Rule Chambers Pty Ltd v Badge Constructions (SA) Pty Ltd - [2009] SASC 70

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
RULE CHAMBERS PTY LTD v BADGE CONSTRUCTIONS (SA) PTY LTD
[2009] SASC 70
Judgment of The Full Court
(The Honourable Justice Duggan, The Honourable Justice Bleby and The Honourable Justice White)
16 March 2009
PROCEDURE - COURTS AND JUDGES GENERALLY - COURTS - RULES OF COURT
Appeal from decision of a Master that a notice of withdrawal of an offer of settlement filed pursuant to r 187 of the Supreme Court Civil Rules 2006 does not become effective until served on the opposing party.
Whether the proper construction of rr 187 and 188 of the Supreme Court Civil Rules 2006 makes a notice of withdrawal of offer of settlement effective at the time that it is filed in Court or at the time it is served on an opposing party – whether, in the circumstances of this case, the party who filed, but omitted to serve, a notice of withdrawal of offer should be estopped from relying on the notice.
Held: a notice of withdrawal of offer of settlement becomes effective at the time the notice is filed in Court. Whilst failure to serve such a notice amounts to a procedural irregularity, it does not of itself make the notice ineffective – in the circumstances of the case, insufficient grounds exist to found an estoppel – appeal allowed – order of the Master set aside.
Supreme Court Civil Rules 2006 rr 3, 4, 12, 17, 34, 60, 68, 107, 112, 117, 156, 187, 188, 293; Supreme Court Rules 1974 (SA); Supreme Court Rules 1987 (SA); Local Court Rules 1970 (SA), referred to.
Cumper v Pothecary [1941] 2 KB 58; Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52, applied.
Money Tree Management Services Pty Ltd v Deputy Commissioner of Taxation (2000) 46 ATR 13, discussed.
Packer v Meagher [1984] 3 NSWLR 486; Ernst & Young v Butte Mining [1996] 1 WLR 1605; Gilham v Browning [1998] 1 WLR 682; Citicorp Australia Ltd v Metropolitan Public Abattoir Board [1992] 1 Qd R 592; Deighton v Cockle [1912] 1 KB 206; ANZ Banking Group Ltd v Computer Plus [1992] 1 VR 607; Rideout v Glaxo Group Ltd [1996] 1 Qd R 200; Argo Pty Ltd v Attorney-General (Tas) (No 3) (2004) 13 Tas R 69; Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd (2000) 22 WAR 372; Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Commonwealth v Verwayen (1990) 170 CLR 394; Heather v Vita Pacific Ltd (1996) 6 Tas R 120, considered.

RULE CHAMBERS PTY LTD v BADGE CONSTRUCTIONS (SA) PTY LTD
[2009] SASC 70
Full Court: Duggan, Bleby and White JJ

DUGGAN J: In my view the appeal should be allowed.
I agree with the orders proposed by White J and the reasons which he has prepared.
BLEBY J: I agree with the orders proposed by White J and with his reasons.
WHITE J: The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] SASC 70
Decision Date: 16 March 2009

CaseChat Overview and Summary

In the case of Rule Chambers Pty Ltd v Badge Constructions (SA) Pty Ltd, the dispute centered on the interpretation and application of the Supreme Court Rules 2006, specifically rule 187(7), which deals with the withdrawal of formal offers of settlement. The primary legal issue was whether the withdrawal of a formal offer of settlement becomes effective upon its filing or requires actual communication to the offeree. The Court of Appeal was called upon to determine the appropriate interpretation of the rule in light of common law principles and the objectives of the rules of court.

The Court of Appeal considered that the Master's reliance on common law principles was misplaced, as the rules of court focus on the encouragement of settlement rather than the formation of contracts. The Court held that rule 187(7) should be interpreted in a manner that aligns with the objectives of the rules, which include promoting settlement and providing a clear and consistent regime for offers and acceptances. The Court concluded that the withdrawal of an offer of settlement becomes effective only upon actual communication to the offeree, aligning with the broader objectives of the rules.

The Court granted Badge permission to amend its notice of contention to pursue its claim of estoppel, but allowed the appeal and set aside the order of the Master. The Court determined that any application to set aside the notice of withdrawal of offer should be made by a proper application, rather than under a notice of contention. The Master would subsequently hear and determine any such application brought by Badge.

