Mayfield v Zadow and Zadow - [2006] SADC 70

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
MAYFIELD v ZADOW AND ZADOW
[2006] SADC 70
Judgment of His Honour Judge David Smith
23 June 2006
PROCEDURE
Appeal against decision of Master to extend time in which to accept lodged offer – discussion of nature of appeal pursuant to s43(2)(a) of District Court Act and r97.01 of District Court Rules – appellant lodged offer to consent to judgment in court pursuant to r40.01 of District Court Rules – respondents were late to accept offer and applied to extend time in which to do so – discussion of whether application by respondents to relax time limitation in which to accept offer as prescribed by r40.02 properly characterised as an “extension” of time or “abridgement” of time – discussion of whether Master was empowered to relax time limitation in r40.02 by r6.02 or r3.04(d) – discussion of whether application of r3.04(d) properly applied to the time limitations in r40 or whether the interaction was ultra vires the rule-making power or required reading down – discussion of width of discretionary power to abridge and extend time in r3.04(d). Held - dismissing appeal that Master was empowered to abridge time pursuant to r3.04(d) and exercised his discretion to do so on the basis of sufficient evidence – held also that Court would not interfere with order that costs of application before Master be costs in the cause.
District Court Act 1991 s43(2)(a), s51; District Court Rules r3.04(d), r6.02, r40, r101.02; Acts Interpretation Act 1915 s27, referred to.
Police v Cadd (1997) 69 SASR 150; O'Brien Lovrinov Crafter Pty Ltd v Corradini [1999] SASC 1549; Transeast Pty Ltd v Commonwealth Bank (1990) 157 LSJS 447; Wigg v Architects Board (1984) 36 SASR 111; Henschke v Guardianship Board (unreported, District Court of SA, Lunn DCJ, 27 July 1998, D3850); In re Flinders Trading Co Pty Ltd (1977) 20 SASR 14; Lamshed v Lamshed [1962] SASR 190; FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 77 ALR 411; Rigney v Rigney (1987) 4 SASR 291; Morris v McEwens and Anor (2005) 92 SASR 281; Queensland v JL Holdings (1997) 189 CLR 146; Victa Ltd v Johnson (1975) 10 SASR 496; Mavra v Logan (1980) 24 SASR 567; Hodak v Bosman (1983) 36 SASR 164; Southern Resources Ltd v Residues Treatment & Trading Co Ltd (1990) 56 SASR 455, considered.

MAYFIELD v ZADOW AND ZADOW
[2006] SADC 70
Introduction

This is an appeal by the appellant (defendant) against a decision made by a Master on the 17^th March 2006, whereby, pursuant to r6.02 of the District Court Rules, the Master extended the time in which the respondents (plaintiffs) could accept a lodged offer.
Nature of Appeal
This appeal is instituted pursuant to s43(2)(a) of the District Court Act 1991 and r97.01 of the District Court Rules, and is by way of rehearing, which means that this Court may exercise its own discretion without regard to the manner in which it was exercised by the Master (see Police v Cadd[1]; O’Brien Lovrinov Crafter Pty Ltd v Corradini[2]; see also Transeast Pty Ltd v Commonwealth Bank[3]).
[1] (1997) 69 SASR 150 per Lander J at 189
[2] [1999] SASC 1549
[3] (1990) 157 LSJS 447 at 450 per Perry J
The appellate Court in a rehearing is deciding the matter as at the time of the hearing of the appeal and so may have regard not only to the evidence adduced in the lower court, but also to any further relevant evidence. In respect of this “further relevant evidence”, the appellate Court is not constrained by the principles relating to the admission of “fresh evidence” on appeal (see Wigg v Architects Board[4]; Police v Cadd (supra); Henschke v Guardianship Board[5]). Finally, an appeal by way of rehearing does not mean that this Court should not give appropriate weight to, in this case, the decision of the Master (see In re Flinders Trading Co Pty Ltd[6]). This must be so, particularly where, as here, the evidence remains the same as it was before the Master. Also r97.01 indicates that “... in matters involving the exercise of a discretion the judge may exercise his own discretion ...”. So at the threshold in an appeal such as this, the Court has a discretion as to whether it should intervene at all.
