Karbowiak v Mitolo

Case [2025] SASC 25

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

KARBOWIAK & ANOR v MITOLO & ANOR

[2025] SASC 25

Judgment of the Honourable Justice Stanley  

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS - OFFER OF COMPROMISE OR OFFER TO SETTLE OR CONSENT TO JUDGMENT PURSUANT TO RULES

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - MATTERS NOT GIVING RISE TO BINDING CONTRACT - VAGUENESS AND UNCERTAINTY

SUCCESSION - FAMILY PROVISION - PROCEDURE - ORDERS AND OTHER PROCEDURAL MATTERS - OFFER OF COMPROMISE

This is an application by the second respondent seeking inter alia that the Court make a declaration that the first applicant and second respondent reached a binding compromise agreement on 4 April 2024 by the first applicant filing an Acceptance of Formal Offer on 4 April 2024 in response to the Formal Offer filed by the second respondent on 22 March 2024.

On 31 August 2022 the applicants brought a claim for provision from the estate of Maurizio Mimmo Mitolo (deceased) pursuant to s 7 of the Inheritance (Family Provision) Act 1972 (SA) (IFP Act). The applicants also sought a declaration pursuant to s11B of the Family Relationships Act 1975 (SA) (FRA) that the first applicant was the domestic partner of Mr Mitolo at the date of his death on 18 December 2019 or some earlier date to be determined by the Court.

On 28 November 2023 the Court ordered that the application for a declaration of domestic partnership be heard first as a separate trial to the applications under the IFP Act. It was subsequently set down for trial on 15 April 2024 with a time estimate of nine days.  Prior to trial, the second respondent made an offer to consent to judgment. The second respondent would agree to the Court making a declaration that the first applicant and the deceased were in a domestic partnership as at 31 December 2012. This offer was accepted by the first applicant. The separate trial was vacated and the parties tasked with satisfying the Court that there was an evidentiary basis to support the making of such a declaration. The parties could not agree on which evidence could be put before the Court for this purpose. The first applicant contends, that by her consent to judgment, the second respondent has made admissions of all facts necessary or appropriate to the making of that declaration and it is open to the Court to make the declaration on this basis.

The Court had to determine whether as a result of the acceptance of the offer of compromise a contract exists between the parties; whether the parties are under a duty to do all things necessary to enable the Court to make the declaration sought; and whether, the second respondent’s filed offer once accepted, constituted implied admissions by her as to the existence of facts necessary to the granting of the declaration.

Held:

1. Where an offer pursuant to…

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Karbowiak v Mitolo [2025] SASC 25
Case
[2025] SASC 25
Decision Date

CaseChat Overview and Summary

In the case of Karbowiak v Mitolo, the plaintiff sought to enforce an offer of compromise under the Uniform Civil Procedure Rules (UCR). The dispute arose from an alleged agreement between the parties to resolve certain legal issues through a formal offer. The court had to determine whether the acceptance of the offer constituted a binding contract or merely a judgment. The central legal issue was whether the formal offer, once accepted, resulted in an enforceable contract or if it simply led to the entry of a judgment as per the terms of the offer.

The court examined the nature of the formal offer and the intentions of the parties at the time of making and accepting the offer. It was noted that the offer was expressed to be a judgment offer, not a contract offer, which indicated an intention to avoid the creation of a binding contract. The court found that there was no objective intention of the parties to enter into a binding contract. Furthermore, even if there had been an intention to create a contract, the offer was void for uncertainty because the parties had not agreed on essential terms, specifically the evidence to be presented to the court to justify the declaration sought. The court concluded that the acceptance of the offer did not result in a binding contract but rather in a resolution that could be implemented through the entry of judgment.

Based on these findings, the court held that the acceptance of the formal offer did not constitute a binding contract. The offer was treated as a judgment offer, and the court was empowered to enter judgment in accordance with the terms of the offer. The court did not find any implied admissions by the defendant regarding the evidence necessary for the declaration sought by the plaintiff. Consequently, the resolution created by the acceptance of the filed offer was implemented through the entry of judgment, and no binding contract was formed.

