Maincom Services Pty Ltd v Raptis Pty Ltd

[2024] NSWSC 305

Supreme Court

New South Wales

Medium Neutral Citation:

Maincom Services Pty Ltd v Raptis Pty Ltd [2024] NSWSC 305

Hearing dates:

01 March 2024

Date of orders:

26 March 2024

Decision date:

26 March 2024

Jurisdiction:

Common Law

Before:

Weinstein J

Decision:

(1) Grant leave to appeal.

(2) Grant leave for the defendant to rely upon its Notice of Contention filed 7 December 2023.

(3) Dismiss the appeal.

(4) Each party is to bear its own costs.

Catchwords:

APPEALS – appeal from Local Court to Supreme Court – Local Court determined parties did not have a binding agreement – whether plaintiff’s offer was subject to contract – how offer should be categorised in accordance with Masters v Cameron

CONTRACTS – formation – agreement – counter-offer – whether purported acceptance complied with mirror image rule – taking into account parties’ conduct in interpreting intention – purported acceptance was a counteroffer – decision of Local Court affirmed

Legislation Cited:

Building and Construction Industry Security of Payment Act 1999 (NSW), s 15(2)(a)(i)

Local Court Act 2007 (NSW), s 40

Suitors’ Fund Act 1951 (NSW), s 6

Uniform Civil Procedure Rules (NSW), r 50.11(3)

Cases Cited:

Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61

County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193

Hannover Life Re of Australasia Ltd v Dargan [2012] NSWCA 185

Keppel v Wheeler [1927] 1 KB 577

Masters v Cameron (1954) 91 CLR 353

Mir Bros Developments Pty Ltd v Atlantic Constructions Pty Ltd (1985) 1 NSWLR 491

Texts Cited:

G E Dal Pont, Law of Costs (LexisNexis, 4th ed, 2018)

J W Carter, Carter on Contract, vol 1 (at Service 36)

Tolhurst and Peden, Furmston and Tolhurst on Contract Formation: Law and Practice (Oxford University Press, 3rd ed, 2023)

Category:

Principal judgment

Parties:

Maincom Services Pty Ltd (Plaintiff)
Raptis Pty Ltd (Defendant)

Representation:

Counsel:
M Keene / C Langford (Plaintiff)
J Horowitz (Defendant)

Solicitors:
Salim Rutherford Lawyers (Plaintiff)
Horowitz & Bilinsky (Defendant)

File Number(s):

2023/00329248

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Local Court of New South Wales

Jurisdiction:

Civil

Date of Decision:

19 September 2023

Before:

Herridge LCM

File Number(s):

2022/00215080

JUDGMENT

1. By Summons filed on 17 October 2023, the plaintiff, Maincom Services Pty Ltd (Maincom) seeks leave to appeal a decision of the Local Court pursuant to Part 50 of the Uniform Civil Procedure Rules 2005. Leave is required because the impugned decision is an interlocutory judgment or order: s 40 of the Local Court Act 2007 (NSW).

2. On 19 September 2023, Magistrate Hedge dismissed a motion brought by Maincom, the defendant below, for summary dismissal of debt recovery proceedings. It sought to enforce what it contended was a binding settlement agreement with Raptis Pty Ltd (Raptis), who was the plaintiff below and is the defendant in these proceedings. The dispute between the parties arises from $80,700.61 allegedly owed by Maincom to Raptis, being the balance of three outstanding invoices for work performed, pleaded in an Amended Statement of Claim filed in the Local Court on 2 August 2023. Maincom contends that the director of Raptis, Mr Constantine Raptis, accepted an offer of settlement made by its solicitors on 11 August 2023. The Magistrate determined that there was no binding agreement between the parties and dismissed the Notice of Motion.

3. Raptis filed a Notice of Contention (NOC) in this court on 7 December 2023, approximately one month out of time. Raptis contends that the decision of the Magistrate should be affirmed because a letter it sent to Maincom on 14 August 2023 (the 14 August Letter) constituted a counteroffer, the effect of which was the plaintiff’s offer of 11 August 2023 was rejected.

