Mildura Aboriginal Corporation & Stewart v Australian Broadcasting Corporation [2001] VSC 82

5. After a 13-day trial, the jury rejected the claim for damages for libel by the first plaintiff the Mildura Aboriginal Corporation but found that the ABC had defamed Stewart by the broadcast and awarded damages in the sum of $115,000. Upon motions for entry of judgment in accordance with the jury's verdict, an issue arose concerning an offer of compromise allegedly made by the plaintiff Stewart pursuant to Order 26 of the Rules of this Court in the sum of $120,000, on 15th November 2000. It was stated from the Bar table by Mr Gillies for the plaintiff Stewart that such an offer of compromise had been made and, when the amount due for interest on damages was added on, the total sum obtained by the plaintiff exceeded the sum of $120,000. At that time there was some debate between the plaintiff Stewart and the defendant as to what the appropriate rate of interest on damages might be. In addition, Mr Riordan, counsel for the defendant ABC, stated that he was not aware of the notice of offer of compromise referred to and would seek to get instructions about it. I stood the matter down for 20 minutes or so and returned at 4 p.m. On my return, I was informed that the parties had agreed as to the orders. Interest was agreed in the sum of $10,005.55. Thus the amount of the sum to be entered by way of judgment was $125,005.55. The parties agreed that the second plaintiff's costs of the proceedings should be taxed on a party/party basis up to and including 15th November 2000 and thereafter to the day of entry of judgment on a solicitor/client basis. After some discussion about the orders for costs with respect to the failed claim of the first plaintiff, the orders with respect to costs ultimately were that

(1) the costs of the second plaintiff's claim in the proceeding, as I have already described them to be and, (2) that the first plaintiff shall pay the defendant's costs in respect of the first plaintiff's claim in the proceeding. A stay of 21 days was ordered by consent.

8. On the day following the pronouncement of the judgment and orders, the defendant gave notice that it wished to bring back on for re-hearing that part of the orders that dealt with costs, arising from the alleged offer of compromise made by the second plaintiff to the defendant on 15th November 2000. It appeared that the situation was that when counsel for the defendant made inquiry on the afternoon of the day before as to the offer of compromise on the part of the second defendant, he had received instructions from the principal partner in charge of the proceeding on behalf of the ABC that there had been such an offer of compromise but that, when more time became available, it was discovered that there was but one offer of compromise made and served, namely on behalf of the first plaintiff and none had been made and served in respect of the second plaintiff. Thus it was desired that that part of the order that gave the second plaintiff Stewart a right to solicitor/client costs from 15th November 2000 be set aside.

11. I treated the application as one to be made within the parameters of the proceeding without any summons. Both parties filed affidavits and exhibits. Both parties have proceeded on the basis that there is no problem or impediment arising from the oral pronouncement of the judgment and orders, the matter never having proceeded to any state of formal entry of judgment, much less authentication, in respect of either the substantive order or the costs order. Neither party raised any difficulty concerning the consensual nature of the orders as to costs nor the ordering of the stay.

