Analysis
18 As I have said, the applicant rejected the third respondent's Offer and made alternative offers (i.e., counter-offers) by Ms Hamdan's letter dated 17 July 2020. Furthermore, on 30 July 2020, the applicant made her own Notice of offer to compromise under the Rules.
19 Under the common law principles relating to offers and acceptance, an offer may come to an end by any of the following means: (1) the lapse of time; (2) revocation by the offeror; (3) rejection by the offeree; and (4) a failure of a condition. In the usual case, rejection by the offeree terminates an offer and a counter-offer is an implied rejection of an offer (see Carter JW, Contract Law in Australia (7th ed, LexisNexis Butterworths, Australia 2018) at [3-42] and [3-51]). There are exceptions to the principle that rejection of an offer by the offeree brings the offer to an end, but they are not relevant in terms of the issues before me (see Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153; Nationwide News Pty Ltd v Vass [2018] NSWCA 259; (2018) 98 NSWLR 672 (Vass) at [54] per McColl JA).
20 The end of an offer by reason of the lapse of time or the failure of a condition are not relevant in this case. If this case was governed by common law principles, then, without more, the third respondent's Offer came to an end by reason of the rejection of the Offer on 17 July 2020 and the counter-offers on the same day and, in the alternative, by reason of the applicant's Notice of offer to compromise on 30 July 2020.
21 However, this matter is not governed by common law principles, but it is governed by the Rules of Court. In Berowra Holdings Pty Ltd v Gordon [2006] HCA 32; (2006) 225 CLR 364, the High Court made the point that it was not correct to analyse an offer of compromise made pursuant to Pt 19A, rule 1(1) of the District Court Rules 1973 (NSW) in purely contractual terms (at [44] and [55] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ). In Vass, the New South Wales Court of Appeal considered the offer of amends regime for the resolution of civil disputes without litigation in Pt 3 Div 1 of the Defamation Act 2005 (NSW). The facts in that case were that a media outlet made an offer of amends to a claimant. The offer was expressed to be open to be accepted until commencement of the trial unless withdrawn in writing. The claimant made an offer of compromise pursuant to r 20.26 of the Uniform Civil Procedures Rules 2005 (NSW) (UCPR). The media outlet did not respond to the offer. The claimant subsequently wrote to the media outlet and purported to accept the offer of amends. The position adopted by the media outlet was that the offer of amends was no longer open for acceptance as it had been rejected by the claimant when he made the offer of compromise. The primary judge held that the offer of compromise under the UCPR did not reject the making of an offer of amends under the Defamation Act by necessary implication. The media outlet was granted leave to appeal, but its appeal was dismissed. McColl JA referred to the position under the common law principles relating to offer and acceptance (at [52]-[54]). Her Honour noted that the amends provisions in the Defamation Act used words conceptually common to the common law of contracts such as "offer", "accept" and "not accept[ed]", but do not use the word "reject". Her Honour held that the offer of compromise under the UCPR did not operate as a counter-offer to the offer of amends. Her Honour expressed her conclusions as follows:
110 In my view, it is apparent from the text of the amends provisions, their legislative history and the purpose they seek to achieve that the legislature did not intend the amends provisions to be construed by reference to ordinary contractual principles.
111 Both Mr Vass's offers of compromise were made pursuant to the provisions of the UCPR "instead of" under the amends provisions as was expressly contemplated by s 12(2) of the 2005 Act.
112 The consequence is that Mr Vass's second offer of compromise made pursuant to a separate statutory scheme did not operate as a counteroffer to the second offer of amends.
(citation omitted; see also Basten JA at [161]).
22 The common law rules relating to offer and acceptance do not apply under Pt 25 of the Rules. As I have said, the Rules provide that an offer made must remain open to be accepted for not less than 14 days after the offer is made (r 25.05). The offer may be withdrawn within the 14 day period, but only if the offeror makes another offer in more favourable terms to the offeree, or the offeror makes an application to the Court for leave to withdraw the offer and that application is granted (r 25.10). The terms of r 25.08 are quite clear. An offer is open to be accepted within the time stated in the Notice.
23 As I understood it, the third respondent sought to avoid the consequences of the Rules by submitting that the Offer had been withdrawn by an actual withdrawal, or a constructive withdrawal. The matter which was said to have given rise to the withdrawal, or constructive withdrawal, of the Offer was the applicant's rejection of the Offer. I reject this submission. The rejection was within 14 days after the Offer had been made and the Rules specifically provide that an offer may be withdrawn only in the two circumstances indicated in r 25.07. They do not include a rejection of an offer by the offeree. Furthermore, the withdrawal of an offer is an act on the part of the offeror, not an act on the part of the offeree. Insofar as the third respondent relies on conduct outside the 14 day period, or conduct which is said to become relevant and operative upon the expiration of a 14 day period, it fails because the only conduct he has identified is conduct on the part of the applicant. He identifies no conduct on his own part which might amount to a withdrawal of the Offer by him. The Rules do not address the withdrawal of an offer after the 14 day period, but even if an informal notice of withdrawal is sufficient, that did not occur in this case.