4. Maincom relied upon several grounds of appeal of both errors of law and factual findings, and contended that the Magistrate should have dismissed the proceedings. For the following reasons, I grant leave to Maincom to appeal but dismiss the appeal, I grant leave to Raptis to rely on its NOC and affirm the decision of the Magistrate.

Background

5. On 22 July 2022, Raptis filed a Statement of Claim in the Local Court seeking an order that Maincom pay it $100,000 pursuant to s 15(2)(a)(i) of the Building and Construction Industry Security of Payment Act 1999 (NSW) in respect of ten invoices for work performed on ten different building projects. The invoices totalled $113,437.02, but Raptis claimed that only $11,565.39 had been paid.

6. On 2 August 2023, Raptis filed an Amended Statement of Claim which reduced its claim to $80,700.61, plus interest and costs, but with respect to only three of the ten invoices. The matter was listed for final hearing on 19 September 2023.

7. On 11 August 2023, Maincom’s solicitors sent a letter to the solicitors for Raptis, that contained a without prejudice offer (the Offer). The part of that letter which set out the Offer is as follows:-

“In an attempt to resolve the matter, and to protect our client against future costs of these proceedings, our client has instructed us to put the following settlement proposal to your client, on a purely commercial basis and without making any admissions (‘offer’):

1. our client pay to your client the sum of $40,000 (‘Settlement Sum’) to your client in full and final satisfaction of all claims made by your client, the proceedings and all matters arising out of the matters the subject fo [sic] the proceedings;

2. our client pay the Settlement Sum within 21 days of your client’s written acceptance of our client’s offer;

3. the proceedings be dismissed;

4. each party to bear its own costs; and

5. your client enter into a deed releasing our client from all claims, actions, interests, demands, suits at law, equity or statute and whether known or unknown.”

8. At 10:11 am on 14 August 2023, Maincom’s solicitors received an email from Mr Raptis personally, attaching a letter which stated:-

“We are accepting your offer of $40,000 to finalise this matter and both parties to pay their own costs.

Any further contact please contact myself Constantine Raptis email: [redacted] or mobile [redacted].”

9. At 11:26 am that day, Maincom’s solicitors sent an email to Raptis’s solicitors saying that they had received an acceptance of their offer from Mr Raptis directly and that they would prepare a deed of settlement and release. Maincom’s solicitors asked for confirmation that they continued to act for Raptis. At 12:06 pm, Raptis’s solicitors sent an email to Maincom’s solicitors saying that they no longer held instructions in the matter.

10. A draft deed of settlement and release was sent to Mr Raptis personally on 16 August 2023 (the Deed). The Deed included a clause releasing Maincom from all actions, suits, claims, demands or any other causes of action with respect to all ten invoices that were pleaded in the original Statement of Claim filed by Raptis.

11. On 21 August 2023, Mr Raptis responded to Maincom’s solicitors, stating that he would not agree to sign the Deed because it included all ten invoices. Mr Raptis said that seven invoices had to be removed in order for him to agree to the settlement terms, or he would otherwise proceed with the litigation. After further correspondence, Maincom filed a Notice of Motion in the Local Court seeking dismissal of the proceedings or vacation of the 19 September 2023 hearing date. This motion was listed to be heard on 19 September 2023 with the substantive claim.

12. On 15 September 2023 – four days before the hearing, and more than four weeks after the date of the offer – Maincom deposited $40,000 into Raptis’s bank account.

The proceedings and decision below

13. Mr Raptis appeared on behalf of Raptis in his capacity as director, and Ms Langford of counsel appeared on behalf of Maincom. At the commencement of the hearing, Mr Raptis explained that he had previously been legally represented but that his solicitor was no longer retained due to communication issues.

14. Maincom submitted that Raptis had accepted the Offer and that it should therefore succeed on its Notice of Motion, because there was no extant dispute between the parties for the Magistrate to determine.

