations;

(b) rule 9.15 of chapter II conveys a discretion by reference to criteria different from that set out in rule 26.08(2), (7) and (8) of chapter I.

77 It seems to me that the implication for this state to be drawn from 620 Collins St is that it is necessary to look first to any special rules for offers of compromise in relation to claims in arbitration under the CA Act (WA) to determine the effect on the discretion in s 34(1) of 'the rules' referred to in s 34(6). Western Australia, of course, has no such special rules at present.

(Page 29)

78 Finally, I note the authority of Transit Australia Pty Ltd v Crewford Australia Pty Ltd [1998] 1 Qd R 690, which was relied upon by the applicant as authority for the proposition that the Queensland counterpart of CA Act (WA) s 34(6) required an arbitrator to take into account offers that complied with rules of court. To the extent that authority was relied upon for the position as to the application of O 24A, it is readily distinguishable.

79 In Transit there was an appeal by leave against a determination by an arbitrator that an oral offer of settlement made by the respondent to the claimant should not be considered by the arbitrator in his determination of the question of costs. It was not clear whether or not the oral offer was 'on the whole more favourable' to the successful claimant than the result it obtained from the arbitrator. Thomas J concluded, however, that the arbitrator had erred in his determination that as the offer had not been made in accordance with the rules of court he should refuse to receive evidence as to the offer.

80 At the time of Transit, Commercial Arbitration Act 1990 (Qld) (CA Act (Qld)) s 34(6) was in the same terms as CA Act (WA) s 34(6). There were provisions with respect to 'offers to settle' in Rules of the Supreme Court (Qld) O 26 (O 26 (Qld)) in similar if not the same terms to O 24A: in particular an offer to settle 'made in accordance with this order shall be in writing and shall contain a statement that it is made in accordance with this order' (O 26 (Qld) r 2(3)). However, there was a provision in Rules of the Supreme Court (Qld) O 85 (O 85 (Qld)), the counterpart to O 81D in this state, in O 85 (Qld) r 18, as follows:

The provisions of Order 26 apply to an arbitration as if a reference to a Court included a reference to an arbitrator or an umpire.

81 It would seem then that the offer in Transit was not one to which the rules for offers to settle in an arbitration could of their own force apply, because the offer was not in writing.

82 In Transit Thomas J, after setting out CA Act (Qld) s 34(6), said this:

In my view that subsection requires an arbitrator to take into account offers that comply with the rules of court, but it does not necessarily limit the wider general discretion which permits the taking into account of offers that do not comply with those requirements.

(Page 30)

83 In my view, the first part of this statement, given O 85 (Qld) r 18, is in accord with 620 Collins St, although there was no reference to that decision in Transit.

84 I conclude from this body of authority, both from this state and from other states with statutory provisions in the same terms as CA Act (WA) s 34(6), that the effect of that provision is to make applicable to the exercise of the discretion as to costs of an arbitrator or umpire, conferred on them by the provisions of CA Act (WA) s 34(1), an offer made in accordance with O 24A in the sense explained by Mideco. I consider this is supported by the authority in this state of Doric.

85 Further, it is my view that (although none of the authorities discuss the matter) an offer in that sense made in accordance with a provision like O 24A may be taken to incorporate the terms of those provisions which as a matter of contract are capable of incorporation. Examples of such terms may be O 24A r 4, r 6 and r 7. It is perhaps a closer question whether or not the provisions of O 24A r 10 are incorporated as a matter of contract, the matter as to which Anderson J in Keywest 14 indicated 'there is much to be said on each side'. It is also perhaps a close question whether or not there was in this case such incorporation of the provisions of O 24A r 8. However, as will shortly appear, I do not consider I have to reach a final view on that matter.

86 I have concluded that the authorities I have referred to when considered in their legislative context provide substantial support for the view that the effect of CA Act (WA) s 34(6) - whether read with or without s 61(1)(ba) - was to make O 24A capable of application to offers to compromise in relation to a claim in an arbitration under that legislation to no greater extent than in relation to the exercise of the arbitrator's discretion as to costs.

