Lady Dee-Lish Pty Ltd v Penman (Ruling)
[2018] VCC 1211
•7 June 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
DEFAMATION LIST
Case No. CI-17-02732
| LADY DEE-LISH PTY LTD (trading as LDL INTERNATIONAL) (ACN 606 743 515) | First Plaintiff |
| and | |
| DEE-ANNE MCGILL | Second Plaintiff |
| v | |
| DAVID DOUGLAS STEVENSON PENMAN | Defendant |
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JUDGE: | HIS HONOUR JUDGE SMITH | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 31 May 2018 | |
DATE OF JUDGMENT: | 7 June 2018 | |
CASE MAY BE CITED AS: | Lady Dee-Lish Pty Ltd & Anor v Penman (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 1211 | |
RULING
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Subject: CONTRACT
Catchwords: Offer and acceptance – whether proceeding settled by acceptance of offer – whether the plaintiff’s purported acceptance of offer was in fact a counter-offer
Legislation Cited: County Court Civil Procedure Rules 2008
Cases Cited:Hyde v Wrench (1840) 3 Beav 334; 49 ER 132; Turner, Kempson & Co Pty Ltd v Camm [1922] VLR 498; Cavallari v Premier Refrigeration Co Pty Ltd [1952] 85 CLR 20; Calderbank v Calderbank (1975) 3 All ER 333; Actrol Parts Pty Ltd v Coppi (No 3) (2015) 49 VR 573; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Boreland v Docker & Ors [2007] NSWCA 94
Judgment: Proceeding not settled. Plaintiff’s summons dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr S A Lowry | Peter G Richards |
| For the Defendant | Mr H J Hoyne | The Lantern Legal Group Pty Ltd |
HIS HONOUR:
1 In this proceeding, the plaintiffs claim damages from the defendant in respect of publications alleged to be defamatory of them.
2 It is not necessary for me to go into detail concerning the nature of the allegations of defamation made by the plaintiffs or of the Defence filed by the defendant.
3 By Summons dated 29 May 2018, the plaintiffs made application for the following orders:
·An order that the proceeding be stayed pending the determination of the following separate preliminary issue pursuant to rule 47.04 of the County Court Civil Procedure Rules 2008 (“the Rules”):
“Has the proceeding been compromised by exchange of correspondence between the Australian lawyers for the parties, including the effect of any incidental telephone attendances between them and, in particular, arising from the:
(a)letter from Harwood Andrews to Peter G Richards dated 14 May 2018;
(b)letter from Peter G Richards to Harwood Andrews dated 18 May 2018; and/or
(c)letter from Peter G Richards to Harwood Andrews dated 23 May 2018;
(Collectively ‘correspondence’).
·A declaration pursuant by the power conferred by Rule 47.04 of the Rules, that the proceeding has been compromised by the correspondence.
·An order that the proceeding be permanently stayed on the grounds set out in the affidavit of Peter Gregory Richards, sworn 29 May 2018, subject to the right of the plaintiffs to re-instate the proceeding on seven days’ notice.
·An order that the defendant pay the costs of and incidental to this application on an indemnity basis or, alternatively, on the basis considered appropriate by the Court.
·Such further and other orders and declarations as appropriate.
4 The hearing of the plaintiffs’ application was heard on 31 May 2018.
5 Both of the parties filed an affidavit sworn or affirmed by their respective solicitors.
6 Over the relevant period there were a number of letters or email messages sent by the two solicitors to each other. I shall refer to each as letters although it is probable that some were emails.
7 By letter dated 14 May 2018, Mr Griffiths (the defendant’s solicitor), wrote to Mr Richards (the plaintiffs’ solicitor). The letter contained general words concerning the proceeding including the build-up of legal costs, the removal of some allegedly defamatory words complained of by the plaintiffs from a Google account, and the evidence proposed to be given by the defendant’s daughter.
8 The relevant part of the letter of 14 May 2018 reads as follows:
“Resolution
…
In a final attempt to resolve the matter, our client wishes to make the following offer in full and final settlement of the dispute:
1.Without an admission of liability by our client, the parties will enter into a Deed of Settlement and release (Deed) containing mutually appropriate releases as well as non-disparagement and confidentiality clauses.