[4] (1984) 36 SASR 111
[5] (unreported, District Court of SA, Lunn DCJ, 27 July 1998, D3850 at 3 and 4)
[6] (1977) 20 SASR 14 at 28
Background Facts
The evidence before the Master was that set out in two affidavits – one sworn by the respondents’ solicitor on the 16^th March 2006, and the other sworn by the appellant’s solicitor on the 17^th March 2006.
The following is a summary of that affidavit evidence.
The action herein arose out of a motor vehicle collision which occurred on the 10^th May 2003. A vehicle driven by the appellant collided with a stationary vehicle driven by the first respondent on Main South Road at McLaren Vale. The first respondent alleges that, as a result of the collision, he suffered injuries and consequential losses. The second respondent, his wife, claims damages for loss of consortium. The appellant has admitted negligence.
Accordingly, the action has proceeded effectively as an assessment of damages, though I note that the appellant in his defence does not admit that the first respondent was injured as claimed.
Following the close of pleadings and the conclusion of the necessary pre-trial matters, a trial date was fixed for the 20^th March 2006.
On the 27^th February 2006, pursuant to r40.01(1)(a), the appellant lodged and served a Consent to Judgment in the sum of $100,000 plus costs and disbursements. The offer was lodged on the last day being just “21 days prior to trial” (see r40.01(1)). The respondents could, at any time after receipt of the offer and “... up to seven days prior to trial, file and serve on all other parties a notice of acceptance” (see r40.02).
So to accept the offer in compliance with the time limitation in r40.02, the respondents had to file and serve the notice of acceptance on or before Monday 13^th March 2006. The last day available for them to do so was probably Friday 10^th March 2005, because Monday 13^th March was a public holiday and was preceded of course by the weekend (see s27 of the Acts Interpretation Act 1915 (SA) and see also r6.02(2)). For reasons unconnected with that long weekend, which will be spelled out in due course, the respondents were late. It was on the 16^th March 2006 that the respondents sought to accept the lodged offer and learned that they were out of time.
Accordingly, on that same day, namely the 16^th March 2006, the respondents made an urgent application to this Court to extend the time in which they could accept the lodged offer.
The relevant time limitation which the respondents had allowed to elapse was that prescribed by r40.02. That rule provides:
40.02The plaintiff may at any time after receipt of an offer to consent to judgment, and up to 7 days prior to trial, file and serve on all other parties a notice of acceptance. Where an offer has been made with respect to several causes of action, such notice shall specify the cause or causes of action to which the acceptance relates.
So the respondents required an abridgement or reduction of the seven day period prescribed by r40.02 not an extension of it. Nonetheless, the remedy sought and granted and the subject of this appeal has been characterised as an extension of time. In my view, nothing is vitiated by this misconception. It merely amounts to looking at the matter “back to front”. Effectively, the Master has abridged the time in which the respondents had to accept the offer.
In the affidavit in support of the application, the respondents’ solicitor, Mr Gary Inglis, deposed as follows:
5.The Plaintiffs who live in the Riverland were due to see Counsel on the 8^th March 2006 in preparation for trial and associated matters. The first Plaintiff I am informed was unfit to attend this appointment. Now produced to me and marked with the letter “B” is a medical certificate provided by my clients’ general practitioner confirming this.
6.My clients subsequently reschedule the appointment to see Counsel on the 15^th March 2006 which they were able to attend with myself. After the Plaintiffs conferred with Counsel I was instructed to accept the offer filed by the Defendant.
7.On the 16^th March 2006 I informed the Defendant’s solicitor that the Plaintiffs wished to accept the filed offer namely $100,000.00 plus costs to date plus medical and interim payments already made by the Defendant.
8.After obtaining instructions the Defendant’s solicitor advised me a few hours later that it was too late for my clients to accept the filed offer.
