GIO General Limited v Allen - [2002] NSWCA 333

NEW SOUTH WALES COURT OF APPEAL

CITATION: GIO General Limited v. Allen [2002] NSWCA 333

FILE NUMBER(S):
40860/02

HEARING DATE(S): 30 September 2002

JUDGMENT DATE: 30/09/2002

PARTIES:
GIO General Limited - claimant
Kenneth Douglas Allen - opponent

JUDGMENT OF: Handley JA Hodgson JA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 1297/98

LOWER COURT JUDICIAL OFFICER: Sorby DCJ

COUNSEL:
Mr. R. Toner SC with P. Regattieri for claimant
Mr. P. Biscoe QC with Dr. A.S. Bell for opponent

SOLICITORS:
Cutler Hughes & Harris, Sydney for claimant
Abbott Tout, Sydney for opponent

CATCHWORDS:
CONTRACT - Offer said to be open until specified time - Offer withdrawn before that time, but then accepted - Whether contract made
PROCEDURE
COSTS - Calderbank offer - Said to be open until specified time - Offer withdrawn before that time, but then accepted - Whether settlement agreement made.

LEGISLATION CITED:

DECISION:
Summons for leave to appeal dismissed with costs.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40860/02
DC 1297/98
HANDLEY JA
HODGSON JA
Monday 30 September 2002

GIO GENERAL LIMITED V. ALLEN

Judgment

HODGSON JA: On 3 March 1998 the claimant commenced proceedings in the District Court against the opponent, seeking indemnity from the opponent pursuant to section 151Z(1)(d) of the Workers Compensation Act on the basis that the opponent had been negligent in causing injury to a worker for which the claimant had made payments pursuant to that Act. The matter was set down for trial in the District Court commencing 23 September 2002.
On 19 September 2002 the opponent made an offer of $175,000 inclusive of costs to settle the matter, in a letter which concluded with the following paragraph:
This offer is made in accordance with the principles in Calderbank v Calderbank and is expressed to be open until 5.00pm on Friday 20 September 2002. You are hereby put on notice that the defendant intends to rely on this letter in any argument in respect of costs and interest in this matter.
On that day and the following day, the claimant made three counter offers, the third of which was rejected by the opponent at 10.30am on 20 September 2002; and at the same time the opponent purported to withdraw the offer made on the previous day. At 11.32am on 20 September 2002, the claimant purported to accept the offer.
On 23 September 2002, the claimant filed a notice of motion seeking leave to amend the statement of claim to one for damages for breach of a contract constituted by the events I have outlined, in circumstances where the opponent denied the existence of any contract.
That application was heard by Sorby DCJ on 25 September 2002, and he dismissed it with costs. The claimant seeks leave to appeal from that order.
In substance the primary judge held that, in accordance with ordinary contract principles, the offer made on 19 September 2002 could be withdrawn before acceptance, and once it was withdrawn it was no longer open to be accepted. That situation, the primary judge held, was not affected by the statement in the offer that it would be held open until a specified time.
The claimant seeks to rely on the following grounds of appeal:
1.            That His Honour erred in failing to take into account the laws of practice and procedure.
2.            That His Honour erred in the application solely of contract law to Calderbank offers and in particular the offer in this case.
3.            That His Honour failed to give correct interpretation to the meaning of the offer contained in the letter from the respondent of 19 September 2002.
4.            That His Honour erred in holding that the respondent could withdraw the Calderbank offer before 5:00 pm on 20 September 2002.
The claimant submitted that the courts deal with letters such as the present, called Calderbank letters, in a similar away to offers of compromise under the court rules; and the claimant referred to Calderbank v Calderbank [1976] Fam 93, Hunter Douglas Architectural Products Pty. Ltd. v Chadwick Industries (Qld) Pty. Ltd. [2001] NSWCA 27, John S. Hayes & Associates Pty. Ltd. v Kimberly-Clark Australia Pty. Ltd. (1994) 52 FCR 201 and Multicon Engineering Pty. Ltd. v. Federal Airports Corporation (1996) 138 ALR 425. Accordingly, the claimant submitted, just as offers of compromise under the rules cannot be withdrawn, neither can Calderbank offers. The whole idea is that an offeree be given a reasonable opportunity to consider an offer which is made so that refusal can be relevant to the question of costs if the action proceeds. It was submitted that if a Calderbank offer could be withdrawn at any time, this would be contrary to the policy of the law to encourage settlements. It would also mean that Calderbank offers would not have the consequence as to costs which they are considered as having, because they would not ensure that the offeree has a reasonable time to consider them.
In written submissions, the opponent contended that ordinary contract principles apply, so that an offer can be withdrawn at any time until acceptance. The opponent also submitted that in any event the counter offers in this case amounted to rejection of the offer and put an end to it, referring to the case of Tallerman & Co. Pty. Ltd. v. Nathan’s Merchandise (Vic) Pty. Ltd. (1958) 98 CLR 93.
In my opinion, it is important to note that no allegation was made before the primary judge, and no evidence was led by the claimant, that it had relied to its detriment on the representation that the offer would be held open to 5pm on 20 September 2002, and no reliance was placed on any estoppel that might have arisen from such material.
In those circumstances, it is my opinion that the claimant’s submissions are clearly wrong. There is no allegation of a contract made for consideration or by deed to hold the offer open to 5pm on 20 September 2002, and there is no basis for such an allegation. Accordingly, on ordinary contract principles, the offer could be withdrawn before acceptance. There is no need to decide whether the opponent’s submission that rejection put an end to the offer is or is not correct.
In my opinion, the fact that courts rely on Calderbank offers in dealing with costs in ways analogous to offers of compromise under the rules does not mean that any special principles apply to the withdrawal of Calderbank offers. Neither the District Court Act nor the District Court Rules make any provision in relation to Calderbank offers. Calderbank offers have consequences in relation to costs because they affect the judgment of the Court concerning the reasonableness of the conduct of the parties, and it is for that reason that in many cases results analogous to the result that would be produced by a rejected offer of compromise are arrived at. If in any particular case a Calderbank offer was made, and made on terms that it would be kept open to a particular time, but was withdrawn before that time, then it seems clear that that would either nullify or at least downgrade the effect which that Calderbank offer would have on the question of costs.
For those reasons, in my opinion leave to appeal should be refused because the appeal has no reasonable prospect of success.
HANDLEY JA: I agree. The Court’s order is summons for leave to appeal dismissed with costs.

**********

LAST UPDATED: 02/10/2002