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

1. DUGGAN J:         In my view the appeal should be allowed.

2. I agree with the orders proposed by White J and the reasons which he has prepared.

3. BLEBY J:             I agree with the orders proposed by White J and with his reasons.

4. WHITE J:             The respondent (“Badge”) instituted proceedings in this Court against the appellant (“Rule Chambers”).  It claimed damages and other relief in respect of alleged breaches of a contract under which it had performed building work at the property of Rule Chambers at 19-21 King William Street, Adelaide.  Rule Chambers denied liability and filed a counterclaim seeking damages in respect of the repudiation of the contract by Badge which it alleged.

5. On 5 November 2007, Rule Chambers filed in the Court an offer to consent to judgment in favour of Badge in the sum of $300,000, inclusive of costs.  This offer was filed under r 187 of the Supreme Court Civil Rules 2006 (“the 2006 Rules”).  On 7 May 2008, Rule Chambers filed in the Court a withdrawal of its offer of settlement.  It did so under r 187(7).  However, apparently as a result of an oversight, Rule Chambers did not serve a copy of the withdrawal of the offer on Badge.  Two months later, on 9 July 2008, Badge filed an acceptance of the offer of 5 November 2007.  It was then acting under r 188. 

6. When Badge served a copy of its acceptance of offer on the solicitors for Rule Chambers, they drew its attention to the withdrawal and asserted that the November 2007 offer was no longer open to be accepted. 

7. A Master of this Court held that a withdrawal of an offer filed under r 187 does not become effective until the withdrawal is served on the opposing party.  The Master was satisfied that Badge was unaware, at the time it filed its acceptance of the offer, that a withdrawal of the offer had been filed.  He held that Badge had accepted the offer at a time when it remained open to acceptance and he entered judgment for Badge against Rule Chambers in the sum of $300,000, inclusive of costs.  The Master also dismissed Rule Chambers’ counterclaim.

8. Rule Chambers appeals against those orders.  By reason of r 17(1) of the 2006 Rules, the appeal against the judgment of the Master lies to the Full Court.

9. The principal question on this appeal is whether, on the proper construction of the 2006 Rules and, in particular, of rr 187 and 188, a withdrawal of a filed offer becomes effective at the time the withdrawal is filed in the Court, or at the time when a copy of the withdrawal is served on the other party to the litigation.  If it is the former, then the withdrawal by Rule Chambers of its November 2007 offer became effective on its filing in the Court on 7 May 2008, and it was no longer open to Badge to accept that offer on 9 July 2008.  If it is the latter, then by reason that Rule Chambers did not serve a copy of the withdrawal until 10 July 2008, the offer remained open to be accepted as at 9 July 2008.  It was common ground that in that circumstance, Badge was entitled to, and did, accept Rule Chambers’ offer by the filing of its acceptance on 9 July 2008.

10. In addition to challenging the construction of the 2006 Rules adopted by the Master, Rule Chambers also challenges his findings of fact.  It submits that on the evidence the Master should have found that Mr Bertram (a manager of Rule Chambers) had made it known to Mr Whiting (a principal of Badge) that the offer had been withdrawn, and that Badge must have known, when it filed its acceptance, that the offer was no longer open.  These grounds of appeal were argued only faintly and can be dealt with quite shortly.  Rule Chambers did not identify any particular error by the Master.  The evidence before the Master was wholly documentary, and this Court is in the same position as was the Master to make an assessment of it.  On my review of the evidence, the findings of fact of which Rule Chambers complains were not only open to the Master but were the appropriate findings.  I would dismiss the appeal against the Master’s factual findings.

    Relevant Rules

11. Rule 187 provides for the filing of formal offers of settlement in the Court:

    (1)A party may, before the relevant date, file an offer of settlement in the Court (a formal offer of settlement).

    (2)     ….

    (3)     The offer must—

    (a)     be in an approved form; and

    (b)     if the offer relates to some, but not all, of the claims involved in the proceedings—state to which claims it relates; and

    (c)     state whether the offer relates to costs and, if so, the amount of the offer so far as it relates to costs; and

    (d)     if the offer relates both to principal relief and costs—state whether the party to whom the offer is made may accept the offer of principal without also accepting the offer as to costs,

    and a copy of the offer must be served on all other parties to the action.