87 It seems to me that the correctness of that view is indicated both by the terms of s 34(6), and the fact it was not suggested to me there has been any exercise of the rule-making authority in s 61(1)(ba) by way of amendment to O 81D in any material respect. Nor in my view is there any basis for implying in O 81D a provision like O 85 (Qld) r 18 as it was at the time of Transit.

88 It was put to me by the applicant, however, that in view of CA Act (WA) s 34(6) it should be taken that O 24A in its entirety is capable of application to offers of compromise made in relation to a claim in an arbitration to which the legislation applies. As I understood the

(Page 31)

matter the applicant was submitting it would be 'anomalous', in view of the language in s 34(6) of 'in accordance with the rules of court', to limit the effect of that provision to picking up simply those aspects of O 24A relevant to costs. Rather, that provision, it was said, had the effect of recognising that all of O 24A applies to an offer of compromise made in relation to such a claim where that offer was made 'in accordance with the rules of court'. The exercise of the authority in s 61(1)(ba) was not necessary when there are rules in relation to offers of compromise which are 'readily applicable'. I took the references to s 61(1)(ba) in the applicant's submission rather to be put forward on the basis that that provision confirmed the potential for the application of a set of provisions in the Rules of the Supreme Court like O 24A.

89 However, Mideco can be seen to be against both aspects of the submission. The Victorian counterpart to CA Act (WA) s 34(6) was not seen to have the effect described. It does not seem to me that the absence in Victoria at the time of an express rule making power with respect to offers of compromise serves to make Mideco of lesser relevance to the position in this state. The presence of such a power if anything would tend against the applicant's position. In my view, where there is such a power in the legislation, the legislature might be taken to have indicated how it considers general rules, not just those relevant to costs matters, should be made directly applicable. One way they could be made so applicable, as appears to have been the course adopted in Queensland (see O 85 (Qld) r 18 as it was at the time of Transit), would be to make a rule incorporating them by reference with any necessary modifications, rather than to set out separate rules for them. The latter was the course adopted in Victoria (see O 9 (Vic) r 9.09 - r 9.16 as they were at the time of 620 Collin Street).

90 I consider that, particularly in relation to what is in large part if not entirely a problem in the construction of uniform national legislation, I should follow Mideco unless I am convinced, as I am not, that it is 'plainly wrong': In The Matter of York Street Mezzanine Pty Ltd (in liq) [2007] FCA 922 [22] (Finkelstein J). Indeed, I consider Mideco to be correct.

91 As it appears to have been conceded by the applicant that, if O 24A is not applicable by reason of CA Act (WA) s 34(6) read if necessary with s 61(1)(ba), the present application must be dismissed, that is sufficient in my view to dispose of the application. I understood that concession to include that, even if the effect of making an offer of compromise in an arbitration under CA Act (WA) in accordance with O 24A is to incorporate into the offer as a matter of contract, to the extent that is

(Page 32)

possible, the terms of O 24A, including O 24A r 8, there is no question of granting the court jurisdiction in the terms of O 24A r 8 by contract. In any event I was not addressed on any such basis for jurisdiction, and I am not readily able to see one.

92 Further, no argument was addressed to me on whether or not the terms of O 24A r 8 could be, and were, incorporated as terms of the contract into this accepted offer of compromise. Indeed I understood the applicant expressly to reserve for other proceedings its position in respect of the enforcement as a contract of the accepted offer of compromise.

93 However, while I do not pursue that matter, there were arguments put to me in the event my conclusion on the application of O 24A r 8 were otherwise than that I have arrived at. I set out below my understanding of those arguments, and my preliminary responses to them. Before doing so, however, I address briefly the possible relevance to this case of CA Act (WA) s 47.

Does the court have jurisdiction under CA Act (WA) s 47?

