New South Wales Supreme Court CITATION : Wesfarmers Kleenheat Gas Pty Ltd v Elgammal [2006] NSWSC 1248 HEARING DATE(S) : 17 November 2006 JUDGMENT DATE : 17 November 2006 JURISDICTION : Equity JUDGMENT OF : Hamilton J DECISION : Summons dismissed with costs. CATCHWORDS : TIME, WEIGHTS AND MEASURES [2] – Time – Computation of time generally – What days included and excluded in reckoning period – Commencing and concluding days of period – General principle – Number of days to be reckoned exclusively of the first and inclusively of the last day. Civil Procedure Act 2005 ss 73 & 99 Interpretation Act 1987 s 36 LEGISLATION CITED : Local Court (Civil Claims) Rules 1988 Parts 7 & 17A Supreme Court Rules 1970 Part 9 Uniform Civil Procedure Rules 2005 rr 1.11(2), 20.26, 42.15 Dodds v Walker [1981] 1 WLR 1027 Hobartville Stud Pty Ltd v General Insurance Co Limited (1991) 25 NSWLR 358 Howship Holdings Pty Ltd v Leslie (1996) 41 NSWLR 542 Ketrim Pty Ltd v AS&L Pty Ltd (2004) 214 ALR 206 CASES CITED : Lester v Garland (1808) 15 Ves Jun 248; 33 ER 748 Mohamed v Farah [2004] NSWSC 482 Tickell v Trevleska Pty Ltd (1990) 25 NSWLR 353 Watson v Issell (1890) 16 VLR 607 Halsbury's Laws of England, Vol 45(2), 4th ed reissue 1999, [235] Wesfarmers Kleenheat Gas Pty Limited (P1) PARTIES : Kleenheat Autogas Pty Limited (P2) Elgas Autogas Pty Limited (P3) Elaraby Elgammal (D) FILE NUMBER(S) : SC 3751/05 COUNSEL : J A Jobson (Ps) E A White (D) SOLICITORS : Nemes Thomas & Co (Ps) Robilliard & Robilliard (D) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J FRIDAY, 17 NOVEMBER 2006 3751/05 WESFARMERS KLEENHEAT GAS PTY LIMITED & ORS v ELARABY ELGAMMAL JUDGMENT 1 HIS HONOUR: The evidence and the issue in this case are in very short compass. These proceedings concern whether or not there was a binding contract of settlement in proceedings in the Local Court. They were commenced before the commencement of the Civil Procedure Act 2005 ("the CPA"), which by s 73 makes it plain, as it was not before, that a motion in the proceedings in the Local Court would provide an appropriate forum for the determination of the question as to whether the settlement was effective. In view of the doubtful situation of the law at that time, it is not surprising that proceedings for declaratory relief were brought in this Court, although that rather elaborate and expensive instrument is no longer necessary for the determination of this question under the new civil procedure. 2 Shortly before the trial of the matter in the Local Court, the third defendant in the Local Court, the present defendant, sent a letter of offer addressed to the plaintiffs' solicitor. That letter made the offer of settlement as between the third defendant and the plaintiffs in the Local Court proceedings of a dismissal of the proceedings as against the third defendant with all parties to pay their own costs, inclusive of all previous costs orders. The offer was in the form of an ordinary letter and contained the following statement: "This offer is open for 7 days and will be relied upon as a Calderbank Offer in relation to any argument regarding costs." The letter bore the date 8 June 2005 and was sent by facsimile transmission at 11.48am on that day. The plaintiffs' solicitors concede that they received the letter at about that time. The plaintiffs purported to accept the offer, but did so by a letter sent on 16 June 2005. The third defendant responded that the offer was no longer open and it was not prepared to regard the offer as accepted. This is certainly the stance that has since been taken. 3 Some parts of the submissions put by the plaintiffs before me proceeded upon false premises. These included a submission that the letter of offer was an offer of compromise under Part 17A of the Local Court (Civil Claims) Rules 1988 (now repealed) ("the LCCCR"). However, it is clear that they were not such an offer. It was a provision of Part 17A r 2 that a notice of offer should bear a statement to the effect that the offer was made in accordance with Part 17A. The relevant letter contained no such statement, but, indeed, contained the inconsistent statement that the letter was in effect a Calderbank letter. The rules relating to offers of compromise are therefore irrelevant. 4 Equally, it was put to me on behalf of the plaintiffs that the conveying of the letter of offer was the service of a document within the meaning of court rules and therefore governed by various provisions of rules as to service. Those provisions included rules as to service in Part 7 of the LCCCR and in Part 9 of the Supreme Court Rules 1970 ("the SCR") then in force. The latter rules were said to be relevant since the Supreme Court was the court of appeal from or review of decisions of the Local Court exercising civil jurisdiction, but that does not seem to me to make the SCR applicable in the Local Court proceedings, particularly as there was a corresponding Part 7 in the LCCCR. 