15. The documentary evidence before his Honour was as follows:-

1. An affidavit of Su Ts’en Johnson affirmed on 12 September 2023;

2. An affidavit of Vishal Shah affirmed on 19 September 2023; and

3. An ASIC Extract Snapshot of Raptis Pty Ltd ACN 154 747 243 dated 13 September 2023.

16. Ms Johnson’s affidavit annexed a number of documents which contained written correspondence between the parties (some of which is summarised above). Those documents are as follows:-

1. An email from Salim Rutherford Lawyers to Raptis’s former solicitor dated 11 August 2023, attaching a letter from Salim Rutherford Lawyers to Raptis’s former solicitor of the same date. This is the letter setting out the Offer referred to above;

2. An email from Mr Raptis to Salim Rutherford Lawyers dated 14 August 2023, attaching the 14 August Letter;

3. Email correspondence between Salim Rutherford Lawyers and Raptis’s former solicitor dated 14 August 2023, confirming that they no longer had instructions to act for Raptis;

4. An email from Salim Rutherford Lawyers to Mr Raptis dated 14 August 2023, reproduced relevantly as follows:-

“Dear Mr Raptis,

We refer to your correspondence received this morning, 14 August 2023, and confirm that you have accepted our client’s offer.

In the circumstances, we will prepare a draft Deed of Settlement and Release and provide a copy to you shortly for your review.

Kind regards,

…”;

5. An email from Mr Raptis to Salim Rutherford Lawyers dated 14 August 2023 and in response to the email set out immediately above, reproduced relevantly as follows:-

“No worries thanks”;

6. An email from Salim Rutherford Lawyers to Mr Raptis dated 16 August 2023, reproduced relevantly as follows:-

“Dear Mr Raptis,

We refer to your letter dated 14 August 2023, accepting our client’s offer to resolve Raptis Pty Ltd’s claims against our client.

As foreshadowed, we attach for your consideration, a Deed of Settlement and Release reflecting the terms set out in our client’s offer.

We would be grateful if you could review the attached Deed and let us know if the terms are satisfactory.

Once the terms have been finalised, we would ask that you sign a copy of the Deed in the space provided on page 6. We would also request that you sign a copy of the consent orders (second page of the orders, which is on page 8 of the Deed), which we will arrange to be filed with the Local Court.

We look forward to receipt of your confirmation that the attached draft Deed is satisfactory.

If you have any queries, please do not hesitate to contact us.

Kind regards,

…”;

7. An email from Mr Raptis to Salim Rutherford Lawyers dated 16 August 2023 in response to the email set out immediately above, reproduced relevantly as follows:-

“Hi Su Ts’en Johnson

I’m not agreeing to the Deed of Settlement as our hearing was for invoices:

Inv 683 Penrith

Inv 670 Berowra Heights

Inv 684 Mount Victoria.

You will need to remove these invoices form your Deed of Settlement

Inv 603 Mellow Bath

Inv 635 Berowra Heights

Inv 641 Berowra Heights

Inv 661 Berowra Heights

Inv 755 Lakemba

Inv 760 Berowra Heights

Inv 758 Beaumont Hills

for us to agree of the $40,000.00 settlement.

If not we will proceed to go to court.

Regards

Constantine Raptis”; and

8. Email correspondence between Salim Rutherford Lawyers and Mr Raptis of various dates after 16 August 2023. These emails set out Maincom’s position that an agreement had been reached in relation to ten invoices and Raptis’s that it would only agree in relation to three invoices (the subject of the Amended Statement of Claim).

17. Mr Raptis gave evidence at the hearing and was cross-examined by Ms Langford. The focus of his evidence was a telephone call he received from a Maincom employee, Mr Vishal Shah, his subjective understanding of the correspondence of 11 and 14 August 2023, and the status of his legal representation at different periods of time.

18. Mr Raptis gave the following account of the telephone call from a Maincom employee:-

“Q. What I would like you to tell the Court about is what occurred on--

A. Friday afternoon.

Q. Friday 15 September?

A. Approximately 3.15 my phone rang and like I answered it and a gentleman that I believed was Vishal from Maincom--

….

Q. Yes?

A. Okay. And he asked for my bank details and I said, “What do you want them for? And he goes, “It’s your lucky day, we’re going to pay you part payment of what we owe you.” And we had a laugh about it and I said, “Oh okay, thank you”, and this and that. He was happy, he was happy and I said, “Okay, no worries, thank you.” And I – and I actually said to him, give me five or ten minutes, I’m just around the corner and when I get home I’ll – I’ll get the details off my wife and I’ll text them to you. And I think I texted it to him within five or ten minutes, give and take.