94 CA Act (WA) s 47 reads as follows:

The Court shall have the same power of making interlocutory orders for the purposes of and in relation to arbitration proceedings as it has for the purposes of and in relation to proceedings in the Court.

95 Reference is made to s 47 in the respondent's written submissions. I understood that reference to have been made for the purposes of contrasting the application before me with one under that provision.

96 No argument was addressed to me by the applicant as to whether or not I had jurisdiction to make the orders sought by the applicant by virtue of this provision. Nor could I find any authority on the point. Therefore I make only brief comment on it.

97 I could not find any authority on whether or not an order of the kind sought by the applicant here made in respect of proceedings in the court under O 24A r 8 or corresponding provisions in other jurisdictions is of a final or interlocutory character.

98 There is authority, to which the respondent's written submissions refer, that a court has the power under a provision like s 47 to strike out a claim before an arbitrator as an abuse of process: Nauru Phosphate Royalties Trust v Matthew Hall Mechanical and Electrical Engineers Pty Ltd [1994] 2 VR 386, 403 (Smith J) (on CA Act (Vic) s 47); and see

(Page 33)

Kendall C and Curthoys J,

Civil Procedure in Western Australia

(30 March 2008) [81D.6.4] .

99 The respondent appears to distinguish Nauru Phosphate on the basis the jurisdiction the applicant contends for is 'to make orders striking out pleadings in an arbitration or dismissing claims in an arbitration on a final basis in circumstances such as this', although there is no elaboration of the point. The submissions of the applicant, both those in writing and those made orally before me, make no reference to the matter.

100 I am prepared to accept for the purpose of the argument that the orders sought by the applicant are of a final nature in the same sense that a dismissal of an action following the striking out of a statement of claim as not disclosing a reasonable cause of action has been held in this state to represent a final order. See Florida Investments Pty Ltd v Milstern (Holdings) Pty Ltd [1972] WAR 148, 149 (Hale J), 151 (Burt CJ and Wickham J).

101 However, it is not clear to me that Nauru Phosphate is distinguishable on that basis. Indeed I note from Nauru Phosphate 403 the following:

It would greatly assist the arbitration system for the court to have the power to stop a claim proceeding before an arbitrator where, for example, no cause of action is shown in the points of claim. As the law currently stands the arbitrator could do nothing about such a case and would have to let the claim take its course.

102 I further note that the correctness of Florida Investments has been doubted in this state, and it has not been followed elsewhere, including in Victoria. See Tobin v Dodd [2004] WASCA 288 [10] (E M Heenan J); see also [2] (Murray J); and see Little v State of Victoria [1998] 4 VR 596 (CA).

103 However, my preliminary view is that, in view of Florida Investments, I am not in a position to proceed otherwise than on the basis that CA Act (WA) s 47 cannot be invoked in support of jurisdiction for the court to make the orders sought in these proceedings. To the extent Nauru Phosphate is inconsistent with Florida Investments the former is not an authority I should follow.

104 In any event, whether or not I am correct in the preliminary view of the effect of Florida Investmentsjust described, there may be a basis for distinguishing Nauru Phosphate that does not involve any question of its consistency with Florida Investments.That basis is that the orders

(Page 34)

sought in this case are in the nature of ones following an agreed final determination of the claims between the parties that had been submitted to arbitration. In that way it may be possible to conclude that the jurisdiction to make them is not of an interlocutory character, for the reasons given in the discussion in

Little

599 - 601 of the authorities, including in particular

Port of Melbourne Authority v Anshun Pty Ltd

[1980] HCA 41; (1980) 147 CLR 35, 38 (Gibbs J).

105 However, in view of the way the present proceedings were conducted before me I do not consider I need to go further into the matters of my preliminary view of Florida Investments or the basis for distinguishing Nauru Phosphate just described.

Non-compliance with the terms of the accepted offer?