5 It is clear, if one looks at the totality of Part 7 of the LCCCR, that what is regulated in that Part is service of documents "required or permitted by the Act or the rules or any order of the Court to be served in the conduct of any proceedings": see definition of "service" in Part 7 r 1. Once the letter of 8 June 2005 is denied the status of an offer of compromise under Part 17A of the LCCCR, the service provisions of Part 7 do not have any application to it. What is commonly called a Calderbank letter is of the nature attributed to it in that expression, ie, it is a letter. When and how it is sent and when it is received are to be judged by the ordinary law relating to those matters in relation to letters. When I say letters, letters these days, of course, may be sent by facsimile transmission, as happened in this case, as well as by the more traditional postal service or hand delivery. 6 Mr Jobson, of counsel for the plaintiffs, put various arguments as to why the letter should be regarded as having been received by the plaintiff on 9 June 2005, the day after the facsimile transmission, rather than on the day of the facsimile transmission itself, despite the acknowledgement in the evidence that the plaintiffs' solicitor received it when it was transmitted on that day. 7 The necessity for the plaintiffs to make that submission is that, according to the ordinary rules as to the calculation of time, if the letter was received on 8 June 2005, then the seven days for acceptance which it stipulated expired on the expiry of 15 June 2005. Acceptance on 16 June 2005 was out of that time, so that the third defendant was entitled to assert that the offer had expired when the acceptance was received. 8 The general rule is stated as follows in Halsbury's Laws of England, Vol 45(2), 4th ed Reissue 1999, [235] as follows: "The general rule in cases in which a period is fixed within which a person must act or take the consequences is that the day of the act or event from which the period runs should not be counted against him. This general rule applies irrespective of whether the limitation of time is imposed by the act of a party or statute." As suggested in the footnotes to this paragraph of Halsbury, that rule appears to have its foundation in the judgment of Sir William Grant MR in Lester v Garland (1808) 15 Ves Jun 248; 33 ER 748. The rule in that case has been taken to be the established rule both in Australia and in England. The common law rule has been adopted in such provisions as the Interpretation Act 1987 s 36 and the Uniform Civil Procedure Rules ("the UCPR") r 1.11(2). 9 In the Full Court of the Supreme Court of Victoria in Watson v Issell (1890) 16 VLR 607, Higinbotham CJ said at 609 - 610: "The old rule was that in computing the time both the first day and the last day were included. But in Lester v Garland 15 Ves 248, a new rule of interpretation was laid down, which was founded on clear and satisfactory reasons. It was said in that case to be a general rule as to computation of time that our law rejects fractions of days, thus rendering a day a kind of indivisible time ... where an act has to be done within a certain period after a day mentioned that day is excluded from the computation of time, and the time runs from the end of that day, and not from the beginning of it. The last day, however, is included." 10 Similarly in England, in the House of Lords in Dodds v Walker [1981] 1 WLR 1027, Lord Diplock said at 1029: "It is also clear under a rule that has been consistently applied by the courts since Lester v Garland (1808) 15 Ves Jun 248, that in calculating the period that has elapsed after the course of the specified event such as the giving of a notice, the day on which the event occurs is excluded from the reckoning." 11 In these circumstances, it seems clear to me that on general principle 8 June 2005 should not be counted among the seven days during which the offer was said to be open. The counting should commence with 9 June 2005. But that means that the offer as made expired at the expiry of 15 June 2005, so that it was not open after that time and the offeror was not bound by an acceptance communicated on 16 June 2005. 