Heather v Vita Pacific Ltd

[1999] TASSC 17

[1999] TASSC 17

PARTIES:  HEATHER, Eileen Glynis
  v
  VITA PACIFIC LTD

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  APPELLATE
FILE NO/S:  1796/1994
DELIVERED:  23 February 1999
HEARING DATE/S:  12 February 1999
JUDGMENT OF:  Evans J

CATCHWORDS:

Procedure - Costs - Taxation - Review - Principles applicable - In general - Agreement as to costs - Determination of terms and construction - Acceptance of offer of compromise made by defendant - After trial but before judgment - Intention of parties as to costs - Whether reasonable to construe ambiguity in agreement against party who has control over its terms.

Aust Dig Procedure [41]
Ruhrkohle Handel Inter GmbH v Allied Queensland Coalfields (unreported, Queensland Supreme Court, 7 February 1989, No 1440/1988), considered.
State Lotteries Office v Bergin (unreported, Supreme Court of New South Wales, 19 May 1993, CA 40133/1993), discussed.
Rules of the Supreme Court, O24A, rr2(5), 6(1), 11(2).

REPRESENTATION:

Counsel:
           Plaintiff:  B R McTaggart
           Defendant:  P L Jackson
Solicitors:
           Plaintiff:  Jennings Elliott
           Defendant:  Griffits & Jackson

Judgment category classification:
Judgment ID Number:  [1999] TASSC 17
Number of pages:  2

Serial No 17/1999
File No 1796/1994

EILEEN GLYNIS HEATHER v VITA PACIFIC LTD

REASONS FOR JUDGMENT  EVANS J

23 February 1999

1. This review of the taxation of the plaintiff's costs turns on the construction of the agreement constituted by the plaintiff's acceptance, on 15 May 1996, of the defendant's offer of compromise dated 1 May 1996.  Upon the acceptance of the offer of compromise all questions of costs of the action were subsumed in the terms of the compromise agreement, although jurisdiction to tax the costs was preserved by the Rules of the Supreme Court, O24A, r6(4).  See Heather v Vita Pacific Ltd 7/1997.

1. The offer specified that it remained open for a period of fourteen days from the date on which it was served and contained the following:

"The Defendant offers to compromise all causes of action pleaded by the Plaintiff against the Defendant in the Plaintiff's Statement of Claim dated 24 November 1994 for:

(1)      $163,000.00 for damages; and

(2)costs to be taxed as between party and party on Table A of Appendix M to the Rules of Court."

The plaintiff's notice of acceptance simply stated that she accepted the offer of compromise.

1. The lacuna in the agreement is the date to which the plaintiff is entitled to costs.  The defendant says that the taxing officer erred in construing the agreement as allowing the plaintiff costs to the date of her acceptance of the offer and that she was only entitled to costs to the date of service of the offer.

1. The action was due to go to trial seven days after the date of the offer.  Pursuant to O24A, r2(4), the offer could not be open for less than fourteen days from the date on which it was served and the offer was expressed to be open for that period.  At the time of making the offer, the defendant was well aware that substantial legal costs could be incurred by the plaintiff between the time of the offer and the time of its acceptance.  To construe the offer as being an offer to pay costs to the date of its acceptance imputes to the defendant a willingness to pay the plaintiff an escalating amount of costs.  Counsel for the defendant submits that there is no reason to attribute to the defendant that willingness, and accordingly the offer should be construed as being an offer to pay costs to the date of service.  Involved in this submission is the proposition that the Court should attribute to the parties an intention to agree on a construction which, from the point of view of expense, is favourable to the offeror.  Support for this approach can be found in Ruhrkohle Handel Inter GmbH v Allied Queensland Coalfields (unreported, Queensland Supreme Court, Macrossan J, 7 February 1989, No 1440/1988).  I do not accept this approach insofar as it proceeds on the basis that as to ambiguities, the parties intended a meaning which is least disadvantageous to the offeror.

1. Counsel for the defendant referred to the following provisions of the Rules of the Supreme Court.  Order 24A, r11(2), which puts a plaintiff who does not accept an offer of compromise at risk for costs from the date on which it was served.  Order 24A, r6(1), which provides that in relation to an offer and acceptance in different circumstances to those under consideration, subject to the terms of the compromise, costs are to be paid to the date of receipt of the offer.  Order 24, r2(5), which entitles a plaintiff who accepts a payment into court to costs to the time of the payment into court.  Whilst the Rules of the Supreme Court provide the framework for the offer of compromise process, the provisions referred to provide little assistance in determining the intention to be ascribed to the parties having regard to the words of the agreement constituted by the offer and the acceptance.

1. If the defendant intended to restrict its exposure to costs to a date prior to the plaintiff's acceptance of its offer, it could easily have done so.  The offer could have specified that the costs would only be paid to the date of the offer, the date of service of the offer, the date upon which the hearing of the action was due to start, or any other date.  That the defendant did not specify a date, notwithstanding that it was well aware that the plaintiff's costs could increase substantially, suggests that the offer was intended to be an offer to pay costs to the date of its acceptance.  I construe the agreement accordingly.  In arriving at this construction, I take into account that it was the defendant who prepared the offer and had complete control over its terms.  The plaintiff could only accept or reject the offer.  The terms of the agreement which resulted from the plaintiff's acceptance of the offer were not negotiated, they were the terms stipulated by the defendant.  In such a situation it is not unreasonable to construe an ambiguity in the agreement against the party who had complete control over its terms.  As to this, I refer to the following passage from the decision of Kirby P (as he then was) in State Lotteries Office v Bergin (unreported, Supreme Court of New South Wales, 19 May 1993, CA 40133/1993):

   "Where a contract is constituted by a printed form which is tendered by a party which has complete control over its terms, it is relevant to take such control into account in construing a term that may appear ambiguous or uncertain. This is not, as such the contra proferentem rule, which developed first as a principle for the construction of deeds against a grantor and in favour of a grantee. See Neill v The Duke of Devonshire [1882] 8 App Cas 135. That rule was later accepted for the construction of ambiguities in policies of insurance. See C E Heath Underwriting and Insurance (Aust) Pty Ltd v Edwards Dunlop and Co Ltd (1993) 67 ALJR 395 (HC), 397. Cf Houghton v Trafalgar Insurance Co Ltd [1954] 1 QB 247 (CA). See K Lewison, The Interpretation of Contracts, Sweet and Maxwell, London, 1989, 134ff; J Parris, Making Commercial Contracts, BSP Professional Books, Oxford, 1988, 202f. It is rather a recognition of the difference which exists between a case where parties haggle about the terms of their agreement before fixing them (on the one hand) and where one party is presented with an agreement ready made which must be accepted, like it or not. In the latter case, at least where the contract is one in the form of a public lottery where it may be inferred that the vendor is well advised and the odds are deliberately stacked against the purchaser, it is not unreasonable to construe an ambiguity (if there be one) against the party which had complete control over the terms which it propounded."

2. I confirm the taxation and dismiss the application for review.