New South Wales Supreme Court CITATION : Khamas v Anton [2008] NSWSC 975 HEARING DATE(S) : 16 September 2008 JUDGMENT DATE : 23 September 2008 JURISDICTION : 11481/2008 JUDGMENT OF : Harrison AsJ (1) Leave to appeal is granted. (2) The appeal is dismissed. DECISION : (3) The decision of his Honour Magistrate Heilphern dated 6 March 2008 is affirmed. (4) The summons filed 4 April 2008 is dismissed. (5) The plaintiffs' are to pay the defendants' costs as agreed or assessed. CATCHWORDS : APPEAL - Local Court Magistrate - whether proceedings were settled LEGISLATION CITED : Civil Procedure Act 2005 Local Courts Act 1982 CATEGORY : Principal judgment Allen v Kerr & Anor [1995] Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Carr v Neill [1999] NSWSC 1263 CASES CITED : Devries v Australian National Railways Commission (1993) 177 CLR 472 Networth Pty Ltd v Sensis Pty Ltd (No 2) [2007] NSWCA 268 R L & D Investments Pty Ltd v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588 Swain v Waverley Municipal Council (2005) 220 CLR 517 John Khamas (First Plaintiff) PARTIES : Margarit Khamas (Second Plaintiff) Wisam Anton (Frist Defendant) Soham Anton (Second Defendant) FILE NUMBER(S) : SC 11481/2008 COUNSEL : P Becker (Plaintiffs) W Carney (Defendants) SOLICITORS : Giles Payne & Co (Plaintiffs) CK Lawyers (Defendants) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 8396/2007 LOWER COURT JUDICIAL OFFICER : Heilphern LCM LOWER COURT DATE OF DECISION : 6 March 2008 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ASSOCIATE JUSTICE HARRISON TUESDAY, 23 SEPTEMBER 2008 11481/2008 - JOHN KHAMAS v WISMAN ANTON JUDGMENT (Appeal decision of Local Court Magistrate - whether proceedings were settled) 1 HER HONOUR: By summons filed 4 April 2008, the plaintiffs seek leave to appeal the whole of the decision of his Honour Magistrate Heilphern dated 6 March 2008 and that the proceedings be dismissed on the terms agreed by the parties on 22 February 2008. The defendant has not opposed the granting of leave. Leave to appeal is granted as the outcome of this appeal may determine the Local Court proceedings. 2 The first plaintiff is John Khamas. The second plaintiff is Margarit Khamas (the plaintiffs). The first defendant is Wisam Anton, the second defendant is Soham Anton and the third defendant is Namir Anton (the defendants). The plaintiffs relied on the affidavit of Paula Louise Becker dated 10 June 2008 and Ex A. 3 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73 of the Local Courts Act 1982 permits a party who is dissatisfied with a judgment as being erroneous on a point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered in Allen v Kerr & Anor [1995] Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479. The judicial officer cannot act on evidence inconsistent with facts incontrovertibly established by the evidence - see Devries v Australian National Railways Commission (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588. 4 In Swain v Waverley Municipal Council (2005) 220 CLR 517, the Chief Justice at [2] reiterated that in the common law system of civil justice, the issues between the parties are determined by the trial process. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. 5 Section 75 of the Local Court Act provides that this Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal. Grounds of Appeal 6 The plaintiffs appeal from the whole of the decision of his Honour Magistrate Heilphern dated 6 March 2008 on the grounds firstly, that the Magistrate erred in law in finding that there was no settlement reached between the parties in the matter; and secondly, the Magistrate ought to have found that there was a binding settlement agreement between the parties and that the proceedings should be dismissed according to that settlement agreement. Local Court proceedings 7 On 4 March 2008, the plaintiff filed a notice of motion in the Local Court seeking an order that the proceedings be dismissed on the terms agreed by the parties on 22 February 2008. The motion was brought pursuant to s 73 of the Civil Procedure Act which reads: "73 Power of court to determine questions about compromises and settlements (1) In any proceedings, the court: (a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and (b) may make such orders as it considers appropriate to give effect to any such determination. (2) This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question." The relevant correspondence 8 There are four relevant letters. The relevant portions of those letters have been reproduced below. 9 On 5 November 2007, Giles Payne & Associates (the plaintiffs' solicitors) made an offer of compromise. It was as follows: "The Plaintiffs offer to compromise their claim on the basis of consent orders as follows:- 1. That the Defendants pay the Plaintiffs the sum of $30,000 in full and final settlement. 2. That the Defendants pay the Plaintiffs' costs as agreed or assessed. This offer:- (a) Is made in accordance with Part 4 Rule 20 of the Uniform Civil Procedure Rules; and (b) Will remain open for at least 28 days after service and thereafter until further notice." 10 On 30 November 2007, CK Lawyers (the defendants' solicitors) wrote to Giles Payne & Associates stated: "Further to the offer of compromise which was served by facsimile on us on our client's behalf on 5 November 2007, we have instructions to reject your offer of compromise. In response our client offers to finalise the matter whereby you would discontinue the proceedings with each party paying their legal costs to date. We reserve the right to tender this letter in support of our client's application for legal costs on an indemnity basis in the event that your client does not accept out client's offer and proceedings with this vexatious litigation against our client." 