12 Mr Jobson has put to me various submissions as to why the offer should not have been regarded as having been received on 8 June 2005, but only on the following day. None of those submissions appeared to me to be cogent and all of them appeared to fly in the face of established authority, that where there has been actual receipt of a document on a particular day, a provision as to service should not be allowed to postpone artificially the date of receipt to a later time: see Howship Holdings Pty Ltd v Leslie (1996) 41 NSWLR 542 per Young J (as his Honour then was) at 544; Mohamed v Farah [2004] NSWSC 482; and Ketrim Pty Ltd v AS&L Pty Ltd (2004) 214 ALR 206. The latter two cases were both decisions in this Court by Barrett J. The first and third dealt with the service of notices of demand under corporations legislation. The second involved the time of acceptance of a formal offer of compromise under court rules. There, the acceptance was faxed very late on the last day, but did actually come to the attention of the recipient on that day. 13 I agree with the learned Judges who decided those cases that to postpone by some artificial rule or mechanism the time of receipt of a document which has clearly come earlier to the attention of the recipient creates the sort of artificiality which is likely to bring the law into disrepute and is to be avoided, except where absolutely compelled by some provision either statutory or in the terms of the transaction in relation to which the transmission is made. 14 Neither of those factors applies here. It seems to me on the evidence and on established principle clear that the last day for acceptance of the offer was 15 June 2005 and that the purported acceptance on the 16th was after the expiry of the offer. In those circumstances, no binding contract was formed by which the Local Court proceedings were compromised between the plaintiff and the third defendant. 15 The question of costs has been argued before me. The matter has come full circle, in the sense that, on the costs of these proceedings the defendant relied upon a formal offer of compromise under r 20.26 of the UCPR to support the order for costs, which must inevitably go against the plaintiffs, being made on the indemnity basis from 5 April 2006, when the offer of compromise was served. 16 The objections put on the plaintiffs' behalf as to the notice having that effect is that the supposed offer of compromise could not be regarded as offering a compromise at all, in that its terms were that the proceedings should be discontinued and that the plaintiffs should pay the defendant's costs. The plaintiffs say that this is not an offer of compromise at all, since it is a demand for the most that the defendant could obtain and therefore does not offer a compromise. Mr Jobson refers to Tickell v Trevleska Pty Ltd (1990) 25 NSWLR 353, a decision of Rogers CJ CommD; and Hobartville Stud Pty Ltd v General Insurance Co Limited (1991) 25 NSWLR 358, a decision of Giles J (as his Honour then was). Giles J said in the latter case at 368: "Compromise connotes that a party gives something away. A plaintiff with a strong case, or a plaintiff with a firm belief in the strength of its case, is perfectly entitled to discount its claim by only a dollar, but it does not in any real sense give anything away, and I do not think it can claim to have placed itself in a more favourable position in relation to costs unless it does so. It follows that I respectfully agree with the approach of Rogers CJ Comm D in Tickell v Trevleska Pty Ltd ." 17 Mr E White, of counsel for the defendant, says that the plaintiffs would have saved something by accepting the offer at the time it was made because not all the costs were then incurred and that the offer should therefore be regarded as offering a compromise. However, as every offer of compromise will be made at a point of time when not every last cent of costs in the proceedings has been incurred, it seems to me that an offer which demands every last cent up to the date of the offer cannot be regarded as offering a compromise, or certainly, which is all I need to decide, that this offer of 5 April 2006 could not be so regarded. In those circumstances, the consequences as to costs provided for by r 42.15 of the UCPR are not brought into effect by the document entitled "Offer of Compromise" in the present case. 18 As that was the only basis on which it was submitted that the order for costs in these proceedings should be otherwise than on the ordinary basis, I propose to order simply that the plaintiffs pay the defendant's costs of the proceedings, which will, of course, carry with it costs on the ordinary basis. The orders of the Court will therefore be: 1 Summons dismissed. 2 Order that the plaintiffs pay the defendant's costs of the proceedings. 19 Mr White indicated that he wished to make an application under s 99 of the CPA that an order relating to the costs be made against Mr Peter Nemes, the solicitor for the plaintiffs. Apparently some notice has been given that some such application would in the event that has occurred be made. However, I am informed by Mr Jobson, who is instructed by Mr Nemes, that Mr Nemes' case in answer to this application could not be put in the few minutes remaining before lunchtime nor, indeed, if the hearing of the matter were continued, into this afternoon. That would necessitate the adjournment of this application to a later date. In those circumstances, Mr White has indicated that the defendant will not persist further with that application. ********** 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.