Q. Anything else happen that day?

A. What happened on that day? What happened personally or just about the matter?

Q. About the matter?

A. No, they just hung up and approximately 6 o’clock the thing came through that there was – there was money in the account. And then approximately, I think 6.30 or 6.45, I got a – I got a letter from the solicitor.

….

Q. How much money was received?

A. 40,000, and he made it specific that it was part payment.”

19. Mr Raptis was exhaustively cross-examined on this account, particularly in respect of the evidence that Maincom was to pay to Raptis “part payment of what [they] owe [it]”.

20. Mr Raptis was asked what he thought about the correspondence on 11 and 14 August 2023, to which he responded:-

“…Yeah, I, at this time, I agreed to the 40,000 to the three invoices that we’re here for today as a hearing. And I sent the email, well my wife sent it but I – I instructed her to send the email and when I got the deed of release I – I didn’t agree to it.”

21. With respect to Mr Raptis’s attempts to obtain legal representation for the hearing below, an important exchange (relevant to the question of costs on this appeal) between Ms Langford and Mr Raptis is reproduced below:-

“Q. And yet you tell his Honour now that you were looking for a barrister and a solicitor alternative to [the plaintiff’s previous solicitor] at that time, is that correct?

A. No, I’ve – the – no, I’ve got a barrister but he was trying to find a solicitor to help him because apparently he cannot come to Court without a solicitor inviting him to come to Court, that’s my understanding of it and that’s how he explained it to me.

Q. When did you try and find an alternative solicitor?

A. We’ve been looking since 14 August.

Q. Why were you looking on the 14^th if you thought there was a deal?

A. Because I need to sort – because you said you were going to send me a deed of release and I need to get explanation for this deed of release. And like I looked at it and my wife looked at it, and the deed of release has got different invoices on it than what we’re here for today to fight.

Q. You’ve been looking for a solicitor since 14 August?

A. Yeah.

….

Q. What inquiries did you make?

A. I’ve rang – I rang another bloke, like I’ve rang a solicitor that I know. I’ve – I’ve spoken to, what’s his name, to my barrister and he’s made inquiries.

Q. You rang one solicitor that you know?

A. Yes.

Q. When did you do that?

A. Yesterday.

Q. Yesterday?

A. Yeah.

….

Q. That is the only thing that you did?

A. No.

Q. Even though you say you were looking from the 14^th?

A. No, no, not at all. I Googled solicitors, for construction solicitors on the – on Google.

Q. You only made one phone call?

A. I only made one phone call.

….

Q. As I understand your evidence, sir, you say on the one hand that you were looking for a solicitor since 14 August. You say the only attempt that you made, apart from Googling construction solicitors was to call one person that you already knew yesterday at lunch time?

A. Yeah.”

22. His Honour gave an ex tempore judgment. He dismissed Maincom’s Notice of Motion on the basis that the only agreement made was an agreement to agree. In this respect, his Honour stated (transcript p 45):-

“In the matter of Masters v Cameron the Court referred to a matter of Keppel v Wheeler which summarises the proposition quite neatly. A reference is made to the judgment of Bankes LJ who says this:

“I pause here to state plainly what is now well established, that where a person accepts an offer subject to contract, it means that the matter remains in negotiation until a formal contract is settled and the formal contracts are exchanged.”

The decision in Masters v Cameron… and its application in this case is that the facts (sic) that Mr Raptis, the plaintiff, did not sign the deed of release means that the process of accepting any offer was not completed. The Court therefore finds that there was no binding agreement.”

The appeal to this Court

23. In its Summons, Maincom relied upon several grounds of appeal. However, at the hearing of the appeal, both parties agreed that the Magistrate erred as outlined in ground 1(a):-

“1. The court erred in determining that the parties had not reached a binding settlement agreement. In particular:

a. The Court erred in law by construing the defendant’s acceptance as being “subject to contract” in the sense used by Keppel v Wheeler [1927] 1 KB 577.

i. There was no basis for finding that the acceptance was “subject to contract” in the sense used in Keppel v Wheeler [1927] 1 KB 577.

ii. The Court misapplied the observation of Bankes LJ in Keppel v Wheeler [1927] 1 KB 577 at 584 and engaged in conclusionary reasoning.”