11 On 22 February 2008 (nearly three months later), the plaintiffs' solicitor replied: "We refer to your letter of 30 November 2007. We accept the offer contained in that letter. We confirm the terms of the agreement are that the proceedings are to be dismissed and each party is the (sic) pay their own costs. We attach Terms of Settlement containing the terms of agreement signed by the solicitor for the Plaintiff. Would you please sign the attached Terms of Settlement and return it so that it can be filed with the Registry forthwith." 12 The consent orders were attached to that letter and signed by the plaintiffs' solicitor. The consent judgment reads: "1. The proceedings be dismissed. 2. Each party bear their own costs." 13 The defendants' solicitor did not sign the consent orders. 14 On 22 February 2008, CK Lawyers wrote in the following terms: "Further to your letter of earlier today, and so that our client may give full consideration to your clients' offer, will you kindly advise of your client's intentions in relation to your costs in the district court proceedings between the parties. We look forward to hearing from you prior to the pre-trial view." The Magistrate's decision 15 On 6 March 2008, the motion was heard by Magistrate Heilphern, who dismissed the motion. In his reasons the Magistrate stated: "…The notice of motion fails on this basis, that clearly there was an offer and it is purported that offer was accepted. That offer was that each party pay their costs to date and clearly there must have been an implication, and the way I read it at any rate, the use of the word "to date" show that it was a limited offer relating to the proceedings not being taken any further or any further costs being incurred. Otherwise, people could not make an offer to settle. It may have been more prudent to have a date fixed for how long the offer would be open but really, that is neither here nor there, particularly when it was purported to be accepted some three and half months later. It was made immediately clear to the party that that offer and not and was never intended to remain open for all time. Civil proceedings are not about taking advantage of something that could have been expressed more prudently but they're about ensuring that the parties can have those issues that are outstanding between them heard and determined. That is not the case were I to grant the notice of motion." 16 The plaintiff submitted firstly, that the offer was not limited to time and could have been accepted up to the time the hearing commenced; and secondly, that in order for the intention behind the offer to be given effect, it is necessary to imply the words "until the date the offer is accepted" in place of the words "to date". 17 The defendant submitted that the offer had to be accepted within a reasonable time and a period of three months, during which further work had been undertaken to comply with court directions, was not reasonable. 18 The issue is how the sentence "In response our client offers to finalise the matter whereby you would discontinue the proceedings with each party paying their legal costs to date" is to be construed. 19 At the hearing of this appeal, both parties referred to Global Alliance Networth Pty Ltd v Sensis Pty Ltd (No 2) [2007] NSWCA 268. The facts are that Global made an offer to Sensis to settle the proceedings. Sensis obtained a judgment that was no more favourable to it than the offer made by Global. Global sought payment of its costs on an indemnity basis. At [19] and [20] the Court of Appeal stated: "19 No time limit for acceptance of the offer contained in the letter of 17 June 2005 was specified, although no doubt it could have been withdrawn if it were not accepted within a reasonable time. However, it has not been suggested in the submissions that have been made that the offer was in fact withdrawn prior to the hearing at first instance. 20 In the foregoing circumstances in our view the failure of Global to accept Sensis' offer was unreasonable given that it would have resulted in a more favourable outcome to Global on its cross-claim than its total dismissal at trial. Accordingly, we would propose that Global should pay Sensis' costs of the cross-claim on an indemnity basis as and from the expiry of a reasonable time after 17 June 2005. In our view the offer contained within that letter ought to have been accepted within three months of its date, that is, on or prior to 17 September 2005. It is from that date that Sensis' costs with respect to the cross-claim should be paid on an indemnity basis." 20 Global is of limited assistance, as the offer was not accepted and the issue for determination by the Court was what was a reasonable period for acceptance, in order for a date to be fixed from which Global was entitled to its costs on an indemnity basis. 21 The Magistrate construed the use of the words "to date" as implying that it was a limited offer relating to the proceedings not being taken any further or any future costs being incurred. If the literal interpretation was adopted "to date" would mean to 30 November 2007, being the date the letter was written. The plaintiffs submitted that it was necessary to imply the words "until the date that the offer is accepted" in place of the words "to date". Even on the plaintiffs' own submissions, some words had to be implied into the sentence. The Magistrate decided that different words were to be implied that the offer had to be accepted before future costs were incurred. In my view, it was open to the Magistrate to construe the sentence in the way he did. There is no error of law. The appeal is dismissed. The decision of his Honour Magistrate Heilphern dated 6 March 2008 is affirmed. The summons filed 4 April 2008 is dismissed. 22 Costs are discretionary. Costs normally follow the event. The plaintiffs' are to pay the defendants' costs as agreed or assessed. The Court orders (1) Leave to appeal is granted. (2) The appeal is dismissed. (3) The decision of his Honour Magistrate Heilphern dated 6 March 2008 is affirmed. (4) The summons filed 4 April 2008 is dismissed. (5) The plaintiffs' are to pay the defendants' costs as agreed or assessed. ********** 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.