106 For the applicant it was put to me the time for payment of the sum under the accepted offer was 28 days, whether by application of O 24A r 4, or by derivation from it, and that there had been a failure to pay within that time. That failure represented a case where, in the language of O 24A r 8(1), 'a party to an accepted offer fails to comply with the terms of the offer'.

107 In the next section of my reasons I consider the arguments put to me on whether or not the time for payment was 28 days. As I will indicate, it was common ground that the time for payment in this case is either supplied by O 24A or implied as a matter of contract law. I have previously indicated that payment was only made 30 days after acceptance of the offer.

108 However, for the respondent, it was put to me that, even if the time for payment was 28 days, such was not a 'term' of the accepted offer for the purposes of O 28A r 8(1). For this purpose particular reliance was placed on certain words in O 24A r 2. I again set out that rule, with the words on which that reliance was placed emphasised

2. Application

In any proceedings the plaintiff or the defendant may make to the other an offer to compromise any claim in the proceedings on the terms specified in the notice of offer.

109 I understood the submission to be that it was only the express ('specified') terms which could engage the jurisdiction in O 24A r 8. However, I took it counsel had found no authority on the matter, and I have not been able to find any such authority.

(Page 35)

110 On a preliminary view I consider the submission of the respondent to be one that is difficult to sustain.

111 At the very least, where there is a provision in O 24A that an offer is 'taken' to be an offer on the basis there indicated, that should be considered to be among the 'terms' for the purposes of O 24A r 8. O 24A r 4 with respect to the time for payment is one such provision in O 24A.

112 Where the terms of the offer are to be drawn from another source, such as implication under the law of contract, it is not clear to me why those are also not 'terms' of the offer, even if they are not 'specified' in the notice of offer.

113 It might be suggested that it is only the 'specified' terms which should be capable of giving rise to the serious consequences in O 24A r8(1). This case itself illustrates such consequences, it might be said, a point to which I will return below when I consider the exercise of the discretion in O 24A r 8.

114 However, O 24A r 8(1) does not use 'specified' terms. And although it may be granted that the consequences in O 24A r 8(1)(a) are serious consequences, this is less clear in respect of r 8(1)(b).

115 At the same time, as I have concluded that I do not have jurisdiction under O 24A r 8 to make the orders sought in this case, I do not consider I have to go further into this matter.

Non-compliance with the time for payment under the accepted offer?

116 For the applicant it was put to me that, by virtue of O 24A r 4, as the notice of the offer of compromise did not otherwise provide, the time for payment was 28 days after the acceptance of the offer. There was no contest that the notice of the offer of compromise did not otherwise provide.

117 The respondent put to me that O 24A r 4, on its face, did not apply to the offer of compromise in this case. That offer was not an offer to pay a sum of money to the plaintiff, but rather an offer to accept a sum of money from the defendant.

118 In any event, the applicant said, even if O 24A r 4 did not on its face apply to the offer of compromise in this case, the time for payment that would be implied would be a reasonable time, and O 24A r 4 supplied what the court should take was a reasonable time, namely, 28 days. I took

(Page 36)

that to be a submission that 28 days was the time that would be a reasonable time at least in the absence of any sufficient reason to arrive at a different period.

119 The respondent agreed that, if O 24A r 4 did not on its face apply, the time for payment that would be implied would be a reasonable time, and I also agree: see Perri v Coolangatta Investments (1982) 149 CLR 537, 543 (Gibbs CJ), 554 (Mason J), 556, 557 (Wilson J). However, the respondent said, whether or not 28 days might be a reasonable time in other circumstances, the period that would be a reasonable time in this case was not less than 30 days. That was the period provided in the notice of offer for acceptance, which was of course longer than the minimum period of 28 days referred to in O 24A r 3(3). Further, there were other circumstances which it was said indicated the time should be taken to be longer than 28 days.

120 No authority was cited to me in relation to these matters for an offer of compromise under O 24A, and I have found none.