In the responding affidavit of the appellant’s solicitor, Ms Cindy Ting, inter alia, deposed as follows:
·that on the 2^nd March 2006 she received some information which had the capacity to compromise the respondents’ entitlements but nonetheless the appellant did not instruct her to seek to “withdraw, amend or file a further offer ...”;
·that on the 9^th March 2006 she received an offer from the respondents’ solicitor to settle for $265,000 less interim payments, plus costs and disbursements; and
·that by letter dated the 11^th March 2006 she indicated to the respondents’ solicitor that the appellant rejected the offer and she drew attention to the lodged offer of $100,000.
On the 17^th March 2006, after hearing argument, the Master granted the respondents’ application and made the following orders:
1.I extend the time for the plaintiffs to accept the defendant’s offer to 5.00 pm on the 17^th March 2006.
2.Costs in the cause.
3.Liberty to apply.
4.I direct that the papers relating to this application be placed in a sealed envelope and not be shown to the trial judge.
I assume that the respondents filed and served the necessary notice of acceptance by 5.00 pm on the 17^th March 2006.
It is clear from his reasons that the Master accepted that the first respondent, by reason of his medical condition, was unable to journey to Adelaide to confer with counsel as arranged on the 8^th March 2006, but that as soon as he was fit to travel he did so and then, without delay, purported to accept the lodged offer. The Master accepted that it was desirable that such a pre-trial conference be “face to face”. Notably, the medical certificate dated the 7^th March 2006 before the Master indicated that the first plaintiff was unfit to travel to Adelaide “this week”.
It was accepted in argument on this appeal that r3.04(d) and not r6.02 was the relevant power. I will say why that was so later.
Grounds of Appeal
Though there are 10 grounds of appeal, I would suggest that the following contentions emerge:
·Rule 3.04(d) should not be applied to abridge the time limitations in r40.02 as it would amount to an impermissible alteration of substantive contractual rights in that it would be compelling the appellant to keep open an offer of settlement which had lapsed. In particular, r3.04(d) in its application to r40 would be ultra vires the rule making power of the Court, as it would be altering substantive rights as opposed to regulating practice and procedure.
·If r3.04(d) empowered the Master to abridge the time in r40.02, then there was insufficient evidence to justify the exercise of the discretion to order the abridgement of time.
·In abridging the time prescribed in r40.02 the Master did not have sufficient regard to the principles of “case flow management” enshrined in r2.01.
·The Master erred in ordering that costs be costs in the cause because the appellant was seeking an indulgence of the Court and so a proper exercise of discretion would be to order the respondents to pay the appellant’s costs.
Conclusion
Rule 3.04(d) empowers the Court to extend or abridge “... any prescribed periods of time ... whether or not such a period of time has expired ...” whereas r6.02(1) does not specifically address the situation where the time has elapsed. Rule 6.02(1) could not support the order of the Master since the time for accepting the offer had elapsed (see Lamshed v Lamshed[7]). Both counsel agree that r3.04(d) is the only rule capable of supporting the Master’s decision. I will proceed as if that rule was the source of the power to extend time.
[7] [1962] SASR 190
I turn to each of the appellant’s contentions
Rule 3.04(d) should be construed as not applying to, in particular, r40.02
The relevant part of r3.04 provides:
3.04The Court shall have power to act at any time to give effect to the purpose of these rules and, without limiting the generality of this power, it may in any case in which it thinks it just to do so:
...........................
(d) Extend or abridge time extend or abridge any prescribed periods of time within or by which any step in a proceeding may be taken whether or not such period of time has expired;
...........................
It can be seen that r3.04(d) is a wide and robust discretionary power of a remedial nature designed to provide the broadest of powers to extend or abridge any prescribed periods of time in order to relieve against injustice. In the case of FAI General Insurance Co Ltd v Southern Cross Exploration NL[8], the High Court had occasion to construe the following similarly worded rule of the New South Wales Supreme Court Rules 1970. Part 2 r3 of those rules provided:
(1)The Court may, on terms, by order, extend to abridge any time fixed by the rules or by any judgment or order.
(2)The Court may extend time under sub-rule (1) as well after as before the time expires whether or not an application for the extension is made before the time expires.