2.The Deed will also contain releases given by each of the plaintiffs to Chloe in relation to the subject publications.
3.The plaintiffs will discontinue their claim in the County Court within seven days of our client executing the Deed.
4.Our client will pay the plaintiffs the sum of $40,000, within twenty-one days of the parties executing the Deed.
5.Our client will pay the plaintiffs their reasonable legal costs calculated at 80 per cent of the Supreme Court Scale. Failing agreement as to the reasonable scale legal costs, the parties will engage an independent costs consultant mutually agreed upon by the parties (the costs of which are to be shared equally). The parties agree to be bound by the determination of the independent costs consultant in relation to the quantum of reasonable scale legal costs.
6.The security for costs in the amount of $20,000 held on trust by our firm, plus any accrued interest, be paid to the plaintiffs within seven days of the discontinuance of the claim in the County Court.
This offer is open for acceptance until 4:00pm on 28 May 2018 after which time it will immediately lapse and be of no further force or effect.
The plaintiffs should not construe this offer as one which invites a counter-offer. This offer represents the maximum amount which our client has capacity to pay and is made only in the interests of avoiding further legal costs and stress to himself and his family.
Accordingly, an offer of this sum will not be repeated if costs continue to be incurred.
Should this offer not be accepted, then this letter will be produced to the court, as appropriate, on the question of our client’s costs, to be calculated on an indemnity basis in accordance with the principles expressed in Calderbank v Calderbank (1975) 3 All ER 333, and as subsequently applied in Hazeldene’s Chicken Farm Pty Ltd [2005] VSCA 298.
We look forward to hearing from you. … .”
9 The parties are in agreement that on 18 May 2018, Mr Richards and Mr Griffiths spoke by telephone. At that time, Ms Lally, a solicitor employed by Mr Richards and who had the carriage of the matter on behalf of the plaintiffs, was present and able to participate in that telephone conversation by way of speakerphone. The solicitors are in agreement that the proposed settlement was discussed by them. However, their recollection of the details of the telephone conversation differs.
10 It is agreed that Mr Richards advised Mr Griffiths that the plaintiffs were inclined to accept the defendant’s offer. Mr Richards deposes that he told Mr Griffiths that he wished to seek clarification of the term set out in paragraph 5 of the offer relating to the means of determining costs in default of agreement. He deposed that an alternative of utilising the Costs Court was discussed. Mr Richards deposes that Mr Griffiths told him that he would have to consult with other members of his firm and revert to him.
11 It is also agreed that, in the telephone conversation, there was further discussion between the solicitors as to the date upon which the defendant was to pay the proposed $40,000 settlement sum to the plaintiffs. Mr Richards deposed that Mr Griffiths said to him that the defendant wished to vary paragraph 4 of his offer as he needed further time to make financial arrangements. He said that Mr Griffiths told him that the defendant needed eight weeks to pay instead of twenty-one days.
12 Mr Richards deposed that he had told Mr Griffiths that he had noted that the terms of the offer were that it was not one that should be construed as inviting a counter-offer. He deposed that he had specifically stated to Mr Griffiths that their discussions and suggested alternative as to calculation of costs “should not be regarded as a counter-offer”. He said that Mr Griffiths accepted this. He deposed that Mr Griffiths had invited him to write to him in relation to the matters discussed, including the requested amendment to paragraph 4. He agreed that he would write to Mr Griffiths about these terms.
13 In an affidavit sworn by Nicola Lally, she deposes that the contents of Mr Richards’ affidavit are correct.
14 In his affidavit, Mr Griffiths deposed that Mr Richards had told him in that conversation that having the plaintiffs’ costs taxed by the Court might be a better mechanism than an independent costs consultant and that he had told Mr Richards that while that might be suitable, he would need to confer with his principal and obtain instructions from the defendant. Mr Griffiths deposed that:
“Mr Richards said that he would like to make an offer in relation to the plaintiff’s reasonable legal costs of the proceeding, indicating that they may be ‘more than your client would like to pay’ but that they would represent a discount on the costs which the plaintiffs would incur.”