121 My preliminary view is that O 24A r 4 is restricted to offers to pay, and does not apply to offers to accept payment. In my view that accords better with its language than the construction proffered by the applicant. It also accords with O 24A r 5(1)(a), which if it applies to a failure to pay by the acceptor of the offer would appear to provide that person with an option whether or not to pay. It is not clear to me why there should be such an option. The asymmetry that on my preliminary view results between an offer to pay and an offer to accept payment might be explained in terms of greater reason for certainty in the former than in the latter case. Where the payee did not (as it were) take the initiative, but is the offeree, the payee receives the measure of certainty O 24A r 4 provides. Where the payee did take the initiative, being the offeror, it might be said there is a lesser claim of the payee to such a measure of certainty, and correspondingly the payor, the offeree, is in a position to say that the offeror should specify the time for payment, failing which the time will be a reasonable time, with its possible allowance for the offeree's circumstances.

122 However that may be, as I have concluded that I do not have jurisdiction under O 24A r 8 to make the orders sought in this case I do not consider I have to go further into this matter.

123 For the same reason, I do not consider I need to indicate other than a preliminary view of the matter of whether or not, if O 24A r 4 did not

(Page 37)

provide the period of time for payment under the present accepted offer of compromise, the reasonable time for such payment should in this case be fixed with reference to the 28 period provided for in that rule. My preliminary view is that a reasonable time is capable of taking its content from considerations such as the stipulation of the time for acceptance of the offer, as the respondent submitted. It seems to me, on the above discussion of the asymmetry in the application of O 24A r 4 to offers for payment, that there is no reason to prefer the period referred to in O 24A r 4 over that 30 day period.

Is there a 'special cause' not to make the orders sought?

124 Under O 24A r 8(1)(a) the other party 'shall be entitled' to the orders in that paragraph as appropriate. This is 'unless for special cause the Court otherwise orders'. This appears to be the only place in the Rules of the Supreme Court in which the phrase 'special cause' appears. That phrase also appears in the corresponding rule for offers of compromise or settlement in the rules of the other states and the Northern Territory.

125 I note that under the provisions of the order in Victoria corresponding to the previous O 24, for payment into court, 'special cause' was used in relation to the costs liability rule (former Ch I O 22 (Vic) r 6 in force at the time of the authorities I refer to below) that applied in the event the amount of the judgment for the plaintiff was less than the amount paid into court. It appears that there was no corresponding provision in the former O 24 in this state on payments into court. Under the Victorian provision, in such an event the plaintiff was to be ordered to pay all of the costs of the defendant from and after the date of payment 'unless for special cause' the court should otherwise order. However, none of the authorities on the meaning of 'special cause' in that rule were cited to me. The only ones I could find have no apparent relevance to the use of the phrase in the present context: see Berry v Coghill [1982] VR 955 which refers to prior authorities.

126 There was some authority from both New South Wales and Victoria cited to me by both parties as going to the meaning of 'special cause' in O 24A r 8. However, it seems to me that this authority, to the extent it went to that meaning, is of no relevance to the circumstances of this case. I return to that authority below.

127 The applicant's written submissions put to me that, to the extent 'special cause' permitted the court to consider the merits of the claimant's claims for which judgment was sought, that permission extended so as to allow the court to assess whether or not the claims were frivolous or did

(Page 38)

not raise any serious question to be tried. The phrase also permitted the court to consider whether or not the defendant had a credible defence such that the respondent with such defence would have real prospects of success

However, as I understood the submission it was not relevant to either permission that there was, as here, a considerable disparity between the amount payable under the accepted offer and the amount the subject of the claim. It is not in dispute that there is a considerable disparity: the amount claimed by the applicant represents on the respondent's submission, not contested by the applicant, a sum in the order of $633,787 together with interest, GST, as well as the costs of the arbitration and this application on an indemnity basis; the amount specified in the notice of compromise was $100,000, as has been indicated. There was also the loss of the respondent's counterclaim, although it appears that during the respondent's opening of its case in the arbitration the respondent indicated that it would not be pursuing its claim for liquidated damages, which represented a substantial part but not the entirety of the respondent's counterclaim.

