New South Wales Supreme Court CITATION : Scanruby P/L v. Caltex Petroleum P/L and Anor [2001] NSWSC 411 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 2940/98 HEARING DATE(S) : 18 May, 2001 JUDGMENT DATE : 18 May 2001 Scanruby Pty Ltd [ACN 058 715 469] (Plaintiff) PARTIES : Caltex Petroleum Pty Ltd [ACN 000 007 876] (First Defendant) Caltex Australia Petroleum Pty Ltd [ACN 000 032 128] (Second Defendant) JUDGMENT OF : Palmer J COUNSEL : S. Coleman (Plaintiff) Mark Doble (Sol) (First and Second Defendant) SOLICITORS : Williams the Law Firm (Plaintiff) Deacons (First & Second Defendants) CATCHWORDS : PROCEDURE [103] - SUPREME COURT RULES concerning offer of compromise - plaintiff makes offer of compromise - withdraws offer after new evidence produced - no prior leave to withdraw obtained - defendants accept offer claiming withdrawal is invalid - plaintiff seeks leave to withdraw offer nunc pro tunc prior to the entry of judgment - whether leave to withdraw offer of compromise can be granted nunc pro tunc - SUPREME COURT RULES Pt.22 r.3 CASES CITED : Lewis v. Combell Constructions Pty Ltd (1989) 18 NSWLR 528 Young v. Combe (SCNSW 29 July 1993) DECISION : Leave to the plaintiff nunc pro tunc to withdraw its offer of compromise effective on 26 April 2001; Defendants to pay the plaintiff's costs of the Notice of Motion. 1 The circumstances in which the hearing of this matter came to a conclusion are set out in a judgment delivered by me on 24 April 2001 and I shall not repeat them. 2 The trial of this matter was fixed to commence on 23 April 2001. On 18 April 2001 the plaintiff ("Scanruby") delivered to the defendants (collectively, "Caltex") an offer of compromise under Pt.22 r.3(1) of the Supreme Court Rules. 3 Pt.22 r.3(5) entitles Caltex to accept that offer by written acceptance within 28 days from 18 April, that is by 17 May 2001. Under Pt.22 r.3(6), an offer cannot be withdrawn during the time it is open to acceptance unless the Court otherwise orders. 4 The trial commenced on 23 April. On the second day of the trial Caltex produced three boxes of documents in response to a Notice to Produce. Scanruby sought an adjournment on the ground that the material had never been produced on discovery, although it was clearly discoverable. I granted that application for the reasons set out in my judgment of 24 April. Essentially I held that the only real issue of fact in the case was the verification of Caltex's accounts upon the basis of which Caltex claimed compensation for wrongful exclusion from the F3 site. The newly produced documents were relevant to that issue. They should have been produced on discovery. 5 On 26 April 2001 Scanruby's solicitors wrote to Caltex' solicitors withdrawing all offers of compromise. Scanruby did not apply for leave under Pt.22 r.3(6) to withdraw the offer made on 18 April on or prior to 26 April. 6 On 9 May 2001, within the 28 day period provided by Pt.22 r.3(5), Caltex's solicitors accepted Scanruby's offer of 18 April. 7 On 10 May 2001, Caltex's solicitors wrote to the Registrar of the Court giving notice under Pt.38 r.8B of Caltex's acceptance of Scanruby's offer of compromise and seeking the re-listing of the matter for the filing of terms of settlement. 8 On 15 May Scanruby's solicitors gave notice to Caltex and to the Court that it proposed to file a Notice of Motion seeking leave under Pt.22 r.3(6) to withdraw its offer of compromise made on 18 April 2001. 9 The matter was listed for hearing before me today. Without objection, I granted leave to Scanruby to file its Notice of Motion in Court returnable instanter. I subsequently granted leave to Scanruby without objection to amend its Notice of Motion so as to seek relief under Pt.22 r.3(8). 10 Caltex opposes Scanruby's application for leave to withdraw its offer. It says, firstly, that it is too late. The offer was accepted by Caltex on 9 May within the time permitted by the Rules. It says that the offer was then still open for acceptance because the purported withdrawal by Scanruby on 26 April was ineffective without the leave of the Court obtained under Pt.22 r.3(6). 11 Further, says Caltex, there was no sufficient reason demonstrated by Scanruby which would have supported the application for leave to withdraw, even if it had been made at the appropriate time. 12 I may dispose of the second submission at once. In Young v Combe (unrep. SCNSW 29 July 1993), Hodgson J. (as he then was) held that before the Court will grant leave under Pt.22 r.3(6) to withdraw an offer of compromise, it is necessary for the applicant to demonstrate that there has been a sufficient change in circumstances since the offer was made to make it just that the applicant be permitted to withdraw the offer. Significant new evidence coming to light after the offer had been made was, his Honour held, a sufficient change in circumstances to warrant leave being granted. 13 In the present case, for the reasons I gave in my judgment of 24 April, it is clear that new evidence has come to light since Scanruby made its offer on 18 April. That evidence may well be significant to the result of the case. Scanruby cannot now demonstrate positively that the evidence will be significant, but that is not surprising since it has not had access to the material since it was produced. Caltex has refused access on the ground that the case was brought to an end on 9 May by its acceptance of the 18 April offer of compromise. 14 I am of the opinion that there has been a sufficient change in circumstances since Scanruby made the offer to justify leave being granted under Pt.22 r.3(6) to withdraw that offer. But is it too late, as Caltex submits, because the offer has already been accepted by Caltex on 9 May so that a binding contract for compromise has been concluded between the parties? 