15 Mr Griffiths deposed that he told Mr Richards to put the plaintiffs’ offer in writing so he could confer with his principal and obtain instructions from his client.
16 Importantly, in my opinion, Mr Griffiths further deposed:
“At no time during the conversation did I confirm or otherwise acknowledge, expressly or otherwise, that an offer made by the plaintiffs in the terms discussed would not constitute a counter offer.”
17 On 18 May 2018, Mr Richards wrote to Mr Griffiths in the following terms:
“We acknowledge with thanks your letter of 14 May 2018.
We refer to the offer in that letter and our several subsequent without prejudice discussions.
While we acknowledge you made it clear in your letter you did no[t] invite a counter-offer, having regard to our discussions the plaintiffs make the following offer in full and final settlement of the dispute:
1. Without any admission of liability by your client, the parties will enter into a deed of settlement and release (Deed) containing mutually appropriate releases, as well as non-disparagement and confidentiality clauses.
2. The Deed will also contain releases given by each of the Plaintiffs to Chloe in relation to the subject publications.
3. The Plaintiffs will discontinue their claim in the County Court within seven days of your client executing the Deed with a right of re-instatement should payments in paragraphs 4 and 6(a) not be made within seven days of the due dates for payment in which event the Deed would be wholly discharged and of no further effect.
4. Your client will pay the sum of $40,000 within eight weeks of the parties executing the Deed.
5. The security for costs in the sum of $20,000 held on trust by your firm, plus any accrued interest, be paid to the plaintiffs within seven days of the discontinuance of the claim in the County Court.
6. Subject to paragraph 7, your client will pay the Plaintiffs’ costs of the proceeding including all disbursements in the sum of ninety-five thousand dollars ($95,000) (costs) payable as follows –
(a)The sum of thirty-five thousand dollars ($35,000) within eight weeks of the parties executing the Deed;
(b)The balance of the costs (namely $60,000) payable by six monthly payments of $10,000 the first payment being on 31 December 2018 and thereafter on the last day of each month, the final payment being on 30 June 2019;
(c)In the event of the default in payment of any of the monthly payments and such default continues for seven days, then the amount then outstanding shall thereupon become immediately due and payable and the plaintiff may enter judgment for the amount outstanding and the certificate of the plaintiff’s solicitor as to the amount outstanding shall be conclusive and the Deed may be produced as conclusive evidence of the defendant’s consent to judgment.
7. Failing acceptance by the defendant of the sum on account of costs, the defendant will pay the plaintiffs’ costs as determined by the Costs Court on the standard scale applicable to County Court proceedings (for the avoidance of doubt being 80 per cent of the Supreme Court scale).
8. For the avoidance of further doubt, the costs calculated and payable in accordance with the preceding paragraph will be immediately due and payable subject to any state lawfully granted by the Costs Court.
Having regard to the steps required to be taken in accordance with the court timetable, this offer is open for acceptance until 4:00pm on 23 May 2018.”
18 On 22 May 2016, Mr Griffiths wrote to Mr Richards in the following terms:
“We refer to the plaintiffs’ counter-offer contained in your letter dated 18 May 2018, which effectively rejected our client’s offer dated 14 May 2018.
We are instructed to reject the plaintiffs’ counter-offer.
Further, the proposed sum on account of legal costs does not appear to be in the spirit of compromise or calculated with reference to the relevant court scale on a standard basis.
Our client holds serious concerns in relation to the proportionately (sic) of legal costs being incurred, particularly in light of your covering email which stated that our professional fees had been ‘significantly reduced’ in reaching the sum of $95,000.
The proceeding has not even reached mediation.
As you know, section 24 of the Civil Procedure Act 2010 (Vic) provides that litigants and lawyers must use all reasonable endeavours to ensure that legal costs are reasonable and proportionate to:
(a) the complexity or importance of the issues in dispute; and
(b) the amount in dispute.