The final orders of the Court of Appeal were to grant Badge permission to amend its notice of contention, allow the appeal, and set aside the order of the Master, leaving it to the Master to hear and determine any future application for setting aside the notice of withdrawal of offer.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The supplementary written submissions of Rule Chambers did not address this issue in any detail. In my opinion, it is inappropriate for an issue of this kind to be resolved under a notice of contention. If Badge wishes to pursue a claim that the notice of withdrawal of offer should be set aside, it should do so by a proper application and on proper notice to Rule Chambers. Conclusion For the reasons given above, I would grant Badge permission to amend its notice of contention to pursue its claim of estoppel. However, I would allow the appeal and would set aside the order of the Master. It will be for the Master in due course to hear and determine any application for the setting aside of the notice of withdrawal of offer which Badge may bring.

Ratio Decidendi

Legal Principle Established

It can be seen that the Master’s decision rested on two strands of reasoning. First, that r 187(7) should be construed consistently with the common law principles concerning offer and acceptance. Secondly, that such a construction was necessary in order to avoid a subversion of the objects stated in r 3 of the 2006 Rules.Consideration of Appeal Rule Chambers accepted that r 60 required a copy of its withdrawal of offer to be served on Badge, and that its failure to do so amounted to a procedural irregularity. It submitted nevertheless that the withdrawal became effective on its filing. Rule Chambers founded its submission on the provision in r 187(7) that a formal offer of settlement may be withdrawn at any time “by the filing of a notice of withdrawal”. Those words indicated, it contended, that a withdrawal becomes effective at the time of the filing of the notice of withdrawal. As already seen, the Master relied very much on the common law principles concerning the formation of contracts. At common law, an offer (the acceptance of which may lead to the formation of a contract) may be withdrawn only by actual communication of the withdrawal to the offeree.[1] In relation to the withdrawal of offers to consent to judgment there is no equivalent of the postal acceptance rule under which an acceptance of an offer is effective immediately (and before its receipt by the offeror) upon the posting of an appropriately stamped and addressed letter. The Master considered that by analogy, a withdrawal of a filed offer becomes effective only when it is communicated to the offeree. In the context of a rules regime requiring both the filing and service of a document, that communication occurs when a notice of withdrawal is served.[1] Contract: General Principles, The Laws of Australia at [7.1.760]. The reference by the Master to the principles concerning the formation of contracts at common law is understandable. Rules 187 and 188 use the terminology of offer and acceptance familiar in the common law. However, in my opinion, reference to the common law concepts is of limited assistance in the construction of r 187(7). The focus of rr 187 and 188 is not on the formation of contracts, but on the encouragement of litigants to make and accept reasonable offers of settlement. Rules 187 and 188 establish a regime for the filing and acceptance of offers and provide costs sanctions or costs benefits for doing so. The rules are not concerned with the bringing of a contract into existence. Instead, if a formal offer of settlement is accepted, the consequence is that judgment may be entered, by consent, determining the relevant action or claim on a basis which reflects the terms of the offer (r 188(5)). This does not mean that a contract may not be brought into existence by the process of filing an acceptance of an offer under rr 187 and 188, but simply that that is not the primary purpose or focus of the rules. Furthermore, there are differences between the regime for offers and acceptances contained in rr 187 and 188 and the common law principles concerning contracts. I noted earlier that the 2006 Rules require offers of settlement and acceptances to be served on all parties to the litigation whether or not, in litigation involving several parties, the offer and acceptance concern two parties only. Further, unlike the common law position, a party is not regarded as having rejected an opponent’s offer by the later filing of its own formal offer of settlement .[2] Nor will a party be regarded as having rejected an offer by engaging in other conduct (such as taking further interlocutory steps) which would seemingly amount to a rejection of the offer. Parties who have expressly rejected a filed offer in the course of communications with the offeror may later change their minds and accept it. Further again, although it is not necessary to express a concluded view about this, the 2006 Rules do not appear to contemplate formal offers of settlement which are expressed to be open for a limited period only. Instead, offers should be able to be accepted at any time before the “relevant date” fixed by r 188(2).[2] Cf Heather v Vita Pacific Ltd [1996] TASSC 168 at [7]; (1996) 6 Tas R 120 at 124-25.