128 The applicant's written submissions also directed me to material in the Edwards affidavit of 12 October 2007 as to evidence in the arbitration that showed the claim for delay costs was 'not inarguable' and that the calculations of them were not 'untenable'. I was also directed to material in the Edwards affidavit of 6 September 2007 as to the points of claim, the points of defence and the points of counterclaim in the arbitration.

129 However, in the oral submissions for the applicant the position was put to me that the applicant's primary position was that 'special cause' was not meant to allow for any review of the merits in the proceedings. Rather as I understood the submission 'special cause' should be taken only to cover matters of the kind I describe below in connection with the authority cited to me as going to the meaning of 'special cause'.

130 The respondent put significant emphasis on the considerable disparity referred to, and on what were described to me as the 'draconian' consequences of the failure to comply with the terms of the completed offer relied upon by the applicant, that failure being the tender of payment after 30 days where (on the present argument) the obligation was to pay within 28 days. I was referred to Colbran, S E et al, Civil Procedure Commentary and Materials (3rd ed, 2005) [16.3.38], in which the following appears, in respect of O 24A r 8, as well as rules in similar form in other jurisdictions:

(Page 39)

These are draconian consequences, the rationale for which lies in the desirability of discouraging offers in cases where the offeror cannot or does not intend to fulfil them. (This is not a problem which arises in the context of money actually paid into court.)

131 In this case, of course, it is the offeree who (on the present argument) failed to comply with the terms of the offer, but who endeavoured to do so a short time after the time for performance had passed, and who might be taken to have put forward (at the least) an arguable case that its performance was not due by the earlier time, but by the time of that performance.

132 It might be suggested for such a case that, where the offeree has explained its failure to perform, and where it has shown that it had a defence with real prospects of success, it has shown 'special cause' why the offeror should not have the option in O 24A r 8. That is, a similar approach should be adopted in such a case to that which might be employed in relation to setting aside a regular judgment obtained in default of a defence. Indeed, such a position would not be too far distant from the position other than its primary position put forward by the applicant.

133 The respondent put to me, as I understood its submission, that there is support for the use of just such an approach in Kendall and Curthoys [24A.8.2] where the following appears:

If an action is compromised as the result of the acceptance of an offer made pursuant to this Order and there is a failure to comply with its terms, the party who seeks to enforce the compromise may apply to the court pursuant to r 8(1)(a) for the action of a plaintiff to be dismissed or that the defendant's defence be struck out, and in either case for judgment accordingly; or the party may apply under r 8(1)(b) for such judgment or order as to which he or she may be entitled. There is no entitlement to judgment but it is suggested that the procedures for judgment in default of appearance and in default of defence offer some guidance.

134 In relation to relieving a defendant from the consequences of judgment in default of defence, the respondent directed my attention to the following, from Kendall and Curthoys, [13.10.6];

The general rule is that when a judgment in default has been regularly entered it is not to be set aside unless the court is satisfied that there is a defence on the merits, and instances of departure from the general rule are rare. The application should be supported by affidavit evidence which discloses a defence on the merits and explains the failure to comply with the rules and any delay in bringing the application:

Palmer v Prince

(Page 40)

[1980] WAR 61 at 62 (FC). The defendant must present a credible defence demonstrating that, if the default judgment were set aside and the matter were argued on its merits, the defendant would have a real prospect of success:

Parker v Transfield Pty Ltd

[2000] WASCA 382; BC200007521 at [3], [58], [59]. … It is a rare case in which the court will decline to set aside a judgment entered in default of appearance when there is a defence on the merits and the failure to enter an appearance has been explained:

Crayden v Ottaviano

[2003] WASCA 20; BC200300540 at[1], [53], [55].