24. Maincom submitted that the Offer does not contain a stipulation that it is “subject to contract” or words to that effect. The Offer contains five terms separated by numbered paragraphs, each forming part of the terms of one offer of settlement.

25. Maincom contended that term 5 of the Offer was that Raptis “enter into a deed releasing [Maincom] from all claims, actions, interests, demands, suits at law, equity or statute and whether known or unknown.” It was submitted that the term that Raptis enter into a deed releasing Maincom from certain liabilities was not a stipulation that the Offer would not be accepted until a contract had been executed. It was simply an expression that, if the Offer were accepted, the terms of the parties’ agreement would be expressed more fulsomely in a deed.

26. Although it is not strictly necessary for me to address ground 1(b), given the way that it was put by the plaintiff, ground 1(a) was essentially its corollary:-

“b. The Court erred by locating the case within the third category in Masters v Cameron (1954) 91 CLR 353 rather than the first category.

i. The Court should have started its analysis by reference to, and given primacy to, the objective meaning of the parties’ words in their written offer and acceptance.

ii. Instead the Court analogised erroneously from Keppel v Wheeler [1927] 1 KB 577 and relied on subsequent conduct evidence in a manner that was improper in the circumstances of the case.”

27. Maincom contended that an agreement resulting from acceptance of the Offer would not fall within the third category outlined by the High Court in Masters v Cameron (1954) 91 CLR 353 (‘Masters v Cameron’) (at p 361):-

“They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own. The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document, … or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed.” (citations omitted.)

28. His Honour’s finding that the Offer was subject to contract was a finding that the purported agreement fell within this category.

29. On appeal, Maincom contended that the agreement in fact fell within the first category outlined in Masters v Cameron at p 360, namely that where “the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.” For the reasons that follow I do not agree that the purported agreement fell within the first category of Masters v Cameron, but rather that the 14 August Letter constituted a counteroffer.

28. In my opinion, his Honour misapplied the principle in Keppel v Wheeler [1927] 1 KB 577 by categorising the Offer as being “subject to contract” and within the third category outlined in Masters v Cameron. This was an error of law.

29. Raptis submits that the matter does not fall within the first category.

30. I would therefore grant leave to appeal on the basis that an error of law was made as outlined in ground 1(a) of the Summons. However, as will be seen, the appeal should be dismissed.

Raptis’s NOC

Leave to rely upon the NOC

33. Raptis filed a NOC on 7 December 2023, relying upon a single ground:-

“The Defendant’s 14 August 2023 letter constituted a counteroffer which meant the Plaintiff’s offer dated 11 August 2023 was rejected; Boreland v Docker & Ors [2007] NSWCA 94 at [28] to [44] and Carter on Contract, vol 1 at [03-210] (cited with approval by Beasley JA in Boreland).”

34. Raptis requires leave to rely upon its NOC because it was filed out of time: see r 50.11(3) of the UCPR. Maincom opposed such leave being granted.

35. Mr Keene, who appeared with Ms Langford for Maincom, submitted that Maincom would suffer prejudice if Raptis were allowed to rely upon its NOC on the basis that it could have raised the issues outlined in its NOC at the hearing before the Magistrate.

36. Raptis is not subject to the same limitations as Maincom in relation to the matters raised on appeal. In Hannover Life Re of Australasia Ltd v Dargan [2012] NSWCA 185, Barrett JA stated (at [23]):-

“While an appellant ordinarily cannot raise on appeal matters that were not agitated below, a respondent – who is made party to the appeal whether he or she likes it or not – is not so limited: David Syme & Co Ltd v Lloyd (1985) 1 NSWLR 416. Subject to the procedural requirement of notice of contention (as a means of avoiding surprise), the respondent is entitled to seek to uphold the decision below on “any good legal ground appearing upon the evidence, although he did not present it in the Court below”. These are the words of Jordan CJ in NRMA Insurance Ltd v B & B Shipping and Marine Salvage Co Pty Ltd (1947) 47 SR (NSW) 273 at 282.”