14. There have been two affidavits filed in respect of the present application, each from the solicitor of each of the firms acting respectively for the defendant and the second-named plaintiff. From these affidavits, and because of certain uncontested aspects, the following facts emerge. By 15th November 2000 Holding Redlich, the solicitors for the plaintiff (Mr Andrew Giles having the conduct of the matter) had instructions from the first plaintiff the Mildura Aboriginal Corporation to make an offer of compromise on its behalf to the defendant in the sum of $10,000. There were also instructions from Stewart, the second plaintiff, to make an offer of compromise on his behalf in the sum of $120,000. The appropriate offers of compromise were drafted and prepared, with appropriate correspondence, to be sent by facsimile to the solicitors for the defendant pursuant to Rule 6.07(1)(e) of the Rules. Each Offer of Compromise and the forwarding correspondence was signed on behalf of the solicitor partner in charge, Mr Pullen. The Offers of Compromise, not being originating process, may be served, pursuant to the provisions of Rule 6.07.1(b) and 6.07(2.1) by means of facsimile or, as the Rule describes it, telephone transmission of a facsimile of a document. The documents exhibited as AGJ1 comprised five pages as follows: (i) A letter of 15th November 2000 to Blake Dawson Waldron, purportedly in compliance with Rule 6.07(2.1). That letter identified the subject matter of the proceeding which was Mildura Aboriginal Corporation & Anor v. Australian Broadcasting Corporation (identifying the Supreme Court number, both being plaintiffs in the one proceeding). It stated "We enclose by way of service Offers of Compromise on behalf of our clients." This cover page complied with the requirements of 6.07(2.1) although it did not specify the name and telephone number of the person to contact in the event of any problem in transmission of the document, in specific terms. Nevertheless, the cover page identified both Mr Giles and Mr Pullen and gave a telephone number. In the event, Mr Riordan for the ABC did not suggest that any falling short of absolute formality in that respect was a relevant issue for the purpose of this application. (2) The next document was a two-page document headed "Offer of Compromise", not bearing any date on it, whereby the second plaintiff made an Offer of Compromise in the sum of $120,000, to be open for 14 days after service. (3) The next document was a two-page document constituting an Offer of Compromise, on behalf of the first plaintiff in the sum of $10,000. It is to be noted that each document was undated and purported to be filed on behalf of the plaintiffs. Although page 2 of each Offer of Compromise was signed by Holding Redlich, as solicitors for the first plaintiff, on one document for the first plaintiff and for the second plaintiff on the other, page 2 of the Offer of Compromise served for Stewart contained a paragraph that appeared on the first page of the Corporation's offer, namely the identical paragraph 3. (4) None of the plaintiffs documents retained, constituting the cover page and the notices of Offer of Compromise, contain any dates and times and numbers recording sending. (5) The TX report, apparently automatically prepared for the sender, sets out a number of details, the usage time (1 minute 5 seconds), the number of pages sent as 5 and the result as "OK". That TX was timed at 11.48 on a fax with Holding Redlich's number.

17. The affidavit of Mr Gibson, the partner in charge for the ABC at Blake Dawsons ("Blakes"), exhibits what was faxed to Blake's and printed out on the fax paper in the defendant's solicitors facsimile machine as received. This is as follows:

(1) Page 1 ("001") a facsimile of the cover page faxed from Holding Redlich. There is at the top of that printed out, obviously by the receiving machine at Blakes, (a) the time, (b) the number of the fax sending and the name, (c) "Holding Redlich". There is also hand-stamped on it, self-evidently at Blakes "To GG 15th Nov 2000 time 12.13". I construe this to be put on subsequent to receipt at Blakes, by some employee and as denoting the time at which it was noted to be forwarded to the partner Mr Gibson. That is, it is not a time automatically recorded by a facsimile machine. (2) Page 002 of documents printed out at Blakes is page 1 of the Offer of Compromise on behalf of the first plaintiff, the Mildura Aboriginal Corporation. One would have thought, perhaps, that that would have been followed, enumerated as page 003, by page 2 of the Offer of Compromise for the first plaintiff, which contained the signature of Holding Redlich. However 002 was not followed by that page but by two other pages, (003 and 004 respectively) both headed as 15/11/2000 11.48 Fax and then Holding Redlich's number and name. Both of those pages were blank, save for the matters to which I have referred. (3) Page 005 was then a facsimile reproduction (also 11.48) of page 2 of the Offer of Compromise purportedly served on behalf of the first plaintiff, the Corporation. These are, I believe, the key documents in the case.

20. Mr Gibsons's affidavit states that he received a facsimile from Holding Redlich attaching an Offer of Compromise on behalf of the first plaintiff on 15th November 2000 but no Offer of Compromise relating to the second plaintiff. Accordingly, on that day he wrote to an in-house solicitor for the ABC who was instructing him, enclosing the Offer of Compromise on behalf of the Corporation and stating "I've received the attached copy of compromise of $10,000 for the Corporation. ... There is no offer from Mr Stewart. We are obviously being invited to consider settlement." His affidavit stated that he did not refer to any Offer of Compromise served on behalf of the second plaintiff because he had not received one.