[8] (1988) 77 ALR 411
The High Court held that the above rule gave the Court of first instance, power to review its own self-executing order, notwithstanding that the time for compliance had passed and an order for dismissal of the action had taken effect. In other words, the High Court held that the Court which had made a self-executing order, which had taken effect, was not functus officio.
In the course of arriving at that view, Wilson J, who delivered the leading judgment said at 417:
The plain meaning of these words is very wide. The Court may extend "any time" fixed by "any ... order" and may do so as well after as before the time expires and even though the application to extend is not made until after the time has expired. As Baggallay LJ said in Carter v Stubbs ((1880) 6 QBD, at p 120) of the analogous English rule, it gives "very full discretionary power; indeed, I can hardly imagine a more extended discretion". It is a remedial provision which confers on a court a broad power to relieve against injustice. The discretion so conferred is not readily to be limited by judicial fiat. The fact that it manifestly is a power to be exercised with caution and, in the case of conditional orders, with due regard to the public policy centred in the finality of litigation does not warrant an arbitrary limitation of the power itself, not expressed in the words of the rule, so as to deny its capacity to apply to circumstances such as those which are to be found in the present case. It would be wrong to so read the rule as to deny to a court power to prevent injustice in circumstances where the party subject to a conditional order ought to be excused from non-compliance.
As indicated, the appellant’s contention is that r3.04(d) can have no application to relax the time limitation in r40.02 because to do so would be tantamount to undermining the basic contractual rules of offer and acceptance and so would be beyond the power of the Court to make rules for the “... regulation of practice and procedure of the Court ...” (see s51 District Court Act 1991).
In particular, Mr Livesey QC submitted that allowing the abridgement of time in this case, effectively and impermissibly negated the contractual rule that a counter offer or rejection of an offer had the effect of causing that offer to lapse. Mr Livesey QC was here contending that the counter offer of the 9^th March 2006 upon ordinary contractual principles would have resulted in the lapsing of the lodged offer so that the lodged offer could not, unless renewed, be accepted. In response, Mr Brohier correctly pointed out that the r40 scheme in any event has the effect of keeping an appellant’s lodged offer alive up to seven days before trial notwithstanding any previous rejection or counter proposal. Mr Brohier referred to the Full Court decision of Morris v McEwens and Anor[9] and in particular to the comments of White J at [68] which accept and endorse that interpretation of r40.
Thirdly, with one qualification, r 40 does not specify any time limit within which a plaintiff must indicate whether or not an offer which has been lodged is, or is not, accepted. The qualification is that an offer may only be accepted “up to” seven days before the trial. Apart from that, it is open to a plaintiff to accept an offer which has been lodged (and not withdrawn) at any time. The offer may be accepted even though the plaintiff had previously determined not to accept it, and even though the plaintiff may have previously communicated to the defendant a determination not to accept the offer. Of course, r 40.03 provides an incentive for early acceptance. A plaintiff who delays acceptance for longer than 14 days after service of the offer is at risk of being ordered to pay the costs incurred by the defendant after that 14-day period. But nevertheless, an important element of the regime established by the rules to encourage settlement of litigation is that it is to be open to a plaintiff to accept an offer which has been lodged (and not withdrawn) at any time up to seven days before the trial. Plaintiffs are thereby enabled to reassess their position as the litigation proceeds in the light of further information which becomes available or in the light of further advice. Defendants are not disadvantaged because, in the event of a belated acceptance by the plaintiff of an offer, the plaintiff is likely to be ordered to bear the defendants' costs from the date 14 days after the service of the offer.
(The italics are mine)
[9] (2005) 92 SASR 281
The fact that the operation of a rule may affect rights does not determine whether it is within the rule making power. As von Doussa J said at 312 in Rigney v Rigney[10]:
However, the fact that a rule may alter substantive rights in some respects is not sufficient to render it ultra vires. In Cleland v Boynes (supra), this Court said (at 474):
"We think therefore that the problem is one of characterisation. The proper test is whether the rule, albeit one affecting rights, is properly to be regarded as one relating to practice and procedure. If so, it is within power."
