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gmh legal - offers of compromise

McGlashan V QBE Insurance (Australia) Ltd (No 4) [2014] NSWSC 882

Campbell J was required to determine two issues in relation to the offer of compromise in this case.

First, his Honour was required to determine whether the plaintiff was able to make an informed assessment of the offer in circumstances where the defendant served a expert’s report after the expiry of the offer.

The Court found there was no obligation for an offeror to serve all its evidence before the making of an offer and that a departure from an order for indemnity costs would only be required where an offeror’s case at trial departed from the case advanced at the time of making the offer.

Secondly, his Honour was required to consider whether the offer complied with rule 20.26. That rule essentially provided that, if an offeror had made or been ordered to make an interim payment, the offer must state whether or not the offer is in addition to that payment.

The relevant offer was expressed as follows: “The offer is inclusive of all or any interim or other payments made to or on behalf of the Plaintiff by the Defendant.”

The problem was that the defendant had not produced any material to demonstrate that an interim payment had been made, and as such, the offer referred to a nonexistent interim payment.

Campbell J held that, for this reason, the offer was noncompliant. In distinguishing the law which applies to Calderbank offers, the court noted that a strict application of the UCPR is required and the noncompliant clause could not be treated as “mere surplusage.”

Youssef Taouk and Najibi Taouk v Najib Louis (No 3) [2014] NSWSC 1117

Darke J was required to consider an offer:
a) made prior to 4pm on Friday 28 March 2014;
b) which remained open for acceptance until 5pm on Monday 31 March 2014; and
c) where the trial commenced on Tuesday 1 April 2014.

The defendant made the above offer to the plaintiff and on 31 March 2014 served fresh evidence. The plaintiff submitted that the period for acceptance was unreasonably short.

The rules require an offer to remain open for a period of 28 days where it is made outside of two months before the first trial date, or otherwise must remain open for a reasonable period.

The Court held that the plaintiff should have been in a position to “give due consideration” to the offer and would have “had a clear appreciation of the strength (or weaknesses) of their case.” The Court noted that the evidence served went to issues already dealt with in other evidence. Accordingly, an award for indemnity costs was made.

Dailhou v Kelly; State of NSW v Kelly (No 3) [2014] NSWSC 1220

Rule 20.26(8) of the UCPR provides that:

“Unless the notice of offer otherwise provides, an offer providing for the payment of money, or the doing of any other act, is taken to provide for the payment of that money, or the doing of that act, within 28 days after acceptance of the offer.”

In Dailhou the offer by the defendant concerning payment said as follows:

“3. If this offer is accepted:
(a) Payment in the sum of $160,000 is to be paid within 28 days of the later to occur of the following:
(i) The date of judgment; and
(ii) Receipt of an authority to receive satisfactory to the defendants.”

An authority to receive was necessary as the payee was the State of New South Wales. The plaintiff submitted that the offer made payment conditional and thus was removed from the realm of the UCPR. However, Adamson J rejected that submission, noting that the provisions contemplated offers other than for payment to be made within 28 days of acceptance.

The plaintiff also argued that clause 3(a)(ii) rendered the offer uncertain as it reserved discretion with the defendant with respect to the authority to receive.

The Court found that the discretion did not invalidate the offer and that it should not be assumed the defendants would have acted capriciously. Accordingly, the offer was upheld and an order for indemnity costs was made.

A link to the original article can be found here. NSW Law Society Article

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