23. It was the obligation of the defendant, pursuant to Rule 26.03(3.1), to serve a written acknowledgment of service on the defendant within 3 days of the service of any offer of compromise on that defendant. The defendant did not serve such a written acknowledgment in respect of the service on it of the first plaintiff's offer of compromise and, necessarily since it had arguably not received the second plaintiff's, no acknowledgment in respect of that. However on 12th January 2001, after some conversations between Mr Gibson and Mr Giles on 11th January, Blakes wrote to Holding Redlich with respect to "Mildura Aboriginal Corporation v. The ABC" Supreme Court proceeding No. 974/1996, "We refer to your client's Offer of Compromise served on us 15th November 2000. We are instructed that the ABC rejects that offer and is prepared to settle this proceeding by bearing its own costs." A file note made by Mr Giles, according to the file number, "Stewart/ABC", referred to a conversation between him and Mr Gibson which took place at 3.30 in the afternoon of 11th January and lasted 24 minutes. The only reference possibly relevant to this dispute in that note was to the effect that Mr Gibson "will get instructions" to see about settling the matter. Mr Gibson's affidavit asserts that he was not served with an Offer of Compromise for the Stewart claim nor was one ever served at Blakes or the ABC. His affidavit also states that no Offer of Compromise on behalf of the second plaintiff was brought to his attention before 15th March 2001, the date upon which the jury gave its verdict. Mr Gibson's affidavit indicates that it was not until after the Court resumed at 4 p.m. on that day that he was able to ascertain that an Offer of Compromise had been served only on behalf of the first plaintiff and not the second plaintiff.

26. Although the orders were made by me, it does not appear to me to be denied that, whatever the legal construction of the documents in relation to the Rules might be, that the defendant's solicitor did not receive a written offer of compromise on behalf of the second defendant, printed out on the page, including the critical figure. On 15th March, it appears to me the defendant acted on the basis that, if the plaintiffs were claiming that they had served a Offer of Compromise on behalf of the second plaintiff, that the relevant order for costs could not be resisted.

29. The facts now having been unearthed, I approach the matter on the basis that there was no advantage or disadvantage to be conferred on the parties as a consequence of the order being made on 15th March. Another way of saying this is that I approach the question now as I would have approached it had all of the facts been made available to me at the time application was made for the entry of judgment and an order for costs. At that time the plaintiff would have had to satisfy me that a written Offer of Compromise on behalf of the second plaintiff had been made to the defendant through its solicitor.

32. Neither party in this case adduced any other evidence or indicated any desire to adduce other evidence apart from the solicitor's affidavits that might bear upon possibly technical facsimile features that were raised. Mr Riordan's submissions for the defendant were simple enough. He contended that there was no evidence that the Offer of Compromise for the second defendant was ever received by the defendant, whether by facsimile or otherwise. He said that the position really was the same as service by post. Although certain assumptions were made by the Rules with respect to service by post, proof of non-delivery will thwart the deeming of the time and place of service and that proof of non-delivery is as effective as proof of non-service. He continued that, although his client did not serve within the time provided a written acknowledgment or receipt of the Offer of Compromise for the first plaintiff, it did ultimately do so on 12th January 2001. Moreover, it was put that the failure to supply any written acknowledgment of receipt of one or both of the Offers of Compromise, as required by Rule 26.03(3.1) of the Rules, ought to have led the plaintiffs to suspect that something was amiss and thereby to have chased the matter up to inform the defendant that there had been a written Offer of Compromise intended to be served and thought to have been served by facsimile on 15th November. His case was that his client, through the solicitors, simply did not receive a written notice of Offer of Compromise.

35. The plaintiff contended that the Court should find that the second plaintiff's Offer of Compromise was validly served on the defendant and that the fax transmission report of the plaintiff's solicitors confirmed that five pages were successfully sent at 11.47 a.m. on 15th November. Thus the argument was founded on the proposition that transmission to the recipient's fax machine, not the printing of the fax, was the critical element for valid service. Some reliance was placed on the statement of Otton, L.J. in Lady Anson v. Trump[1] to this effect:

"Transmission must be given a meaning which is consonant with modern communication technology and commercial practice. I would hold that 'transmission' means the process from the moment that a document is despatched by the sender to the time when the complete document has been received into the faxed equipment. This may be a matter of seconds or even nano-seconds, it may be somewhat longer if the recipient's fax machine or the document is longer. The fact that it may remain in the fax memory before being printed or read is to my mind irrelevant."

That case was primarily concerned with the time at which the relevant document was received and there was no issue in that case of the non-printing out of the document. At all times the document despatched and received was in the same form when received as when despatched.

