REASONS FOR JUDGMENT

introduction and procedural history

1                     Mr Amos has appealed under s 24(1)(d) of the Federal Court of Australia Act 1976 (Cth) against a decision of Federal MagistrateBurnett given on 6 August 2009:  Monsour Pty Ltd v Amos [2009] FMCA 742.  His appeal essentially relates to a costs order made in favour of Monsour Pty Ltd, the respondent, which arose in the following circumstances.

2                     On 19 April 2006,  Monsour filed a Creditor’s Petition in the Federal Magistrates Court of Australia in relation to a debt that Mr Amos owed Monsour arising out of a costs order made against Mr Amos in earlier proceedings.  On 11 April 2007, Burnett FM dismissed the Creditor’s Petition, by consent, but reserved his decision on costs.  On 18 May 2007, after hearing submissions from the parties, Burnett FM ordered that Mr Amos pay Monsour’s costs.  It is that costs order and, more specifically, the lengthy and numerous taxation processes that followed it, which lies at the heart of this appeal.  Because of this, it is necessary to describe those taxation processes in a little detail.

3                     After Monsour’s bill of costs was filed, it was referred to Registrar Berry for assessment under O 62 r 46(1) to (3) of the Federal Court Rules.  Order 62 of the Federal Court Rules applied to the taxation for the reasons set out in [24] below.  Registrar Berry assessed the bill at $17,397.46 and notified the parties accordingly on 10 September 2007.

4                     On 1 October 2007, Mr Amos objected to that assessment under O 62 r 46(3)(c) of the Federal Court Rules.  As a consequence, the bill of costs proceeded to taxation under O 62 r 41 of the Federal Court Rules.  On 21 July 2008, Registrar Berry gave his reasons for decision on the taxation and assessed the costs payable by Mr Amos in the total sum of $18,728.70.

5                     Following that, Mr Amos filed a notice of motion objecting to the taxation decision under O 62 r 42 of the Federal Court Rules.  Registrar Berry, therefore, reconsidered his decision as required by O 62 r 43 of the Federal Court Rules.  He delivered his reconsideration decision on 29 September 2008, allowing the costs payable in the total sum of $19,934.28.

6                     Mr Amos then sought review of that reconsideration decision by filing a notice of motion in the Federal Magistrates Court under O 62 r 44(3) of the Federal Court Rules.  Mr Amos’ notice of motion set out six grounds for review.  In summary, he contended that Registrar Berry’s orders should be set aside because he had erroneously:

1.                  concluded there was no accord and satisfaction of the costs payable under the order;

2.                  concluded that the cheque in payment of the costs payable under the order was not tendered conditionally under s 27 of the Cheques Act 1986 (Cth);

3.                  concluded there was no contract between the parties to compromise the costs payable under the order;

4.                  concluded there was “insufficient consideration” for any contract between the parties to compromise the costs payable under the order;

5.                  assessed the costs when there was a fixed sum agreed between the parties;

6.                  made various calculations in assessing the costs payable.

7                     On 6 August 2009, Burnett FM dismissed Mr Amos’ notice of motion.  As mentioned above, it is that decision that is the subject of this appeal.  It may be noted that this appeal marks the fourth review since Registrar Berry’s initial assessment of the costs payable.

the factual and legal matters raised before registrar berry

8                     To understand the grounds of review that Mr Amos raised before Burnett FM (see [6] above), it is necessary to set out the details of the factual and legal matters that he had earlier raised before Registrar Berry.

9                     During the taxation of Monsour’s bill of costs, Mr Amos objected to Registrar Berry proceeding with the taxation because, among other things, he claimed that the costs payable under the order of Burnett FM had been satisfied, or compromised, by the tender of a bank cheque to Monsour’s solicitors and there was, therefore, no necessity for the costs to be taxed.  To make these claims, Mr Amos relied on five letters that passed between his solicitors and the solicitors for Monsour between 11 April 2007 and 1 October 2007.