    (4)A formal offer of settlement must be filed in a suppressed file and must not be disclosed to the trial judge (or the adjudicating officer) unless—

    (a)     all questions to which the offer is relevant have been determined; or

    (b)     a defence of tender before action is raised; or

    (c)     the defendant relies on the offer (together with an apology or apologies) as a defence to an action for defamation and the plaintiff, by pleading, denies the defence; or

    (d)     a declaratory judgment determining liability has been made and the Court permits the disclosure of the offer.

    (5)     ….

    (6)     ….

    (7)A formal offer of settlement may be withdrawn at any time by the filing of a notice of withdrawal and in such cases, subject to any Court order to the contrary, the offer will be treated as if it had never been made.

12. Under the heading “Consequences of Filing Offer of Settlement in Court”, r 188 contains provisions concerning the  manner of acceptance of a filed formal offer.  It specifies the consequences for a party who does not accept an offer and does not obtain a judgment which is more favourable to it than the terms of the offer.  Rule 188 provides (relevantly):

    (1)A party to whom a formal offer of settlement is made may, before the relevant date—

    (a)     accept the offer; or

    (b)     if the offer relates to both the principal relief and costs and the offeror has not indicated that the offer may only be accepted in its entirety—accept the offer so far as it relates to principal relief.

    (2)     In subrule (1), the relevant date is—

    (a)     the date falling 7 days before the first, or any subsequent, date fixed for the trial to commence; or

    (b)     if the offer relates only to costs and is made in proceedings relating only to the adjudication upon costs—the date falling two days before the date appointed for the adjudication.

    (3)     The acceptance of a formal offer of settlement—

    (a)     must be in an approved form; and

    (b)     takes effect on the filing of the acceptance in the Court.

    (4)A copy of the acceptance of a formal offer of settlement must be served on all other parties to the proceedings as soon as practicable after it is filed in the Court.

    (5)If a formal offer of settlement is accepted, judgment may be entered, by consent, determining the relevant action or claim on a basis reflecting the terms of the offer.

    ……

13. Rule 187 provides that a formal offer of settlement must be in an approved form (and a copy of the offer must be served on all other parties to the action (r 187(3))).  A formal offer of settlement is to be filed in a suppressed file and is not to be disclosed to the trial judge or an adjudicating officer other than in specified circumstances (r 187(4)).  As I understand r 187(4), it precludes disclosure to the trial judge of the terms of a formal offer of settlement but not of the fact that such an offer has been filed.  The party to whom a formal offer of settlement has been made may accept the offer (r 188(1)(a)).  The acceptance of a formal offer of settlement must be in an approved form (r 188(3)(a)) and takes effect on the filing of the acceptance in the Court (r 188(3)(b)).  A copy of an acceptance of a formal offer of settlement must be served on all other parties to the proceedings as soon as practicable after it is filed in the Court (r 188(4)).

14. A party may withdraw a formal offer of settlement at any time by the filing of a notice of withdrawal (r 187(7)).  In such cases, subject to any Court order to the contrary, the offer will be treated as if it had never been made. 

15. Rule 60, which requires the service of a copy of any document filed in the Court, applies to documents filed under rr 187 and 188.  Rule 60(1) provides:

    (1)A party that files a document in the Court after the primary action has been commenced must, as soon as practicable after the document is filed, serve a copy of the document on all other parties for whom a current address for service is on file in the Court.

    Thus, although r 187(7) does not itself require the service of a notice of withdrawal of a formal offer of settlement, the effect of r 60(1) is to require the party withdrawing the offer to serve a copy of the notice of withdrawal on all other parties to the action.  The operation of r 60(1) may suggest that the provisions in rr 187(3) and 188(4) concerning the service of a copy of a formal offer and of the acceptance of a formal offer are unnecessary.  Strictly speaking, that may be so but the inclusion of those provisions serves to emphasise that both a formal offer and an acceptance must be served on all other parties to the action and not, in the case of litigation involving many parties, on only that party to whom the offer, or the acceptance, as the case may be, is directed.  Rules 187 and 188 contemplate, in other words, that offers, and the responses to them, are to be made known to all parties to the litigation and may not be made in circumstances which are confidential to some parties only. 

16. Both Badge and the Master referred to the statement of the objects of the 2006 Rules contained in r 3:

    3 – Objects

    The objects of these rules are—

    (a)     to establish orderly procedures for the just resolution of civil disputes; and

    (b)     to facilitate and encourage the resolution of civil disputes by agreement between the parties; and

    (c)     to avoid all unnecessary delay in the resolution of civil disputes; and

    (d)     to promote efficiency in dispute resolution so far as that object is consistent with the paramount claims of justice; and

    (e)     to minimise the cost of civil litigation to the litigants and to the State.