40. I am of the opinion that it cannot amount to the service of a document in this way if what is telephonically transmitted is a blank page, or a page not containing the critical parts of the document. It is the contents of the document, not its simple existence as a piece of paper, that is critical. In this case, in my judgment, the strong inference to be drawn is that the person charged with the duty of physically despatching the telephonic facsimile from Holding Redlich to Blakes failed to despatch the critical two typed pages of the Offer of Compromise on behalf of the second plaintiff to the solicitors for the defendant. It seems likely that this was because the despatcher put the relevant two pages of the Offer of Compromise around the wrong way so that the printed pages were not photographically re-produced but merely the blank back of the pages. It is to be noted, having regard to the order in which the documents were received by the defendant solicitors at their office, that the despatcher at Holding Redlichs had put them out of logical order. That is, the fifth page received at Blakes should have been the third page received, as the fifth page related to the Offer of Compromise by the first plaintiff and not the second plaintiff. This has some significance to my mind in two respects.

43. First, it indicates that the despatcher departed from what would be regarded as an ordinary and reasonable method of despatching documents, that is to do so in the order in which it was desired that they be read by the receiver to facilitate understanding. Put another way, the failure to do this could be reasonably regarded as a mistake made in the intended order of transmission of documents.

46. More importantly, however, that order of events strongly supports the inference that the blank pages at the Blake's end are accounted for by the error of positioning the documents by the despatcher at Holding Redlich. Mr Gillies strongly argued that no such inference should be drawn because it was just as valid an inference that the facsimile machine at Blakes malfunctioned with respect to the critical two pages. This possibility, as argued, might have had force to it, had the vital two pages of the Offer of Compromise on behalf of the second defendant been the final two documents, that is, that the last two documents transmitted were blank. However the correct functioning of the Blake's machine so as to record page 2 of the first plaintiff's Offer of Compromise, as the final document, indicates that the Blake machine was correctly working immediately after the two blank pages came through. Neither party called any evidence about it but it would seem to be a remarkable and fortuitous concatenation of events if the Blake's machine malfunctioned for a critical 20 or 30 seconds and then came back into operation so as to pick up the last page. No expert evidence was called by anybody. In the circumstances, I cannot be satisfied that the second plaintiff's offer of compromise was transmitted. That is, I am not satisfied that the Holding Redlich despatcher, with respect to the Stewart Offer, sent anything but two blank pages, which were then transmitted by facsimile in error.

49. At one point of time the argument appeared to be advanced that so long as the document sought to be faxed was put in properly, then that would constitute service, even if what emerged at the other end was not the reproduction of the document purported to be served. I do not find it necessary to speculate about this for the reasons to which I have referred. I am more aided in terms of authority by the views of the Court of Appeal in the United Kingdom in Hastie and Jenkerson v. McMahon[2] than Lady Anson. That was a decision of the Court of Appeal with respect to service by fax at a time when service by fax was not provided for under Victorian Rules. (See Gobbo, J. in Sellen v. Victorian Amateur Turf Club[3] disallowing service by fax.) In Hastie and Jenkerson, three years later, the Court of Appeal in the United Kingdom expressed the view that the transmission by fax of a document, not required to be personally served (or not being an originating document) constituted good service, provided it could be proved that the document had in fact been received in a complete and legible state by the person on whom service was affected, since the purpose of serving a document was to ensure that its contents were available to the recipient (my emphasis). Whether it was served in the conventional way or by fax, the result was exactly the same, because although what was transmitted was an electronic message, what was produced, using the recipient's machine and paper, was the document which the other party intended should be served. Thus, that case warned of the risks in transmitting a document by fax, since it might be difficult to prove that a legible copy of the document had in fact been printed at the recipient's premises. Earlier in Ralux NV/SA v. Spencer Mason[4], O'Connor, L.J. (a passage cited in Hastie and Jenkerson) stated:

"... Speaking for myself I would conclude that if a party can prove that a legible copy of the document which otherwise meets the rules is in the hands of the party to be served, that is good service."

It would seem to me that, in the absence of some circumstances not here relevant, the evidence does not establish the necessary fact.