15 In my view it is not too late. True it is that the Scanruby offer was withdrawn on 26 April without prior leave under Pt.22 r.38(6), but that rule does not expressly require that leave be obtained prior to withdrawal of an offer. There is nothing in the Rules which otherwise prevents the Court giving leave under r.3(6) nunc pro tunc to validate that withdrawal, provided that an application for withdrawal is made prior to the entry of judgment pursuant to the compromise. Support for this view is to be found in Young v. Combe (supra) at p.8 of his Honour's judgment. His Honour says this: "The requirement in Pt.22 r.3 for an order permitting withdrawal of an offer, and … for leave to withdraw an acceptance, contemplates that some application has to be made to the Court which, on ordinary principles, would have to be served on the other party, and which normally would involve some time passing before the application was actually heard by the Court. The rules do not seem to be inconsistent with an application for such an order, or for leave, being served together with a statement to the effect that the offer or acceptance, as the case may be, is withdrawn subject to obtaining leave of the Court to do so nunc pro tunc. However, it seems to me that the mere service of a notice of an application for an order or for leave sufficiently conveys the same intention, and I do not think the matter could turn on the precise wording of the notice of motion or any other document that might be served with it. Accordingly, it seems to me that where, as in this case, an offer is accepted after an application for leave has been served, it would not be correct to regard this as simply an accepted offer which falls to be dealt with under Pt.22 r.8, rather than something falling to be dealt with under Pt.22 (r.3(6)). In a case such as this, it seems to me that what has been accepted is an offer which is itself subject to being withdrawn, if the Court gives leave when the application comes to be heard. In expressing that view, I am not expressing any final view as to what the position would be if the application for an order allowing the offer to be withdrawn was served only after there had already been an acceptance." 16 It will be seen that his Honour left open in that case the position which would arise if the application for an order allowing the offer to be withdrawn was served only after there had been an acceptance, but his Honour's previously expressed views show that in his Honour's opinion there was nothing in the Rules to prevent the Court from making such an order nunc pro tunc if the circumstances otherwise required it in the interests of justice. 17 I observe also that in Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528, an application was made for an order that judgment not be entered in accordance with the terms of an offer of compromise made in accordance with Pt.22 r.3 and accepted prior to any withdrawal. Finlay J. said at page 537: "In the present case judgment has not been entered. The defendant's acceptance of the offer of compromise is, in my view, an agreement to a compromise of litigation which is subject to the procedures of this Court. Such procedures, including the possibility that the Court may consider it unjust to enforce the settlement, or that it is in the interests of justice that the matter proceed to trial." Further, at p.538 his Honour said: " What I perceive to the relevant principle in the category of cases into which this matter falls is that in an appropriate case, especially before judgment is made, the overriding interests of justice and the Court's concern over its own procedure may mean that the Court will not enforce a contract. Of course contracts made during the Court's process to settle, if they are bona fide and not affected by any error, will normally be enforced. But I repeat my previous observation that whenever parties agree to a compromise of litigation, they do so subject to the procedures of the Court which include the possibility that the Court may consider it unjust to enforce the terms of settlement or that it is in the interests of justice that the matter proceed to trial. In my view the overriding principle with which the Court is here concerned is the interests of justice in all the circumstances." 18 I adopt that statement of principle as applicable to the circumstances of the present case. In my view, the Rules of Court are to be applied so as to promote justice as between the parties, not to frustrate it. If, in the interests of justice, the Court will not enforce by judgment a contract for compromise made under the Rules, as occurred in Lewis v Combell Constructions , then the Court will not in the interests of justice hold invalid under the Rules the withdrawal of an offer which would have prevented such a contract coming into existence merely because an application seeking leave to withdraw was not made prior to the withdraw. Rule 3(6) does not expressly require that leave be obtained prior to the withdrawal, and there is no justification for construing the Rule in that way. 19 In my view, therefore, an application can be made under r.3(6) for leave to withdraw an offer at any time prior to the entry of judgment. 20 Accordingly, I grant leave to the plaintiff nunc pro tunc to withdraw its offer of compromise, effective on 26 April 2001. 21 I order that the defendants pay the plaintiff's costs of the notice of motion. – o0o – Last Modified: 05/28/2001 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.