Sharp bht Sharp v Illawarra Shoalhaven Local Health District

Offer and Acceptance

1. On 20 December 2017, the solicitors acting for the plaintiff (through her tutor) served an Offer of Compromise of the same date. The solicitor who authored the letter confirmed that the offer was made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 ("UCPR"). Further, the solicitor made clear that the offer was open for acceptance for a period of 28 days from the date of the letter.
2. The attached Offer of Compromise was in the following terms: "The plaintiff offers to compromise the whole of this claim on the following terms: (1) Verdict and judgment in favour of the plaintiff in the sum of $10,000,000.00. (2) This Offer of Compromise is open for acceptance for a period of 28 days. (3) This Offer of Compromise is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005."
3. On 16 January 2018, the Crown Solicitor's Office responded, indicating that it was considering the offer and seeking an extension of time for a further two weeks before the offer closed. By letter dated 19 January 2018, the solicitors acting for the plaintiff extended the closing date for acceptance of the Offer of Compromise to the close of business on Thursday, 25 January 2018.
4. Reasons were given for that latter date, namely that the matter was listed for Directions Hearing in the Court on 31 January 2018, by which time the parties were expected to be ready to proceed to trial and, as a consequence of which, significant work would be required to be undertaken prior to 31 January 2018.
5. On 25 January 2018, the Crown Solicitor's Office wrote accepting the offer. It is appropriate for me to recite the entirety of the very short response, which is in the following terms: "I refer to the Offer of Compromise dated 10 December 2017 offering to settle Mia's claim for $10,000,000. Time for acceptance of that offer was, by letter dated 19 January 2018, extended to close of business on 25 January 2018. I am instructed to accept that offer. Please see attached a proposed Consent Judgment for your consideration."
6. Attached to the letter, as is clear from its terms, was a Draft Consent Judgment. One of the terms of that Draft Consent Judgment contained in Clause 6 provided that no interest would be payable on the costs of the proceedings if the cost were paid within 28 days of: the date on which the costs had been agreed by the parties; or receipt of a certificate as to determination of costs pursuant to s 70 of the Legal Profession Uniform Law Application Act 2014 following assessment of costs. There were other terms, but the foregoing is that which is contentious.
7. Further, a later issue arose in relation to the terms of Clause 5(b) of the Draft Consent Judgment which required a receipt of an Authority to Receive, satisfactory to the defendant, before time ran (28 days), after which interest would be payable.
8. It should be noted first, that the letter of acceptance of 25 January 2018 was unequivocal in its acceptance of the offer. On the other hand, the Draft Consent Orders only required "consideration".
9. The acceptance of the offer was not conditioned on acceptance of the terms of the Draft Consent Orders provided. Nor was acceptance conditioned on an agreement on the terms of any order of the Court.
10. By letter dated 31 January 2018 the plaintiff's solicitor wrote noting that the defendant had "accepted the plaintiff's Offer of Compromise dated 10 December 2017", but disputing the applicability of Clause 5(b), (summarised above) because of the plaintiff's lack of capacity and the need for the appointment of a court appointed manager, and disputing and/or not agreeing to, the provisions of Clause 6, referred to above.
11. It is unnecessary to recite the correspondence that ensued, but the issue between the parties as to the payment of interest is a live one and, on the submission of the defendant, no agreement has been reached because of the impasse.

Is there an agreement?

1. Leaving aside the other requirements, for there to exist a contract at law, the parties must be in agreement as to the terms of that contract, at least to the extent necessary for the enforcement of the contract.
2. The High Court in Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 dealt with the situation in which parties have, in negotiations, reached agreement upon terms of a contractual nature and also agree that the matter agreed shall be dealt with by formal contract (or in this case orders). The Court (Dixon CJ, McTiernan and Kitto JJ) expressed a taxonomy of such cases falling into three classes: first, where the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect; secondly, where the parties have agreed upon all the terms of their bargain and intend no departure from or addition to that bargain, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document; and, thirdly, the parties have agreed that the bargain is not concluded at all, unless and until they execute a formal contract.
3. As was stated by the High Court [at 360], in each of the first two above classes, there is a binding contract. In the first class, the contract is binding and the parties are "at once to perform the agreed terms whether the contemplated formal document comes into existence or not and to join (if they have so agreed) in settling and executing the formal document"; and, in the second class, "a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution".
4. Ultimately, whether there is agreement is a question of fact based upon the conduct of the parties and, in this case, their correspondence. That conduct must be seen in the context in which the negotiations are occurring.
5. The UCPR provides for a party to proceedings, by notice in writing, to make an offer to any other party to compromise the claim. Such an offer (or notice) is required to identify the claim or part to which it relates and the proposed order for disposal of the matter, including, if a monetary judgment is proposed, the amount of that monetary judgment. Further, the offer "must not include an amount for costs and must not be expressed to be inclusive of costs" and must refer to the Rule expressly. There are other requirements.
6. The offer made and attached to the letter of 20 December 2017 was an offer that complied with r 20.26 of the UCPR.
7. Further, UCPR r 20.27 provides that a party "may accept an offer by serving written notice of acceptance" at any time during the period that the offer is open. If an offer is accepted in accordance with UCPR r 20.27, any party to the compromise may apply for judgment.
8. In the context of the provisions of the UCPR upon which the plaintiff relied and by which each of the parties are bound, the terms of the Offer of Compromise, recited above, were, expressly, accepted by the defendant in its letter dated 25 January 2018, also recited above. The terms of the agreement are that there be verdict and judgment for the plaintiff in the sum of $10 million and that otherwise the UCPR provisions will apply.
9. By the foregoing, the Court is not suggesting that it would not have been preferable for the orders to be made by the Court to be agreed. However, that which was agreed is, subject to the issue of approval, enforceable.
10. It is necessary to restate the principles associated with the necessity to obtain approval and the effect such a necessity has on the agreement reached.
11. The effect of the requirement to obtain approval for a compromise that has been reached under the UCPR is that the compromise is, regardless of the need for approval, binding on each of the parties to the compromise, and contains an implied term that the compromise will be brought to the Court for approval: See Fisher v Marin [2007] NSWSC 1411; Fisher v Marin [2008] NSWSC 1357; as Azar v Kathirgamalingan [2012] NSWCA 429 ("Azar"). In Azar, the Court of Appeal said, at [197]: "[197] In Fisher v Marin [2007] NSWSC 1411 Patten AJ at [83]-[89] followed Smallman concerning an agreement for compromise of litigation, made on behalf of a person under legal incapacity by her tutor. He held that the agreement for compromise was binding on the parties, and there was an implied term to bring the agreement to the court for approval. Consistently with the various authorities that I have discussed, that decision was correct."
12. As a consequence, the need for approval of the Court makes no difference to the resolution of the question of whether there is a binding agreement between the parties. The agreement reached by the Offer of Compromise of 10 December 2017, accepted by letter dated 25 January 2018, is that there is a binding agreement between the parties. It is for the Court to determine the appropriate orders to be made to reflect that agreement.