24 As I have said, the third respondent submits, in the alternative, that I should decline to recognise and give effect to the acceptance of the Offer in the exercise of the Court's discretion. He submits that the Court has a discretion under r 25.10 to refuse to make an order. In the alternative, he relies on the general power of the Court in r 1.34 to dispense with compliance with the Rules. As to this latter submission, the third respondent did not identify the rule which he claims should be made the subject of the dispensation, but I proceed on the basis that he is seeking dispensation from any requirement in the Rules or implied by the Rules that the leave of the Court be obtained or a notice of withdrawal be given in order for an offer to be withdrawn. I do not need to analyse the source of the Court's power to grant relief to the third respondent because I have reached the conclusion that, in any event, this is not a case where such relief should be granted.
25 As I said earlier, Ms Giles, on behalf of the third respondent, gave evidence that after the applicant rejected the third respondent's Offer on 17 July 2020, the third respondent considered the Notice was no longer capable of being accepted. She also deposed in paragraph 9 that, as a result of the express rejection of the third respondent's Offer, she proceeded to take the steps in the proceedings on behalf of the third respondent set out above (at [17]). It is not clear what Ms Giles means when she deposes to the fact that she proceeded to do various things as a result of the express rejection of the third respondent's Offer. It is not clear whether she is saying that she would have postponed that work until after 12 August 2020 when the 28 day period had expired, or whether, had she known that the express rejection of the third respondent's Offer did not mean that the Offer was no longer capable of being accepted, she would have approached the Court with a view to obtaining leave to withdraw the Offer. The docket judge made a number of procedural orders on 26 June 2020, including an order in paragraph 8 that the time within which the third respondent was to file and serve an affidavit containing his evidence in chief on the defined topics be extended retrospectively from 23 June 2020 to 17 July 2020. Furthermore, the docket judge in notes recorded in the orders noted that the parties would be conferring with respect to issues of discovery and with respect to the proper scope of the evidence to be led at the trial. The third respondent made his offer on 15 July 2020 and that offer was open to be accepted for a period of 28 days. The twenty-eighth day was 12 August 2020. It may be inferred that when the Offer was served, the third respondent was aware that it was open to be accepted up to and including 12 August 2020.
26 The third respondent referred to the overarching purpose of civil practice and procedure provisions identified in s 37M of the Federal Court of Australia Act 1976 (Cth) and the obligation on parties to a civil proceeding to act consistently with the overarching purpose in s 37N of the Act. The civil practice and procedure provisions include the Rules of Court and the Rules must be interpreted and applied, and any power conferred or duty imposed by them must be exercised or carried out, in the way that best promotes the overarching purpose (s 37M(3)). The overarching purpose and various objectives are set out in s 37M(1) and (2) which are as follows:
(1) The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes:
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.
(2) Without limiting the generality of subsection (1), the overarching purpose includes the following objectives:
(a) the just determination of all proceedings before the Court;
(b) the efficient use of the judicial and administrative resources available for the purposes of the Court;
(c) the efficient disposal of the Court's overall caseload;
(d) the disposal of all proceedings in a timely manner;
(e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
27 As I understood the third respondent's submission, it is that it is not consistent with the overarching purpose for the applicant to refuse the third respondent's Offer and to make counter-offers, and then when the counter-offers have not been accepted and the third respondent has incurred further costs, to turn around and accept the initial offer. There can be no doubt that if the applicant had accepted the third respondent's Offer on 17 July 2020, then costs incurred by the third respondent of a reasonably substantial amount would have been avoided. The difficulty with this argument is that what the applicant did in this case was, in my respectful opinion, clearly permitted under the Rules. The third respondent's Offer was said to be open for a period of 28 days. The applicant was entitled to, in effect, see if she could achieve a better result, but at the same time, preserve the ability to accept the initial offer. It seems to me that that is the effect of the Rules and certainty in the construction of the Rules and in their application, particularly in the area of offers and the effects offers can have in terms of the costs of proceedings, is important.
28 In any event, there was nothing done on the applicant's side which would justify departing from the effect of the Rules. The third respondent seemed to suggest at one point that the applicant had misrepresented the position by rejecting the Offer and then later accepting it. I cannot see that there was any misrepresentation by the applicant. She was entitled to do what she did under the Rules.