37. Although Raptis had legal representation at some stage prior to the hearing, it was not legally represented on the day of the hearing. Rather, Mr Raptis appeared in person on its behalf, and it is appropriate to give it some leeway in not having raised the matters in the NOC at the hearing below. On one view, it raised the issue of counteroffer in other than precise legal language. Further, Maincom has had a substantial period of time to prepare its case in relation to the NOC. I also note that Maincom did not raise any complaint about the delay until it filed written submissions on 29 February 2024.

38. Notwithstanding a lack of documentary evidence explaining why the NOC was filed out of time, I accept the explanation offered by Mr Horowitz in this Court. In the interest of finally disposing of the issues the subject of the appeal, I granted leave to Raptis to rely on the NOC in this Court. I turn now to the parties’ substantive submissions on the NOC.

Raptis’s submissions

39. Raptis alleged that the terms of the 14 August Letter did not mirror the terms of the Offer, which meant that the purported acceptance was ineffective and instead it constituted a counteroffer.

40. Counsel for Raptis referred to J W Carter, Carter on Contract, vol 1 (at Service 36) at pp 8246-8247 [03-220]-[03-230]:-

“The offer and acceptance must precisely correspond and any departure from the offer will result in the purported acceptance being ineffective. The position is obvious in relation to a counter offer. However, the rule is a strict one, and is not limited to material deviations from the terms of the offer.

Even if it is worded as an acceptance, an acceptance which does not correspond to the offer will normally amount to a counter offer …

Acceptance must be unequivocal. This means that the language used by the offeree must be such as would convey to a reasonable person in the position of the offeror a clear and definite decision by the offeree to be bound by the terms of the offer, leaving nothing further to be negotiated [Appleby v Johnson (1874) LR 9 CP 158; Spencer’s Pictures Ltd v Cosens (1918) 18 SR (NSW) 102; Ballas v Theophilos (No 2) (1957) 98 CLR 193].”

41. Raptis contended that the 14 August Letter was not an acceptance of the Offer because:-

1. It did not precisely correspond to the offer – in that it did not expressly or impliedly accept in toto, the offer (i.e. it did not comply with the “mirror image rule”);

2. It was not clear and unequivocal; and

3. It leaves doubt as to the fact of acceptance.

42. Mr Horowitz, who appeared on behalf of Raptis, submitted that the five terms outlined in the Offer were not matched by the 14 August Letter. Rather, he submitted that the 14 August Letter only constituted express agreement to payment of $40,000.00 to “finalise this matter” and for each party to bear their own costs. It was accepted that Raptis also impliedly agreed to the terms that required payment be made within 21 days and that the proceedings be dismissed.

43. It was contended that the effect of the words “this matter” needed to be read in the context of the circumstances as at the date the offer was made. Less than two weeks prior to the offer, Raptis had filed an Amended Statement of Claim whereby it had reduced its debt claim from 10 invoices to three. It was in this context, Raptis said, that the words “finalise this matter” plainly referred to the claim that was on foot in the Local Court at the time. I agree.

44. Mr Horowitz argued that the 14 August Letter could not amount to an acceptance of term 1 or term 5 of the Offer. He submitted that term 1 uses the words “all claims made by your client” and term 5 was expressed as a global release of all claims known and unknown. This would include the seven invoices abandoned when the Amended Statement of Claim was filed, whereas it was argued that the words “finalise this matter” when read in context only refer to three invoices the subject of the Amended Statement of Claim.

45. He submitted that a reasonable person in the position of Maincom would have understood Mr Raptis’s 14 August Letter as a counteroffer. I agree.

Maincom’s submissions

46. Maincom contended that the 14 August Letter was not a counteroffer, and that it constituted an acceptance of the Offer.

47. Mr Keene submitted that the language used in an acceptance need not match that of the offer, either with any strict precision or at all.