Issue between the parties

1. As may be obvious from the recitation of the difference between the parties as to the terms of any order of the Court, the issue between the parties relates to the time from which interests on unpaid costs (or unreimbursed costs) shall run.
2. Each party has a reasonable apprehension of difficulty. On the one hand, the plaintiff fears that the defendant could "drag its heels" with regard to the payment or force the plaintiff to proceed to an Assessment of Costs, thereby delaying reimbursement of the costs expended.
3. On the other hand, the defendant correctly says that for the Court to make orders in terms sought by the plaintiff in relation to interest on cost, the defendant would have no control over the timing at which costs were incurred, but not notified to the defendant, during which interest would be running.
4. In the course of the proceedings, I remarked that it was a degree of shadowboxing by each of the parties. The term was not used as a criticism of either party.
5. Each party had particular difficulties because of that which might be done by the other party, albeit unlikely. Neither party was suggesting that the other party would so act or act otherwise than properly and efficiently.
6. In the circumstances, it seemed to the Court that the matter could be easily resolved by making orders in the terms notified to the parties at the time of the hearing by which terms interest would run from 28 days after the time that the defendant was notified of the Memorandum of Costs and Disbursements (or legal costs incurred) and rendered to the Trustee. In that way, interest would be incurred by the defendant to no greater extent than interest would be incurred by the Trustee and the plaintiff was protected from any deliberate delay by the defendant.
7. I reiterate that the Court does not consider that either difficulty is a probable risk, given the degree of cooperation that has existed thus far. Nevertheless, the terms of the order ultimately issued and entered resolve each issue adequately and take out of contention that which was concerning the plaintiff, on the one hand, and the defendant, on the other.

Approval

1. The principles applicable to the grant or refusal of approval in circumstances where a plaintiff is under an incapacity were described at length by me in Fisher v Marin [2008] NSWSC 1357 at [27] and following. It is unnecessary to repeat the statement of principles.
2. In summary, the Court is exercising a parens patriae jurisdiction by exercising full control over any settlement compromising the claim on behalf of the plaintiff and acts for the benefit of the incapacitated plaintiff, not the tutor. The principle applied by the Court in Fisher v Marin, ibid, is whether the settlement reached (and, in particular, the amount thereof) is in the interests of the plaintiff, bearing in mind the risk that the plaintiff may receive nothing from any hearing that may occur so that the question becomes whether the risk to the plaintiff of losing that which is already agreed is outweighed by the possibility of receiving more, if the matter were to go to hearing.
3. I have been provided by the plaintiff, on a confidential basis, the advice provided to the tutor in relation to the settlement, which includes, attached thereto, the latest schedule of damages but amended so as to provide a low range and a high range in relation to each head of damage. I have read the confidential advice and I accept that the low range and high range accurately or reasonably depicts the range of damages that might be awarded as a result of the proceedings.
4. The settlement is, essentially, at the midpoint between the high range and low range and is an appropriate and proper settlement of the claim between the parties. It is in the interests of the plaintiff that the matter be settled on the basis of the Offer of Compromise, which has been accepted.
5. Pursuant to s 76(3) of the Civil Procedure Act 2005, the Court, on 27 February 2018, approved the settlement and issued the orders provided, as amended by the Court during the course of the proceedings, and now entered. It did so for the reasons now published.

Amendments 01 May 2018 - Order (2) amended. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 May 2018