We draw your attention to the decision in Actrol Parts Pty Ltd v Coppi (No 3) [2015] VSC 758 in that regard.
Our client otherwise looks forward to arranging for the inspection of relevant computer devices pursuant to the court’s order dated 9 May 2018. … .”
19 On 23 May 2018, Mr Richards wrote to Mr Griffiths in the following terms:
“… we are surprised that your client has rejected the more favourable elaboration and refining of your offer we discussed, we having advised you that our client was not making a counter-offer and that our client was inclined to accept your client’s offer.
Accordingly, our client hereby accepts your client’s offer contained in your letter of 18 May 2018 which we note by its terms was open for acceptance until 4:00pm on 28 May 2018.
Could you kindly confirm that this matter has now been compromised on the terms of your letter of 18 May 2018 … .”
20 On 24 May 2018, Mr Griffiths wrote to Mr Richards advising that the counter-offer by the plaintiffs had the effect of rejecting the first offer and that there was no current or valid offer on the table capable of being accepted by the plaintiffs. He advised that the defendant had instructed him not to repeat his previous offer.
21 By letter dated 25 May 2018, Mr Richards wrote to Mr Griffiths, seeking to persuade him that the proceeding had resolved.
22 By letter dated 28 May 2018, Mr Griffiths wrote to Mr Richards opining that Mr Richards’ letter of 18 May 2018 was indeed a counter-offer. In that letter, Mr Griffiths pointed to a number of terms of the alleged counter-offer which differed from the offer that had been made by the defendant by email dated 14 May 2018.
23 The parties were in agreement that the following principles of law applied.
(a)That it was trite law that, generally, a counter-offer operates as an implied rejection of an offer, thereby bringing that offer to an end;[1]
(b)An acceptance will be effective if:
(i)it does not depart from the terms of the offer, but simply repeats in the offeree’s own words the effect of the offer; and/or sets out expressly what would be implied by law, or reasonably inferred, in the absence of express agreement;[2]
(ii)a deviation from the offer that is solely in favour of the offeror will not prevent a contract being formed;[3]
(iv)acceptance of an offer must be unequivocal. A purported acceptance which is conditional or imposes a new term will not be an effective acceptance and will constitute a counter-offer.
[1]Hyde v Wrench (1840) 3 Beav 334; 49 ER 132
[2]Turner, Kempson & Co Pty Ltd v Camm [1922] VLR 498 at 502; Cavallari v Premier Refrigeration Co Pty Ltd [1952] 85 CLR 20
[3]Boreland v Docker & Ors [2007] NSWCA 94 at paragraphs [76]-[78]
24 Counsel for the defendant submitted that any variation to an offer will prevent the contract being formed regardless of whether the proposed variation is a material or an important variation unless they were variations solely in favour of the offeror. I have some doubts as to whether a variation which is not material will always result in the prevention of the contract being formed.
25 Notwithstanding, I have come to the conclusion, somewhat reluctantly, that there were, in Mr Richards’ letter of 18 May 2018, a number of variations which, in my view, amount to a counter-offer rather than an acceptance of the offer. They are as follows:
(a)In the original offer of 14 May 2018, reference is made to the parties entering into a deed of settlement and release, together with non-disparagement and confidentiality clauses. I consider that, in the event that the settlement sum was not paid, the plaintiffs would have had a contractual claim against the defendant for the sum of $40,000, together with costs calculated in the manner set out in paragraph 5 of the Order.
Mr Richards’ letter of 18 May 2018 contained an additional clause that the plaintiffs would discontinue their claim in the County Court within seven days of the execution of the deed by the defendant, but with a right of reinstatement should payments not be made within seven days of the dates required by paragraphs 4 and 6 of the letter of offer. What Mr Richards’ letter was proposing was that if the monies were not paid within seven days of the due date, the claim would not be discontinued, a right of reinstatement would apply and the claim would continue against the defendant. In other words, there would be no settlement.