48. I was referred to Furmston and Tolhurst on Contract Formation: Law and Practice (Tolhurst and Peden, Oxford University Press, 3^rd ed, 2023) which states at pp 90-91 [4.40]:-

“To a certain extent [the mirror image rule] is strict, for there to be a contract upon communication of an acceptance that acceptance must assent to the terms of the offer. However, there is no rule that the acceptance must be in the form of ‘I accept your offer’ or that it exactly duplicate the terms of the offer. It may rephrase the terms. …. However, ultimately, the result must depend on how the communication is to be interpreted by a reasonable person in the position of the offeror”. (citations omitted.)

49. It was further submitted that whether acceptance is unequivocal, that is, nothing further is left to be negotiated between the parties, is dependent on the view that a reasonable person in the position of the offeror would regard the communication as an acceptance.

50. In written submissions, Maincom provided 10 reasons why the NOC should be dismissed which can be summarised as follows:-

1. Considerable weight should be attached to the words, “We are accepting your offer…”;

2. That there is a verbal discrepancy between the 14 August Letter and the Offer is of no importance;

3. The 14 August Letter paraphrased the Offer and did not misdescribe it;

4. The “matter” between the parties was not limited to the Amended Statement of Claim;

5. Even if the “matter” was limited to the claims the subject of the Amended Statement of Claim, this is not a fatal inconsistency between the Offer and the purported acceptance;

6. No reasonable recipient of the 14 August Letter would understand the words “to finalise this matter” as a rejection of terms 1 and 5 of the Offer;

7. The proposition that Raptis rejected term 5 of the Offer is contradicted by the facts, including statements made and evidence given by Mr Raptis at first instance;

8. Raptis remained silent in the face of assertions by Maincom that Raptis had accepted the Offer;

9. Maincom did not in fact understand the 14 August Letter to have constituted a rejection; and

10. The words “to finalise this matter” are inconsistent with accepting some terms of the Offer, but rejecting others.

51. I do not propose to address each of these assertions individually. Instead, they can be broadly grouped into two categories:-

1. that the 14 August Letter did in fact mirror the terms of the Offer (including by paraphrasing); and

2. that the parties’ conduct before, after and in between the exchange of the Offer and 14 August Letter suggests that the 14 August Letter was an acceptance of the Offer.

Consideration

52. Having regard to the submissions of both parties, I do not accept that the 14 August Letter was a mirror image of the Offer. Rather, I am satisfied that it constituted a counteroffer.

53. The construction of a contract is an objective question for the court, and the subjective beliefs of the parties are generally irrelevant: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 at [27].

54. Considered in the context of the dispute between the parties, the words used in the 14 August Letter, in particular the words “finalise this matter”, do not encapsulate terms 1 and 5 of the Offer. That Raptis had amended its Statement of Claim to remove seven invoices from its debt claim two weeks prior to the Offer being made is significant in that regard.

55. Furthermore, Raptis did not have legal representation at the time the 14 August Letter was sent. Maincom’s solicitors became aware of that fact approximately two hours after receiving it. A reasonable person in the position of Maincom would have appreciated that Mr Raptis, responding on behalf of Raptis, may not have understood elementary contract principles. In the circumstances, in my view a reasonable person in the position of Maincom would not have considered the 14 August Letter to be an unequivocal acceptance of the Offer. It may have instead, for example, sought clarification that Raptis in fact accepted terms 1 to 5 of the Offer, including by confirming that the Offer related to all ten invoices (and other claims) once it understood that Raptis was no longer legally represented.

56. Conduct after the 14 August Letter is admissible on the question of whether a contract was formed: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 per Heydon JA citing Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 at p 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at pp 668, 669, 673; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9,147 at pp 9,149, 9,154-9,156; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9,251 at p 9,255.

57. In County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193, McColl JA stated (at [161]):-

“The present state of the law throughout Australia on whether, and if so when, it is possible to use post-contractual conduct as an aid to construction of the contract is not yet settled, the view, favoured in this Court, being that subsequent communications cannot be looked to as an aid to construction of a contract, but can be looked to as an aid to deciding whether a contract has been entered into”. (citations omitted).