    Decision of the Master

17. The Master’s conclusion that a withdrawal of a formal offer becomes effective only upon service of the notice of withdrawal appears in the following passage of his reasons:

    It seems to me that to interpret sub-rule (7) so that a withdrawal becomes effective upon the filing of a notice of withdrawal, rather than upon service of that notice upon the party to whom the offer was originally made, does not serve the objects of the Rules, as stated in 6R 3.  Rules of Court relating to formal offers of settlement often invoke the common law principles relating to contracts formed by a process of offer and acceptance.  The Rules of Court sometimes vary the common law position to reflect the fact that the court is effectively the supervisor of the process of offer and acceptance in respect of litigation.  6R 187(7), when read in conjunction with 6R 60, has been drawn in the context that the common law position relating to the withdrawal of an offer is preserved.  Notice of the withdrawal must be given to the offeree for it to be effective.  There is no reason why sub-rule (7) should be interpreted to have a different effect.  Indeed, as I have said, the purposes of the Rules would be subverted if a contrary interpretation were adopted.

18. 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

19. 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. 

20. 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. 

21. 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].

22. 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).

23. 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. 

24. 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.

25. My view that the common law principles of contract are of limited assistance presently is supported by a passage in the judgment of Goddard LJ in Cumper v Pothecary[3] concerning the analogous procedure of payment into court.  Goddard LJ said:

    ….there is nothing contractual about payment into court.  It is wholly a procedural matter and has no true analogy to a settlement arranged between the parties out of court, which, of course, does constitute a contract.[4]

    [3] [1941] 2 KB 58.

    [4] Ibid at 67.

26. Rather than relying on  common law contractual principles, I consider it preferable to construe r 187(7) by reference to its own text, context and purpose.[5]

    [5]    Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56 at [96]; (2007) 234 CLR 52 at 83.

27. On its face, r 187(7) appears to be both permissive and prescriptive in nature, ie, both permitting an offer to be withdrawn and prescribing the means by which such a withdrawal may be effected.  An offer may be withdrawn by the filing of a notice of withdrawal in the Court.  This suggests that a withdrawal becomes effective upon the filing of the notice of withdrawal.  Counsel for Badge submitted that r 187(7) was silent as to the time when the withdrawal of an offer becomes effective.  Rule 187(7) does not, for example, specify that a formal offer of settlement may be withdrawn at any time upon the filing of a notice of withdrawal.  I agree that use of the word “upon” in r 187(7) may have made clearer the time at which a withdrawal becomes effective, but that consideration does not detract, in my opinion, from the ordinary meaning of r 187(7).

1. If r 187(7) is not construed as specifying the time at which a withdrawal of an offer becomes effective, it would follow that the 2006 Rules are silent on that topic.  One would not readily accept that conclusion.

2. The submission of Badge that a withdrawal becomes effective only upon the service of a notice of withdrawal faces other difficulties.  Rule 187(7) should be construed in the context of the 2006 Rules as a whole.  The scheme of the 2006 Rules generally is to make the filing of a document in the Court both the means by which, and the occasion upon which, a step in an action is taken.  Thus, an action is commenced “by filing” an originating process in the Court (r 34(1)) and not by both the filing and service of that process.  An action may be discontinued “by filing” a notice of discontinuance (r 107(1)) and not by both filing and serving a notice of discontinuance.  An appellant may discontinue an appeal “by filing” a notice of discontinuance (r 293(1)) and not by both filing and serving a notice of discontinuance.  There are some exceptions to that general scheme.  For example, r 156(3) provides that a notice to admit facts or documents is given by filing the notice in the Court and serving the notice on the party asked to make the admission.  Similarly, r 156(8) provides that a notice of response to a notice to admit is given by the filing and service of the response.  However, the general structure of the 2006 Rules is to make the filing of documents in the Court, and not the service of documents, the event (and therefore the time) upon which the procedural steps take effect.  In my opinion, rr 187 and 188 should be construed consistently with the general scheme.

