Simpson and Simpson v Coastal Enterprises Pty Ltd
[2005] QDC 15
•11 February 2005
DISTRICT COURT OF QUEENSLAND
CITATION:
Simpson & Simpson v. Coastal Enterprises Pty Ltd & Ors [2005] QDC 015
PARTIES:
Robert Lewis Simpson and Lesley May Simpson
AND
Coastal Enterprises Pty Ltd
FILE NO/S:
404 / 98
DIVISION:
Civil
PROCEEDING:
Application
ORIGINATING COURT:
District Court
DELIVERED ON:
11 February 2005
DELIVERED AT:
Maroochydore
HEARING DATE:
21 January 2005
JUDGE:
K.S. Dodds, DCJ
ORDER:
Application dismissed with costs
CATCHWORDS:
Application to withdraw an offer to settle, pursuant to Part 5 Chapter 9, Uniform Civil Procedure Rules;
whether offer to settle was open to be accepted by the plaintiff.
Legislation Cited: Part 5, Chapter 9, Uniform Civil Procedure Rules 1999
Cases Cited: Rosniak v. Government Insurance Office (NSW), Supreme Court New South Wales, Wood J, 4 October 1990.
COUNSEL:
Ms M H Hindman for the plaintiff
SOLICITORS:
Dibbs Barker Gosling solicitors for the plaintiff
Chris Reeve & Co solicitors for the defendant
This is an application by a defendant to withdraw an offer to settle, pursuant to Part 5 Chapter 9 of the Uniform Civil Procedure Rules (UCPR) filed on 7 December 2004. In the alternative the applicant asks the Court determine that the amount offered to settle was $82,141.45 (although this amount was not the amount set out in the offer).
The Background
By claim filed on the 13th of November 1998, the plaintiffs sought injunctions to prevent the defendant as mortgagee taking possession of and selling certain land, to prevent the defendant enforcing a loan agreement between the plaintiffs and the defendant, a declaration that the amount owed by the plaintiffs to the defendant was reduced or eradicated by set off of damages and damages.
A defence was filed. On 23 November 2000, an amended claim was filed.
It emerges from the amended pleading, that in March 1996 the plaintiffs purchased from the defendant a business, Currimundi Discount Nursery, for $85,000.00 plus stock. At settlement the amount owing by the plaintiffs to the defendant (which included the value of stock) was $116,209.00. Payment was to be by instalments. To secure payment, mortgages were executed by the plaintiffs in favour of the defendant over real property at Buderim and Turkey Beach. In July 1997 the mortgage over the Buderim property was released and in lieu a bill of sale was granted to the defendant. Between August 1997 and January 1998 the plaintiffs paid $3,000.00 to the defendant. In March 1998 the defendant took possession of goods belonging to the plaintiffs pursuant to the bill of sale and sold them, realising a net amount of $22,500.00 which was credited to the outstanding debt.
The plaintiff’s claim was based upon allegedly false representations in financial statements provided by the defendant to the plaintiffs which allegedly induced them to purchase the business. According to the plaintiff’s pleading these false representations were made fraudulently or negligently and were misleading or deceptive contrary to S. 52 of the Trade Practices Act 1974.
The matter then went to sleep for a while and was awakened by a notice of intention to proceed filed by the plaintiffs on 18 November 2003.
In its amended pleading filed on 13 October 2004 the defendant counterclaimed for damages in the sum of $193,047.14. It asserted that as at 1 August 1997 the plaintiffs were indebted to the defendant in the sum of $131,886.60, that the loan documents provided for interest to be payable on outstanding monies at 9.5% per annum monthly in arrears as and from 1 August 1997 and capitalising monthly thereafter, and that between August 1997 and April 1998 the plaintiffs paid or were credited various sums which totalled $34,067.55 leaving the plaintiffs owing the defendants $193,047.14.
On 24 September 2004 the plaintiffs applied for summary judgment seeking the injunctions and damages for breach of contract, or alternatively for a declaration that the amount owed by the plaintiffs to the defendant was reduced or eradicated by way of set off of damages due from the defendant to the plaintiffs. In the alternative, the plaintiffs sought that the defendants entry of appearance and defence be struck out and judgment for the plaintiffs against the defendant. In the further alternative, the plaintiffs sought that the defendant be ordered to file and serve an amended defence within 14 days, and comply with its disclosure obligations by producing financial documents and taxation returns and notices of assessment for financial years 30 June 1993 to 30 June 1995 inclusive. The application sought a self-executing order for the striking out of the defendant's Entry of Appearance and Defence and for judgment in the event of non-compliance with the Court's orders.