58. That Raptis remained silent in the face of assertions that it had accepted the Offer does not mean that it accepted the Offer. Raptis was not legally represented at the time of those assertions. Further, Mr Raptis’s conduct after sending the 14 August Letter in fact suggests that its terms did not match those of the Offer. When Mr Raptis received the Deed from Maincom’s solicitors which included terms that would release Maincom from all actions, suits, claims, demands or any other causes of action with respect to all ten invoices that were pleaded in the original Statement of Claim, he responded by indicating that he would not sign the Deed because it would extinguish his claims in relation to ten invoices, rather than three, which he had never intended. This supports Raptis’s contention that the 14 August Letter was a counteroffer, which Mr Raptis believed had been accepted by Maincom.

59. The 14 August Letter, in light of all the circumstances, including conduct before and after, demonstrated objectively acceptance of terms 2 to 4 of the Offer, but not terms 1 and 5, which in my view ought to have been conveyed to Maincom. The 14 August Letter contained different terms than the Offer (in that it did not include some of those in the Offer) and therefore constituted a new offer.

60. It follows that, in my opinion, the 14 August Letter constituted a counteroffer rejecting the Offer. Accordingly, the Magistrate’s decision must be affirmed on the basis advanced in the NOC.

Costs

61. Maincom and Raptis were both partially successful. The parties were in agreement that the Magistrate had erred on a point of law, but they each opposed the granting of leave to hear the appeal and rely upon the NOC respectively.

62. Although it is not necessary for me to address the point, Mr Horowitz raised the prospect of an application under the Suitors’ Fund Act 1951 (NSW) (the Act) in his oral submissions. Relevantly, section 6 of the Act reads:-

“6 Costs of certain appeals

(1) If an appeal against the decision of a court:

(a) to the Supreme Court on a question of law or fact, or

…

succeeds, the Supreme Court may, on application, grant to the respondent to the appeal or to any one or more of several respondents to the appeal an indemnity certificate in respect of the appeal.”

63. Putting to one side the question of whether the appeal would properly be considered “successful” under the Act, the nature and purpose of the Act are outlined in G E Dal Pont, Law of Costs (Lexis Nexis, 4^th ed, 2018) as follows (at p 744):-

“A particular focus of the legislation is on the costs consequences for respondents to an appeal who prove unsuccessful because the trial judge erred in law. At general law, a respondent so positioned is ordinarily liable to pay the appellant’s costs of both the appeal and the first trial. It is the unfairness of casting upon a respondent who has succeeded due to the lower court’s error of law to bear the costs consequences of this error that drives the legislation, which gives the appeal court the power to alter this otherwise usual outcome of a successful appeal. In Acquilina v Dairy Farmers Co-operative Milk Co Ltd, speaking of the main provision in the New South Wales Act, Moffitt J explained the rationale for the legislation as follows:

The grant of such relief, it can be inferred, proceeds on the assumption that the law is known, so that if an error of law occurs in a court of first instance or an inferior appellate court, such error may ordinarily be attributed to a fault in the administration of justice rather than of the parties so that the costs of having the error rectified ought not ordinarily to lie on the unsuccessful respondent to the appeal but to be paid from a fund contributed to by all litigants.” (citations omitted.)

64. In Mir Bros Developments Pty Ltd v Atlantic Constructions Pty Ltd (1985) 1 NSWLR 491, Kirby P and Samuels JA identified the purpose of the Act as (at p 494):-

“the relief of a party who incurs or becomes liable for costs not through his own decision or conduct but because of some error of law of the court appealed from…”

65. I have found that the Magistrate erred in law, but I have affirmed his Honour’s decision on a ground put forward by Raptis which Maincom opposed, and which might have been put before the Magistrate. Raptis was not legally represented at the time of the hearing below and Mr Raptis’s evidence was that his efforts to obtain legal representation extended only to conducting Google searches and making one telephone call to a solicitor (on the day prior to the hearing). In any event, he elected to proceed without legal representation on the day of the hearing below.

66. Taking all matters into account, I order that each party bear its own costs.

Orders

67. I make the following orders:-

1. Grant leave to appeal.

2. Grant leave for the defendant to rely upon its Notice of Contention filed 7 December 2023.

3. Dismiss the appeal.

4. Each party is to bear its own costs.

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Decision last updated: 26 March 2024