54. There are a number of other matters raised which I do not find it necessary to address in detail. One argument was that the tenor of the Rules was to place a burden on the recipient to report faulty or defective transmission, this apparently being sought to be derived from the necessity (see 6.07(2.1)) to have the name and telephone number of a contact person in the event of any problem in transmission of the document. But no obligation is imposed on the recipient by the Rule other than the obligation to serve the acknowledgment of receipt. No sanction for failing to serve the notice of acknowledgment is specified. In appropriate cases, it may be that that failure may be productive of some breach of another part of the Rules or other rules of practice and equity. But the reliance by the plaintiff on the failure to acknowledge in this case seems to me to be misconceived. The failure to acknowledge the receipt of any of the faxed Offers of Compromise within the Rule was known to the plaintiff by the 19th or 20th November. The plaintiffs took no steps to make inquiry of the defendants at that point and, even worse, when the letter of 12th November dealt with the Offer of Compromise, it specifically dealt only with the receipt of the first plaintiff's Offer of Compromise. If no warning bells had been rung by the want of acknowledgments in the months of November and December, the sound of them ought to have been clearly audible by 12th January 2001. There was also addressed that the receiver of the facsimile must have been aware from the cover page's use of the plural that it was intended that both plaintiffs were giving a Notice of Compromise and that the blank pages should have alerted the defendant to the likelihood that an error had occurred. I have no intention of commenting on this aspect. The correspondence shows that the defendant's solicitor treated the matter as one in which the only offer of compromise related to the first plaintiff and I do not venture any opinion critical of that approach, in the discharge of his duty to his client.

57. Mr Gillies advanced an interesting argument founded upon Rule 6.11 of the Rules that the cover letter referred to "plaintiffs" (plural). It should be noted that that Rule is headed "Confirmation of Informal Service". Its scope has not been much explored outside the circumstances of originating process coming indirectly to the person purported to be served. Smith, J. in Rowland v. Commonwealth of Australia[5] had considered but not decided whether Rule 6.11 was confined to the case where a copy of the writ came to the direct notice of the defendant by an indirect means or whether for the purposes of the Rule it was sufficient if the essential contents of the writ came to the defendant's notice. However, in this case the document did not come to the notice of the person to be served although it might be concluded that the existence of the document might have been inferred from the use of the plural in the cover page.

60. It also appeared to be suggested that where a defendant has failed to comply with Rule 26.03(3) by giving a written acknowledgment, that the defendant lost its right to dispute valid service of the Offer of Compromise. However, if it appears to be the case that there was no obligation to acknowledge the Offer of Compromise, which was not served, there can be no such consequence.

63. Accordingly, I am not satisfied that an Offer of Compromise on behalf of the second defendant was served within the meaning of the Rule and accordingly there will be no order made in respect of the costs for the payment by the defendant of costs on a solicitor/client scale from 15th November 2001, as had been made but not entered because of the defendant's mistake on 15th March 2001.

66. This is not a result which gives much satisfaction the Court. I have no doubt that it was intended that an Offer of Compromise on behalf of Stewart be made and that all the steps necessary to be taken to transmit it by facsimile had been undertaken. But the intention is not enough; service has to be effected. It would be just as unsatisfactory if the defendant was visited with an increased and not insubstantial level of costs notwithstanding that it never received notice of the Offer of Compromise. The parties did not, in argument, get much involved in the issue of follow-up service by post of facsimile transmission. However, this case is a cautionary tale that with respect to documents of this importance, that is, which may bring a substantial loss in costs, that the party seeking to get the benefit of the document served should take its own steps to be satisfied that the document has been served and received. Confidence in the certainties of modern instantaneous communication is often misplaced, and thwarted. A follow-up delivery by certified post, with respect to such documents, seems both prudent and inexpensive.

69. Accordingly the final form of judgment in this proceeding will be as follows:

1. With respect to the claim of the first plaintiff Mildura Aboriginal Corporation in the proceeding, there shall be judgment for the defendant, the first plaintiff to pay the defendant's costs, including reserved costs, to be taxed. Stay 14 days.

2. With respect to the claim of the second plaintiff Barry William Stewart in the proceeding, there shall be judgment for the second plaintiff against the defendant in the sum of $115,000 plus the sum of $10,005.55 as damages by way of interest (a total sum of $125,005.55), the defendant to pay the second plaintiff's costs of his claim in the proceedings including reserved costs, to be taxed. Stay 14 days.

3. The second plaintiff to pay the defendant's costs of the application concerning costs in connexion with the second plaintiff's claimed Offer of Compromise.

[1] [1998] EWCA Civ 656; (1998) 3 All E.R. 331 at 339.

[2] (1991) 1 All E.R. 255.

[3] Supreme Court of Victoria, 24th August 1988, unreported.

[4] (1989) Times 18th May.

[5] Supreme Court of Victoria, 2nd July 1993 (unreported).