The application was to proceed on 15 October 2004. On that day it was ordered by consent that the application be adjourned to the registry subject to either party being at liberty to apply by providing seven days' written notice to have the matter set down for hearing.
The Offer to Settle.
In support of the defendant’s application to withdraw its offer to settle, its solicitor Mr Reeve (Reeve), relied upon his affidavit filed 7 December 2004 in which he deposed as follows: He acquired the defendant’s file from its previous solicitors on or about the 28th of January 2004. On or about 12 October 2004 he received instructions to make an offer of settlement to the effect that the defendant would forego its claim for interest provided that the balance funds otherwise payable at settlement were paid. On that day he spoke to the plaintiff's solicitor, Mr Rowell, (Rowell) and advised him of the offer, although he did not, at that time, know what the amount was. The offer was rejected. There was an offer by Rowell also rejected. Reeve then had his secretary consult the file to ascertain what balance was owing and payable on settlement. He was informed it was $50,932.45 which did not include stock. He instructed his secretary to include the amount of the stock. A letter was prepared containing a Part 5 UCPR offer to settle. It reads:
"12 October 2004
Without Prejudice”
Re Coastal Enterprises Pty Ltd ats Simpson Maroochydore District Court claim number D404 of 1998.
Further to our open letter of even date and our recent without prejudice telephone conversations our clients instruct us to reject your offer to settle this matter on the basis that our clients would pay your client's a rebate in the purchase price or anything, but we are further instructed that our clients are agreeable to accepting the balance of $50,932.45 payable by them under the contract and loan agreements being $85,000 initially secured at settlement less payments received since then totalling $34,067 including the stock but without interest. In exchange for this payment they would release the mortgage and all proceedings will be discontinued and each party would pay its own costs. This offer is made pursuant to Part 5 of the Uniform Civil Procedure Rules and is open for acceptance for a period of 30 days. We look forward to hearing from you in relation to the above."
When he signed the letter he did not notice that the letter did not include in the amount the value of the stock. The letter went by facsimile to Rowell. Reeve said he had a clear recollection of a phone call from Rowell after the letter was sent in which Rowell said he had trouble understanding the nature of the offer. He explained to Rowell “that it was … an offer for the balance payable on settlement including stock less the amounts received by the defendant since settlement, in other words foregoing interest” That telephone call was on the 14th of October 2004. By letter dated 20 October 2004 the plaintiffs purported to accept the offer. Their solicitors wrote to Reeve inter alia:
"Simpson v. Coastal Enterprises Pty Ltd
District Court of Queensland Maroochydore - claim number D404 of 1998.
We refer to your letter of offer dated 12 October 2004 pursuant to Chapter 9 Part 5 of the Uniform Civil Procedure Rules 1999 (UCPR 1999). Pursuant to rule 358 UCPR 1999 our clients accept your client's offer."
By letter dated 21 October 2004 he wrote to the plaintiffs' solicitors referring to previous correspondence and the letter of 20 October 2004 accepting the offer. The letter proceeded, "We confirm our telephone conversation of the 12th of October 2004 that the amount offered to be settled for was calculated as follows:
Balance owing at settlement $85,000
plus stock $31,209
$116,209
less payments received $34,067.55
amount offered $82,151.45
We confirm that our telephone advices to you on that day that the letter was unfortunately not as clear as it should have been but we note your understanding that this was the amount being offered even though the figure was not cited in the letter due to lack of time before the impending hearing of the application in order to give you time to get your client's instructions.
Will you please confirm that this is the amount that you are agreeable to accepting."
