If one puts that definition into s34(5A) that means that there is an offer of compromise where it has been made in accordance with rules made by the Judges of the Supreme Court, they being the authority having the power to make rules or orders regulating the practice and procedure of that court. There is added force given to the argument as to the application of O 26 by the fact that s34(5A) came into force on the same day as O 26 was first introduced into the Supreme Court Rules. In addition, at the same time as the new Supreme Court Rules came into force, the power in s61 of the Commercial Arbitration Act to make rules as to the conduct of arbitrations was removed: see the Schedule to the Supreme Court Act 1986.
It was argued that the phrase 'Rules of court' in s34(5A) must mean appropriate Rules of court. Moreover, the subsection, it was said, postulates rules that are expressly or impliedly applicable to arbitrations, in much the same way as rules for payment in arbitration proceedings form part of Chapter 2 of the Rules of the Supreme Court. It was also argued that the rules must refer to rules made for arbitrations, otherwise the phrase 'Rules of court' could comprehend rules of any court, including the Federal Court or the Magistrates' Court.
It was argued that the wording of r1.05(1) of Chapter 1 of the Rules of the Supreme Court made it clear that those rules applied only to civil proceedings in the Court and thus could not apply to arbitrations. It was also argued that if the applicant's view were adopted, it could mean that other quite inappropriate provisions of Chapter 1 would apply to arbitrations. Finally, it was put that O 26 was difficult, if not practically impossible, to apply to arbitrations.
In my view, the foregoing arguments should be rejected. The critical question is not whether the rules themselves make O 26 applicable to arbitrations. Plainly, r1 05 does not. The question rather is whether s34(5A) of the Commercial Arbitration Act must be taken to mean that an offer of compromise made in accordance with the relevant Rules of Court was to be taken into account. In this sense, the Act overrides the rules. This statutory direction is peculiar to offers of compromise, so it cannot be said that this view means that other rules in Chapter 1 become applicable. It is true that the verbiage of r26 is such that it is difficult to apply to arbitrations. No doubt rules may be made by the Court to deal specifically with arbitrations, or specifically referring to the applicability of some portions of those rules. But that does not mean that s34(5A) is to be treated as having no capacity to bring existing rules as to offers of compromise into operation with such modifications as are appropriate.
I have accordingly concluded that, as a result of s34(5A), O.26 is capable of applying to arbitration proceedings.
The second part of the first main question depends on whether the letter of 21 December 1987 is capable of amounting to an offer of compromise within O 26.
There are many parts of the verbiage of O 26 that make it difficult to apply it to arbitrations. For a start, the definitions in O 26 of 'plaintiff' and 'defendant' are not apposite. There are many provisions other than O 26 which are geared to verdicts and judgments rather than awards that pose some difficulty in application, even with modification. All of this may make an argument for rules expressly tailored to arbitrations. In addition, r26 08 [which I take to be a reference to r26 08(3), corresponding as I will indicate below to O 24A r 10(5)], which deals with the costs consequences of failure to accept an offer of compromise cannot apply in terms literally to arbitrations, for it is in the nature of a formula rather than a guideline. But the tenor of the concluding words of s34(5A) appears to be referring to guidelines rather than any kind of a strict formula. I am of the view that an offer of compromise can still be made in accordance with O 26 even though not all the provisions of O 26 can readily apply. It is significant that s34(5A) in effect recognises this, since it does not postulate automatic application of the rules but merely directs the arbitrator to take them into account. This may be taken as meaning that to the extent that the rules apply, they are to be taken into account. The one matter, however, that must be met if the subsection is to apply, is that there must be an offer of compromise in accordance with the rules.
The respondent argued that the letter here could not be said to be an offer in accordance with the rules in that it failed to comply in a number of critical respects. These were the non-compliance with r26 03 and the failure to comply with O 27 dealing with the content of court documents.
As to the latter, there are many respects in which the present letter does not comply with O 27. All these are matters of form, and non-compliance is able to be dispensed with by the Court in the ordinary course of a civil proceeding. R2 04 of Chapter 1 of the Rules provides as follows: -