135 The respondent directed my attention to material in the Champion affidavit of 27 September and the Champion affidavit of 30 October 2007 as to evidence given in and prepared for the arbitration. As I understood the submission this material was put to me as supporting the existence of defences to any liability for the delay costs claimed by the applicant.

136 It appears to me on a preliminary view that the matter of the disparity between the applicant's claim and the amount it indicated it would accept has not been shown to me to have any significance in this case. While the authorities I reach below indicate that an accepted offer of compromise will not be enforced in a case where it would be unjust to do so, it is not clear from those authorities, nor is it clear to me, that injustice is shown or even supported by reference to such a disparity. At least this is so where it is not suggested there were any matters present of the sort that those authorities address.

137 It further appears to me, on a preliminary view, that the appropriate approach to 'special cause' in this case includes that which I associated with the submissions of the respondent I earlier referred to. I further consider on a preliminary view that on the explanation for the failure to comply with the terms of the offer to which I have already referred, and the material to which both the applicant and the respondent directed me, 'special cause' has been shown to deny the applicant the option in O 24A r 8. However, for the reasons previously given, I consider I do not need to go further into this matter.

138 My preliminary view is also that 'special cause' is probably capable of extending further than that approach would take a court. This is indicated by the authorities cited to me by the applicant, and the one cited to me by the respondent, as relating to 'special cause' in O 24A r 8. The authorities cited to me by the applicant were Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 529, 536C - 538F; HW Wilson Pty Ltd v Pitman (Unreported, VSC, Library No 10696, 6 December 1990); Young v Combe (Unreported, NSWSC, Library No 3254, 29 July

(Page 41)

1993) 6 - 9 (Hodgson J); and

Nesci v Nesci

[2005] WASC 65. The authority cited by the respondent was

Mohamed v Farah

[2004] NSWSC 482.

139 Those authorities appear to me to indicate that in suitable cases a mistake in crafting the terms of the offer, or a belated discovery of matter related to the claim or a defence to it, whether or not that mistake or matter might otherwise be sufficient to enable the court to set aside an accepted offer of compromise, might yet make it unjust to enforce that offer of compromise as provided for in a provision like O 24A r 8. Further, a sufficient change of circumstances after the offer was made might also represent 'special cause' in the same sense. However, my preliminary view is that it has not been shown to me that any of these three sorts of matters is apt to describe the circumstances of this case.

Was the application brought in the proper form?

140 Finally, I note the respondent's submission that the application in this case was not brought in proceedings in the court, and so should have been by originating motion: O 4 r 1(c) and r 2; Kendall & Curthoys [54.1.1]. The application here, as I have earlier indicated, was brought by motion.

141 The applicant's reply is that the application in this case is one made under a written law of the state permitting an application to be made to the court or a judge and thus is business that can be dealt with on motion in chambers under O 4 r 2(b). This submission depends, of course, on whether or not the effect of CA Act (WA) s 34(6), read if necessary with s 61(1)(ba), is that O 24A including O 24A r 8 is made capable of application to offers of compromise in relation to a claim to which an arbitration agreement applies. That reply might be correct were the application in this case so made by virtue of the provision or provisions of the CA Act (WA) referred to. However, I have already indicated that in my view that condition is not satisfied.

Orders (including costs)

142 It follows I would dismiss the present application.

143 I note, as put to me by the respondent, that, notwithstanding that I have determined that this court does not have jurisdiction to make the order applied for, there is authority that an order as to costs in favour of the successful party may be made: see Re Crittendon; Ex parte Law Institute of Victoria [1958] VR 101 (FC), 102 - 103 and O 66 r 1; and Kendall & Curthoys [66.0.1].

(Page 42)

144 I will hear from the parties as to the orders I should make on my conclusions.

Cooper and Oxley Builders Pty Ltd

[2008] WASC 63

1 MAY 2008

COOPER & OXLEY BUILDERS PTY LTD [2008] WASC 63