On 23rd December 2004 the defendant filed an affidavit by Rowell in which he deposed as follows: On the 11th of October 2004 he phoned Reeve to inquire whether it would be necessary to proceed with the application to be heard on 15 October 2004. During that telephone call he said words to the effect, "Both parties should consider the possibility of a commercial settlement of all matters in dispute with a view to avoiding the need for an appearance at the application and any further litigation." Reeve said words to the effect, "I expect to be able to make an offer shortly for your client's consideration." The Part 5 offer of settlement dated 12th October 2004 was received at 12.30 p.m. on the 12th of October 2004. At about 4.30 p.m. on that date Rowell phoned Reeve and prefaced any conversation by saying words to the effect, "All communications during this telephone call is on a without prejudice basis". Discussion about the claim, counterclaim and the offers then ensued. Rowell provided a detailed basis for the amount contended for by the plaintiffs which he had set out in a letter sent to Reeve at 11.49 a.m. on the 12th of October 2004. Throughout Reeve said words to the effect, "Ultimately any settlement will be based on an amount that the parties can live with and so the basis for the calculation is of limited relevance." Rowell said words to the effect, "You should obtain your client's instructions on an offer of $40,000 to be paid by the plaintiffs to the defendant in full and final satisfaction of the claim." Reeve said words to the effect, "I'll obtain my client's instructions." On 14 October 2004 Rowell phoned Reeve. Reeve said words to the effect, "My client rejects your client's offer and wishes to withdraw its formal offer. My client will not accept less than a hundred thousand dollars payment from your client to settle this dispute. I will send a fax to this effect today." Rowell said words to the effect, "The defendant's offer could not be withdrawn within the time allowed for acceptance without the leave of the Court because it was a formal offer under UCPR." Reeve said words to the effect, "Those are my instructions. Notwithstanding the previous formal offer, the amount now required at settlement is $100,000." On the same date Rowell received a facsimile from Reeve confirming the defendant would not settle for anything less than $100,000. On the same date Rowell received instructions to accept the formal offer. On the 20th of October 2004 Rowell caused the letter of acceptance of the Part 5 UCPR offer set out above to be sent to Reeve.
Discussion.
Because the offer to settle to settle at the centre of this application stated it was made under Part 5 it is taken to be an offer made without prejudice, Rule 356 UCPR. The words “Without Prejudice” at the top of Reeve’s letter of 12 October were superfluous. An offer to settle made under Part 5 cannot be withdrawn during the period specified therein the offer is open to acceptance without the leave of the court. An application for leave may be made without notice. The offer may be accepted any time before the application for leave to withdraw is decided Rule 355 UCPR. The offer if it is to be accepted must be accepted by serving written notice of acceptance on the party making the offer, Rule 358 UCPR.
On the face of it, the offer to settle was clear. It was to accept $50,932.45 from the plaintiffs. In exchange it would release the mortgage, all proceedings would be discontinued and each party would pay their own costs.
On Reeves account of things, subsequent to the Part 5 offer being sent, he explained to Rowell by telephone on 14 October that the offer was for the balance payable on settlement including stock (meaning the value of the stock) less amounts received by the defendant since settlement.
On Rowell’s account of things, he telephoned Reeve on the 12th of October after receiving the defendant’s Part 5 offer. The conversation ended with Reeve saying he would obtain the defendant’s instructions regarding matters which had been discussed including Rowell’s suggestion the plaintiffs pay the defendants $40,000.00 to settle the matter. On 14 October, Rowell phoned Reeve again. Reeve informed him the plaintiff’s informal offer was rejected, the defendant wished to withdraw its Part 5 offer, it would not accept anything less than $100,000.00 to settle the matter. Rowell pointed out that the defendant’s Part 5 offer could not be withdrawn without the court’s leave. Later that day Rowell received a facsimile from Reeve to similar effect. He also received the plaintiff’s instructions to accept the defendant’s Part 5 offer. He did not do so until the 20th of October thereby providing the defendant the opportunity to apply to the court to withdraw the offer. It did not do so before the plaintiff’s, in writing served on the defendant, accepted the offer.
It seems to me it is not now to the point that as Reeve deposed, the amount in the Part 5 offer was an error on the part of his office. Had an application been made promptly to the court on this basis, the discretion to permit the offer to be withdrawn would almost certainly have been exercised. Rosniak v. Govt Insurance Office (NSW) Supreme Court New South Wales, Wood J, 4 October 1990. Nor is it now to the point that Rowell may have been told by Reeve on 14 October that the offer intended there be an additional amount being the value of the stock at settlement. Rowell waited for five clear days before acting on his instructions to accept the offer. It seems to me he was entitled to proceed on the basis that no matter what Reeve had said to him on the telephone, if the court had not given leave to withdraw the offer, the offer may be accepted.
Decision
The offer was open for acceptance. Having been accepted, the claim and counter claim is at an end. The plaintiffs may if necessary take steps to formalise the offer by judgment.
The application is dismissed with costs.
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