[10] (1987) 4 SASR 291
So in my view the argument based on the rule making power does not justify reading down or in some way limiting the application of r3.04(d) to the time limitations in r40.
Further, there is nothing in the language of either r3.04(d) or r40 which would justify a refusal to apply r3.04(d) to the several time limitations prescribed in r40. In particular, there is no basis to quarantine r40 from the time relaxation rules, namely r3.04(d) and r6.02. The somewhat similar Rules from other jurisdictions, to which my attention has been drawn, only serve to support the above point. If the rule makers had wished to insulate the r40 scheme from the generally applicable time relaxation rules such as r6.02 and r3.04, then that could have been done simply by the stroke of a pen, as other jurisdictions, in various forms or another, have done.

A party who avails itself of the regulatory scheme embodied in r40 must be taken to have accepted the potential application of the Rules generally. A party cannot, on the one hand, embrace the Rules, and in particular r40, in order to derive the cost advantage it potentially offers, but then shrink from the application of other Rules such as those which allow extensions of prescribed time limitations. For instance, these time relaxation Rules apply, as it were, both ways. A defendant in the appropriate case could apply to abridge the 21 day limitation period fixed by r40.01(4) in which to increase, reduce or withdraw his offer. The appellant here cannot “have his cake and eat it too”.
So I reject the appellant’s submission that r3.04(d) can have no application to r40.02 to abridge the time in which the respondents can accept the lodged offer.
I turn now to the second submission on appeal.
There was no or no sufficient evidence to justify an exercise of discretion to order an extension of time
This is a contention about the sufficiency of evidence.
As I have indicated, the discretion conferred by r3.04(d) is wide, generous and ostensibly unfettered. However, there is, in reality, no such thing as an unfettered discretion. The Court must exercise the discretion having regard, in this particular case, to the object, scope and purpose of the scheme embodied in r40. Extraneous and irrelevant matters must not be taken into account and the discretion should not be exercised capriciously, but judicially. The plain object here is to encourage litigants, under the incentive of a costs advantage, to resolve costly, time and resource consuming litigation and to do so before the “death knell”, that is the trial (see Morris v McEwen and Anor (supra)).
In my view, bearing in mind those considerations, the Master properly exercised the discretion in this case.
The evidence before the Master, and before me, was sufficient to justify the exercise of discretion to extend time.
The offer of the appellant was lodged in Court and served at the very last day permitted by the Rules, namely the 27^th February 2006, thereby giving the respondents a bare 11 days to take advice on the offer, consider it, and make a decision. The respondents, who are resident in the Riverland, arranged through their solicitor to confer with Adelaide counsel on the 8^th March 2006. However, the first respondent was unable to travel to Adelaide during the week of the 7^th March 2006. I agree with the Master that it is not unreasonable for the respondents to meet “face to face” with their counsel and discuss his advice, particularly given the new ingredient in the settlement mix, namely the potential of a costs penalty. So another appointment to confer was made in the following week on the 15^th March 2006. Of course, by then, the time for accepting the lodged offer, prima facie, had elapsed. However, within a day of obtaining the advice, the respondents, by their solicitor, sought to accept the lodged offer. It was then arguably six days late.
The appellant submits, against the cogency of the above circumstances, that the respondents’ solicitor was busily negotiating with the appellant’s solicitors in the week of the first respondent’s incapacity, so indicating that the respondents were in that time capable of taking advice and proffering instructions. The other matter raised by the appellant’s counsel was that on the 2^nd March 2006 the appellant had received information arguably capable of compromising the respondents’ case.
In my view, those matters do not undermine the case of the respondents for the extension of time, sparse though it was. I would infer from the circumstances, as did the Master, that counsel’s advice was wanted on the lodged offer. The counter offer of the 9^th March 2006 does not negate the reasonableness of that. As to the point about discovering compromising evidence, I indicate, as I have above, that the appellant, if he so wished, could have applied to abridge the time to withdraw the lodged offer based on that discovery. He chose not to and so ran the risk of the application the subject of this appeal.