3. To hold that the withdrawal of an offer does not become effective until it is served would be to introduce both uncertainty and possible confusion into the operation of rr 187 and 188.  In the ordinary course, there should not be any uncertainty as to when a document is filed in the Registry of this Court as it will be a matter of record.  On the other hand, there may often be uncertainty as to precisely when a document is served.  Rule 68 provides a variety of ways in which documents may be served.  The time at which service under those alternative means is effected may not always be readily ascertainable.  Further, there are likely to be issues as to when service becomes effective in those cases in which the document has to be served on many parties and that service cannot be achieved simultaneously. 

4. The construction of rr 187 and 188 proposed by Badge would have the consequence that it would be open to a party who has not been served with a notice of withdrawal of an offer to accept the offer, even though the notice of withdrawal had been filed in the Court.  This would mean that it would be open to a party who learns informally of the filing of a withdrawal of an offer to take advantage of the short period which may elapse before the notice of withdrawal is served.  In my opinion, this is not a desirable consequence.

5. Although Badge emphasised on the hearing of the appeal the objects of the 2006 Rules contained in r 3, I do not regard those objects as being of particular assistance in the resolution of the proper construction of rr 187 and 188.  In particular, I do not consider that a conclusion that a formal offer of settlement is withdrawn upon the filing of a notice of withdrawal involves a subversion of those objects.

6. Counsel for Badge drew the Court’s attention to the counterpart rules in the Supreme Court Rules 1947, the Supreme Court Rules 1987, and the Local Court Rules 1970.  Those counterpart rules provided for the withdrawal of a formal offer of settlement by the filing and service of a notice of withdrawal.  The submission was that rr 187 and 188 should be construed consistently with those rules.  I do not consider that this submission should be upheld.  There are material differences between rr 187 and 188 and the earlier rules to which Badge referred.  Furthermore, the 2006 Rules comprise a complete revision of the Rules of this Court so that comparison with previous Rules does not always provide a reliable basis for construction of the present Rules.

7. Badge submitted that unless a withdrawal of an offer takes effect upon the service of a notice of the withdrawal, rr 187 and 188 may produce unfairness.  An offeree may file and serve an acceptance in ignorance of the fact that the offer has been withdrawn.  Such an action would produce unfairness because the offeree would thereby weaken its position in any subsequent negotiations.  Badge’s principal submission was that the Court would be unable to provide a remedy in these circumstances, even if the offeror’s omission to serve the notice of withdrawal was deliberate.

8. In my opinion, resort to notions of unfairness does not assist in the construction of rr 187 and 188 in the present context.  In the first place, there is potential unfairness in whichever construction is adopted.  For example, if the construction proposed by Badge is adopted, there could be unfairness to an offeror if an offeree, learning by informal means that a notice of withdrawal has been filed, takes advantage of the short period which may elapse before the notice is served to file an acceptance of the offer.  In that circumstance, the offer would have been accepted (r 188(3)(b)) even though the offeree knew of the steps being taken by the offeror to withdraw it. 

9. In the second place, as the regime concerning formal offers of settlement is part of the procedural rules of the Court, the Court may exercise its inherent jurisdiction to prevent an abuse of its own process.  If the conduct of an offeror or of an offeree amounted to an abuse of the Court’s process, the Court could exercise its inherent jurisdiction to prevent that abuse.  The exercise of the Court’s power in circumstances which are broadly similar to the present is illustrated by Money Tree Management Services Pty Ltd v Deputy Commissioner of Taxation[6] in which the Full Court held that the filing of a notice of discontinuance could amount to an abuse of the Court’s process.[7]

   [6] [2000] SASC 345; (2000) 46 ATR 13.

   [7] Ibid at [13]; 15. See also Packer v Meagher [1984] 3 NSWLR 486; Ernst & Young v Butte Mining [1996] 1 WLR 1605; Gilham v Browning [1998] 1 WLR 682.

10. Quite apart from its inherent power to prevent an abuse of its process, the Court has the general powers bestowed by r 117(1):

    The Court may make any order it considers necessary for the proper conduct of a proceeding or otherwise in the interests of justice.

    The examples given in r 117(2) of the powers which may be exercised under r 117(1) include the power to “strike out a document or proceeding if the Court considers it frivolous, vexatious or an abuse of the process of the Court.”

11. In addition, the Court has wide powers in the event of a procedural irregularity by a party.  Rule 12 provides:

    (1)     A procedural irregularity does not make an action or proceeding void.