Orders

Orders of the court

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Background

Background to the litigation

Second, in any event, even if the Court found there was an intention to enter into a contractual relationship there is another reason why a contract was not brought into existence. In this case, for the fulfilment of the bargain allegedly struck between the parties, the evidence supporting the making of the declaration sought had to be agreed between the parties. It certainly had not occurred by 4 April 2024 when the second respondent submits the contract was concluded. The failure to do so is not the result of a failure to cooperate in the doing of acts which are necessary to the performance of the contract. The problem is not a failure by the first applicant to cooperate in the performance of a concluded contract but the failure to have agreed essential terms. This is not a case of non-performance by the first applicant of agreed terms of a contract, but a failure to agree specific terms to which it appears the parties had not adverted their minds at the time the offer to consent was agreed. The first applicant and the second respondent had not agreed upon the evidence to be put before the Court that would justify the Court making the declarations. Such agreement was essential to the entry into the contract. The implied duty of cooperation cannot be applied to coerce a party into agreeing essential terms of a contract that the party is not obliged to perform because performance only arises once a valid contract has been entered into. That has not occurred in this case. The putative contract being void for uncertainty, there was no agreement as to the evidence which justified the agreed order the parties asked the Court to make. As a contract was not brought into existence there is no room for the principle in Secured Income to operate. Did the second respondent’s filed offer, once accepted, constitute implied admissions as to the existence of facts necessary to the granting of the declaration? The first applicant submits that notwithstanding that there is no contract between them and the second respondent by way of their offer, there is an implied admission by the second respondent of the evidence necessary for the making of the declaration sought by the parties set out in the evidence schedule of 15 April 2024. If that is not accepted the first applicant submits the failure to agree the facts necessary to make the declaration means the resolution created by the acceptance of the filed offer should not be implemented. The first applicant, relying on reasons of the High Court in Thomson Australia Holdings Pty Ltd v Trade Practices Commission,[19] contends that the Court can make the consent orders on the basis that, by offering to consent to judgment, which offer was accepted by the first applicant, the second respondent admitted all facts necessary or appropriate to the granting of the declaration. The first applicant submits that the facts necessary or appropriate to the granting of the declaration are the facts referred to in the evidence schedule[20] which she submits are admitted facts necessary to establish the jurisdiction of the Court to make the agreed declaration. However, the first applicant’s submission assumes that the second respondent has not only expressly agreed to the making of the consent orders, but has impliedly admitted the facts subsequently identified in the first applicant’s evidence schedule.[21] For the purposes of the first applicant’s argument, the admissions must be implied as they plainly have not been expressly agreed by the second respondent. On the contrary, far from being agreed as necessary to making the declaration sought, the second respondent has put forward their own schedule of evidence which differs from the evidence sought to be relied on by the first applicant in their evidence schedule.[19] (1981) 148 CLR 150 at 163-164.[20] FDN 87. [21] FDN 87.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

At the time the offer was made, UCR 132.4 included:[12][12] On 1 January 2025 rule 132.4(1) was amended to add a subsection (c) in terms of both a judgment to be entered upon acceptance and a contract to come into existence upon acceptance including terms for the disposition of the proceeding (a hybrid offer).(1) A party (the offeror) may file a document making a formal offer to another party (the offeree) in the prescribed form to resolve a proceeding or any part of a proceeding (formal offer)— (a) in terms of a judgment to be entered upon acceptance (a judgment offer); or (b) in terms of a contract to come into existence upon acceptance including terms for the disposition of the proceeding (a contract offer). (2) A formal offer must be served on each other party to the proceeding as soon as practicable after being filed. …(4) A formal offer may include any term capable of being incorporated—(a) in the case of a judgment offer—in a judgment; or (b) in the case of a contract offer—in a contract. … UCR 132.8 provides:(1) When a judgment offer is accepted, the Registrar may— (a) enter judgment in terms reflecting the accepted judgment offer; or (b) require the offeror to file a draft judgment in the prescribed form reflecting the terms of the accepted offer, and may enter judgment on the parties communicating their consent to the terms of the draft judgment under rule 133.1. (2) When a contract offer is accepted, the parties must apply to the Court for appropriate orders within 14 days of acceptance. It can be seen that at the time the offer was made and accepted the scheme of UCR 132.4 contemplates two kinds of formal offers. The first is a judgment offer which is an offer to resolve a proceeding or any part of a proceeding in terms of a judgment to be entered upon acceptance of the offer. The second is a contract offer which is an offer to resolve a proceeding or any part of a proceeding in terms of a contract to come into existence upon acceptance including terms for the disposition of the proceeding. In this case the formal offer was expressed to be a judgment offer not a contract offer. Where, as here, the offer is expressed to be a judgment offer in contrast to a contract offer that is objective evidence of the intention of the offeror that a contract not be brought into existence. In the circumstances I am satisfied that there was not an objective intention on the parties to enter into a contract. In any event, a contract was not brought into existence by the offer and acceptance pursuant to UCR 132 because it was void for uncertainty. In Jackson v Abram[13] the Full Court considered the nature of offers under the previous rules. The question in Jackson was whether the terms of an offer made during proceedings was reasonably certain so as to be capable of acceptance by the offeree. In my reasons with which Peek and Lovell JJ agreed, I held: In Duncan & Weller Pty Ltd v Mendelson Kaye J, with whom Southwell and Hampel JJ agreed, held that a filed offer pursuant to the relevant Victorian rules of court, if accepted, would constitute a binding contract between the parties. Like any contract, to be binding its terms are required to be reasonably certain. To similar effect is the judgment of the Supreme Court of New South Wales in Associated Confectionery (Australia) Ltd v Mineral and Chemical Traders Pty Ltd where Giles J held that a filed offer of a specific sum inclusive of costs could not be treated as an offer of compromise to which effect could be given because it was not possible to determine whether or not the result of the proceedings were more favourable or less favourable than the offer as it was not known how much the specific sum was or should be attributed to costs. [Citations omitted].[13] [2015] SASCFC 175 at [118], (2015) 124 SASR 339 at 342-343.

Ratio Decidendi

Legal Principle Established

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