So, like the Master, I accept that the respondents, given the difficulties of their country locality and the first respondent’s unfitness to travel for a week, acted with reasonable expedition. It is true that there were a number of matters which could have been the subject of explanatory evidence, but in the end the circumstances support the inference spelled out by the Master in his reasons, namely that counsel’s advice was crucial to the consideration of the lodged offer, which I too accept.
So in my view, the exercise of discretion did not miscarry. I would come to the same conclusion.
I now turn to the point concerning case flow management
In exercising the discretion to extend time pursuant to r3.04(d) the Master did not have sufficient regard to the principles of “case flow management” as enshrined in r2.01
In my view, the infraction by the respondents, if it could be so characterised, could hardly be said to impact adversely on “case flow management”. Indeed, strict compliance with r40 probably required the respondents to accept by close of business on Friday the 10^th March 2006. In the result, they sought to do so six days later on the 16^th March 2006. This infraction hardly constitutes a grievous blow to the principles of “case flow management”. Indeed, the requirements of case flow management, in this case, were best served by the decision taken by the Master. The abridgement of time granted by him resolved the matter without the necessity for a trial. In any event, the requirements of “case flow management”, as the Master suggested, are subordinate to the interests of justice which here favour the granting of an extension of time (see Queensland v JL Holdings[11]; see also Victa Ltd v Johnson[12]; Mavra v Logan[13]; Hodak v Bosman[14]).
[11] (1997) 189 CLR 146 at 155
[12] (1975) 10 SASR 496 per Bray CJ at 502
[13] (1980) 24 SASR 567 per Sangster J at 574.9
[14] (1983) 36 SASR 164 per White J at 169.2
Costs
Mr Livesey QC first of all contended that the Master should have dealt with the “costs consequences” for the appellant of extending the period of acceptance. However, as I understand it, counsel, Mr Brohier, accepted in argument before the Master that, in the event of an extension of time being granted, r40.03(c) should operate to entitle the appellant to apply for an order that the respondents pay any costs of the action incurred after the expiration of 14 days from the service of the offer. Such an order would of course cover the costs incurred in the application to extend time before the Master.
I put that contention aside for a moment and turn to the question of the costs order made by the Master in respect of the application before him.
I note at the outset that r101.02(2)(b) provides as follows:
101.02 (2) Unless the Court otherwise orders, the costs of and occasioned by:
..........................
(b)Costs of extensions of time an application to extend the time fixed by any Rule for serving or filing any document, or doing any other act, including the costs of any order made on the application shall unless the Court otherwise orders, be borne by the party making the application;
..........................
Clearly then, prima facie, an applicant for an extension of time can expect to be ordered to pay the costs of the application.
However, it is clear that appeal courts are reluctant to interfere with the exercise of discretion involved in making costs orders. An appellant must show that the exercise of discretion is so unreasonable or unjust as to require this Court to substitute its own discretionary order (see Southern Resources Ltd v Residues Treatment & Trading Co Ltd[15]). In this hearing, though I am entitled to make my own decision about this, I am guided by the above statement of principle.
[15] (1990) 56 SASR 455 at 480 per Jacobs ACJ, Prior and Mulligan JJ
True, it is that the appellant is entitled to rest on the time limitation problem which then faced the respondents and which required the Court’s indulgence, but rather the appellant argued against the giving of the indulgence. In so doing, the appellant courted the risk of a less than favourable costs order even given the prima facie position indicated by r101.02(2)(b) as set out above.
I am not prepared to say that the Master’s discretion, as to costs, miscarried.
In all the circumstances, I decline to interfere with the Master’s order as to costs and in the event that it is a matter wholly for me, I would decline to order that the appellant have the costs of the application before the Master.
However, the above discussion is a little arid, bearing in mind that the appellant is entitled to an order pursuant to r40.03(c), that the respondents pay his costs of action incurred after the expiration of 14 days from the service of the lodged offer. The appellant will thereby be entitled to recover the costs of the application before the Master, which of course stands as costs in the cause.
Final orders
The appeal is dismissed.
Pursuant to r40.03(c) I order that the respondents pay the appellant his costs of the action incurred after the expiration of 14 days from the service of the offer.
I will hear the parties as to costs.