    (2)     If a party commits a procedural irregularity in bringing or in the conduct of an action or proceeding, the Court may, on its own initiative or on application by a party—

    (a)     dismiss the action or proceeding; or

    (b)     set aside a particular step in the action or proceeding.

    Example—

    The Court might in the exercise of this power strike out a party's statement of claim or defence.

    (3)     An application for an order dismissing an action or proceeding or setting aside a particular step in an action or proceeding under this rule must be made within 28 days after the date when the procedural irregularity should have become apparent to the applicant.

12. The word “proceeding” (used in each of rr 12 and 117) is defined in r 4 to include “any step in an action, interlocutory proceeding or appellate proceeding”. 

13. Badge argued that the “step in the action or proceeding” to which r 12(2) referred and “any step in an action” in the definition of “proceeding” referred only to the steps taken to advance proceedings towards judgment (ie, the steps “carrying the cause of action forward”[8]) and not to other steps which did not have that effect.  The authorities on which Badge relied for this submission[9] were decisions relating to rules requiring the giving of notice, or the obtaining of leave from a court, for a proposed step in the proceedings once a specified period had elapsed since the last “step” or “proceeding” in the action.  I do not consider it necessary to review these authorities in any detail.  A reading of the authorities indicates that the construction of the rules adopted in those cases was very much influenced by the purpose of the rule in question, ie, the giving of notice to an opposing party that the prosecution of proceedings which had been dormant for some time were to be resumed.  In that context, it is quite understandable that a step in the action, or a proceeding in the action, should be construed as referring to a step in the prosecution of the action towards judgment, and not to other steps of a more incidental kind.

    [8]    Citicorp Australia Ltd v Metropolitan Public Abattoir Board [1992] 1 Qd R 592 at 594.

    [9]    Deighton v Cockle [1912] 1 KB 206; ANZ Banking Group Ltd v Computer Plus [1992] 1 VR 607; Citicorp Australia Ltd v Metropolitan Public Abattoir Board [1992] 1 Qd R 592; Rideout v Glaxo Group Ltd [1996] 1 Qd R 200; Argo Pty Ltd v Attorney-General (Tas)(No 3) [2004] TASSC 51; (2004) 13 Tas R 69.

14. In my opinion, these authorities do not determine the meaning of the expression “step in an action” for all purposes in rule regimes in which the expression is used.  As the decision of Hasluck J in Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd[10] shows, a different meaning may be given in the case of rules which concern the ability of a non-legal practitioner to represent another in legal proceedings.  Indeed, the authorities to which Badge referred recognised that steps in a proceeding may take various forms. 

    [10] [2000] WASC 178; (2000) 22 WAR 372.

15. Rule 12 of the 2006 Rules serves a quite different purpose from those considered in the authorities to which Badge referred.  In my opinion, there is no reason to confine the ordinary meaning of the words in r 12 by reference to those authorities.  In particular, there is no reason to suppose that r 12 was intended to empower this Court to set aside, in the case of procedural irregularities, those steps taken to advance an action to judgment but not steps of a more incidental kind.  A construction to that effect would circumscribe considerably the wide powers granted to this Court by r 112, and for that matter by r 117(1), to make orders controlling the conduct of litigation.

16. In summary, I am satisfied that the Court does have powers to address circumstances of unfairness (if they arise).  I accept however that the occasions on which it would be appropriate to exercise such powers in relation to the filing of a notice of withdrawal of a formal offer of settlement are likely to be rare.  It may be, as Badge submitted, that a party seeking to set aside such a notice would have to establish circumstances amounting to an abuse of the Court’s process. 

17. Rule 187(7) should be construed as indicating that a withdrawal of a formal offer of settlement becomes effective at the time the notice of withdrawal is filed in the Court.  Subject to two further matters, this means that the appeal should be allowed and the Master’s decision be set aside. 

    Estoppel

18. At the hearing before the Master, Badge pursued an alternative argument.  It submitted that if the withdrawal of a filed offer does take effect upon the filing of the notice of withdrawal, then Rule Chambers should, in the circumstances of the present case, be estopped from relying on that legal effect.  The argument was put as follows:

    [Badge] adopted an assumption (the Filed Offer remained open and capable of acceptance) upon the basis of which [Badge] so acted (filed an Acceptance) that a detriment will be suffered (loss of realistic and a valuable capacity to negotiate; and continuation of litigation risk and cost) if [Rule Chambers] is now permitted to assert otherwise (no binding settlement, and litigation must continue); and [Rule Chambers] played such a part (through it and its solicitors’ conduct on and after 5 May 2008) in the adoption of, or persistence in, the assumption (Filed Offer still open) that freedom (on the part of [Rule Chambers]) to act otherwise than in a manner consistent with it would be unfair or unjust (unconscientious).