(b)In the original offer, the defendant offered to pay the plaintiffs’ reasonable legal costs, calculated at 80 per cent of the Supreme Court Scale and that, failing agreement, the parties would engage an independent costs consultant, mutually agreed upon, and would be bound by the determination of that consultant. Mr Richards, in his letter of 18 May 2018, proposed a different manner of calculating such costs. He proposed that if the parties could not agree that $95,000 was a reasonable sum for the plaintiff’s legal costs, costs would be determined by the Costs Court on the standard scale applicable to the County Court proceedings (which he considered was the same as 80 per cent of the Supreme Court Scale).
26 I do not consider that the extension of time for payment for the sum of $40,000 from twenty-one days to eight weeks would amount to a variation of any significance at all. Such variation would be solely for the benefit of the defendant.
27 However, the variation insofar as the consequences of late or non-payment of the sum of $40,000 was, in my view, a material variation of the offer that had been put by the defendant. I do not consider that this variation was solely for the benefit of the defendant. The effect of that variation was that, in the event that the defendant did not pay the sum of $40,000 on time, the whole proceeding was, once again, afoot. If the proceeding ran to trial, the defendant might obtain a result better or worse for him than the offer he had previously made.
28 With regard to the variation of the manner in which the plaintiff’s legal costs were to be determined on the material before me, I am not able to say whether a determination by an independent costs consultant would be likely to result in a determination of costs more beneficial to the defendant or more beneficial to the plaintiffs, or in the same sum. Further, on the material before me, I am not able to say that the determination of costs by a costs consultant would be a cheaper alternative for the parties than taking the matter to the Costs Court. While I expressed the view during the course of the hearing that an independent costs consultant would probably apply the same costing principles as would be applied by the Costs Court in assessing a party’s costs, there was no evidence before me concerning my supposition and I cannot be satisfied on the balance of probabilities that such was the case.
29 The parties were in agreement that the plaintiffs would carry the onus of establishing that the proceeding was settled. If the letter of 18 May 2018 constituted a counter-claim, it had the effect of cancelling the defendant’s offer notwithstanding that it was stated to be open until 28 May 2018.
30 This is a somewhat unusual case. The defendant’s offer was obviously one made on instructions from the defendant. Following receipt of it, Mr Richards conveyed its terms to the plaintiffs and deposes that they instructed him to accept it.
31 At that point it appears that both parties were prepared to settle the proceeding on the terms set out in Mr Griffiths’ offer. It appears that, since that time, the defendant has had a change of mind and now wishes to proceed to trial. There was no evidence as to a possible reason for such a change.
32 I consider that the variations between the original offer and what I have found to be the plaintiffs’ counter-offer lead to a conclusion that the offer lapsed and that there is no settlement of the proceeding.
33 Even if I were to prefer the evidence of Mr Richards and Ms Lally over that of Mr Griffiths, there is no evidence that the variation to which I have referred in paragraph 25(a) above was discussed at all prior to Mr Richards’ letter of 18 May 2018.
34 In any event, here, where there are two deponents swearing to different versions of that conversation, neither of whom are called for cross-examination, and neither of whose version of the conversation is inherently unlikely, I am unable to prefer one version over the other.
35 Further, a statement by a solicitor that his clients “were inclined to accept the offer” does not amount to an acceptance of the offer. It rather implies that his clients are still considering the offer and may well accept it.
36 Further, I am unable to see anything in the telephone discussions as deposed to by Mr Richards that could give rise to an estoppel.
37 On the evidence before me, I am not satisfied that the plaintiffs have discharged the onus of establishing the settlement alleged.
38 In summary, I have come to the conclusion that Mr Richards’ letter was a counter-offer and the effect of it was that the original offer made by the defendant lapsed.
39 Accordingly, I conclude that this proceeding has not been compromised.
40 I shall order that the Summons dated 29 May 2018 is dismissed. I shall order the plaintiffs pay the defendant’s costs of and incidental to the Summons on the County Court Standard Scale. In default of agreement, those costs shall be determined by the Costs Court.
41 The directions made on 9 May 2018, as varied by my Orders on 31 May 2018, are otherwise confirmed.
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