19. Put more shortly, the submission was that Badge had lost the opportunity to negotiate a settlement with Rule Chambers in a context in which Rule Chambers would not know the minimum amount which it (Badge) was prepared (at least in July 2008) to accept.  The submission was that Badge is now in an inferior negotiating position, which inferior position was brought about by Rule Chambers’ omission to serve a copy of its notice of withdrawal of the filed offer.  Further, or alternatively, the submission was that Badge faces continuing litigation risks in the proceedings, which it had sought to avoid by its acceptance of the offer.

20. It was not necessary for the Master to determine the claim of estoppel and he did not do so. 

21. In its supplementary written submissions, Badge sought to amend its notice of contention so as to raise the claim of estoppel before this Court.  I did not understand Rule Chambers to oppose permission to make the amendment being granted.  Accordingly, I would grant that permission.  It is appropriate therefore for this Court to consider the estoppel claimed by Badge.

22. Badge’s submissions concerning the estoppel were put quite briefly and at a level of generality.  Reference was made to Walton Stores (Interstate) Ltd v Maher, [11] Commonwealth v Verwayen[12] and to the Laws of Australia, section 35.6.

    [11] (1988) 164 CLR 387.

    [12] [1990] HCA 39; (1990) 170 CLR 394 at 445–6 (Deane J).

23. An estoppel by conduct may arise when the party claiming the benefit of the estoppel has adopted an assumption as a basis for action; has thereby placed itself in a position of significant disadvantage if departure from the assumption is permitted; and when, having regard to the role played by the other in the adoption of the assumption, it would be unjust, in the sense of unconscionable, for the other party not to adhere to the assumed state of affairs. 

24. In the present case, the Master’s findings indicate that Badge acted on the assumption that the offer remained open to be accepted as at 9 July 2008 when it filed its acceptance.  There are difficulties however in finding the remaining elements of an estoppel established.  The impaired negotiating position of Badge, if it exists, is not in my opinion a sufficient detriment to found an estoppel.  There are commonly ebbs and flows in the course of negotiations with one party retreating from a position which it had previously adopted.  That is an ordinary incident of the course of negotiation and one which parties frequently bring upon themselves.  An example is seen in the circumstances of the present case, as Rule Chambers had revealed something about its negotiating position by filing the offer originally.  I am not satisfied that this claimed detriment, if it exists, is sufficient to found an estoppel. 

25. The fact that the litigation will continue with all the usual litigation risks for Badge is not a detriment of the requisite kind.  It is not a detriment which results from the reliance by Rule Chambers on the withdrawal of its offer.

26. Furthermore, in my opinion it cannot reasonably be concluded that it would be unjust, in the sense of unconscionable, for Rule Chambers to depart from the assumption upon which Badge acted.  As noted earlier, the failure by Rule Chambers to serve its notice of withdrawal seems to have been an oversight.  Rule Chambers’ solicitor believed that a copy had been served.  The solicitor deposed to having a “recollection” that the notice of withdrawal had been filed and served, and she was not required to attend for cross-examination on that assertion.  On this evidence, while the omission to serve the notice was regrettable, I do not consider that it, or Rule Chambers’ conduct between 7 May 2008 and 9 July 2008, should be characterised as unconscionable. 

27. In these circumstances, it is not necessary to consider whether the claimed estoppel would have any utility, ie, whether the filing of the notice of withdrawal of offer by Rule Chambers would in any event have precluded the Court from entering the judgment sought by Badge under r 188.  For the reasons given earlier, my opinion is that the claim of estoppel fails. 

    Setting Aside the Notice of Withdrawal of Offer

28. In its supplementary written submissions, Badge also contended that, in the event that this Court considered that either r 12 or r 117 permitted an order setting aside the notice of withdrawal filed on 7 May 2008 to be made, an order to that effect should be made.  It submitted that the failure of Rule Chambers to serve a copy of the notice of withdrawal of its offer for a period of approximately two months should attract the exercise of the Court’s discretion and that justice required that the notice of withdrawal be set aside.  Badge also sought permission to amend its notice of contention so as to raise this issue.

29. 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

30. 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.