10                  The first was a letter McInnes Wilson, the solicitors for Monsour, sent to Mr Amos’ solicitors on 11 April 2007, some hours before the commencement of the hearing of Monsour’s Creditor’s Petition before Burnett FM.  This letter referred to an affidavit that Mr Amos had filed in the bankruptcy proceedings deposing to his solvency and stated that, having regard to that affidavit:  “…we confirm our client will consent to the Petition being dismissed on the basis that your client pay our client’s costs fixed at $4,291.50”.  The letter then set out the basis for the calculation of the $4,291.50 figure, and concluded with the words:  “Please confirm by reply that your client will consent to the dismissal of the petition on the above basis”.

11                  McInnes Wilson did not receive a response to this letter prior to the commencement of the hearing.  As it turned out, Monsour’s Creditor’s Petition was dismissed, by consent, at that hearing.  Following that dismissal, both parties sought their costs of the bankruptcy proceedings and that question was reserved by Burnett FM.  The issues that arose on that question were subsequently summarised by Burnett FM as follows:

(a)                Did Monsour have knowledge, actual or constructive, of Mr Amos’ true financial situation prior to bringing its application such as to render its bringing and prosecution of the application unreasonable; and

(b)               Whether or not it was in any event appropriate to bring bankruptcy proceedings when another cheaper means of verifying Mr Amos’ financial position was available.

12                  As noted above (at [2]), Burnett FM heard submissions on this costs question and, on 18 May 2007, his Honour ordered that Mr Amos should pay Monsour’s costs of the bankruptcy proceedings.

13                  Some months later, on 21 September 2007, eleven days after the parties were notified of Registrar Berry’s costs assessment (see at [3] above), Keller Nall & Brown, the solicitors acting for Mr Amos, wrote to McInnes Wilson.  In that letter, Mr Amos’ solicitors stated:  “We refer to your letter of 11 April 2007 (copy herewith for convenience)” and enclosed a bank cheque for $4,291.50 “…in full and final payment of your client’s costs in relation to the Petition”.

14                  On 27 September 2007, McInnes Wilson responded to that letter.  It is appropriate to set out the contents of that letter.  Excluding the formal and more tendentious parts, it stated:

We refer to your letter dated 21 September 2007 enclosing a bank cheque in the amount of $4,291.50 purporting to be payment in ‘full and final payment’ of our client’s costs in relation to the Creditor’s Petition.

We note that the amount in that cheque is calculated on the basis of our ‘without prejudice’ letter dated 11 April 2007.  Obviously, that offer was rejected by your client’s conduct, which culminated in the judgment of Burnett FM on 18 May 2007, whereby your client was ordered to pay our client’s costs of and incidental to the application including any reserve (sic – reserved) costs as well as the costs of the costs argument itself.

Further, you will have received Taxing Officer Berry’s estimate of $17,397.46 dated 10 September 2007, in respect of these costs.

…

We will hold the bank cheque for $4,291.50 in part payment of the amount due in respect of the costs estimated by Taxing Officer Berry.  Under no circumstances does retention of these monies constitute a waiver of our client’s entitlement to the entire amount of costs in accordance with the Taxing Officer’s estimate.

…

We will take immediate enforcement steps if satisfactory arrangements for payment are not made by 7 October 2007.

15                  On 28 September 2007, Keller Nall & Brown responded to that letter.  Omitting the formal parts, it stated:

Your client’s offer of 11 April 2007 to accept payment of $4291.50 costs is not conditional on acceptance by a specified time and nor does it lapse by a specified time.

Your client is not entitled to retain the bank cheque without accepting the terms upon which it was offered.

Unless the bank cheque is returned to us by 2.00 pm on Monday 1 October 2007 we will treat your retention of it as evidence of the admission by your client that it has accepted the bank cheque pursuant to the terms of the letter which accompanied it of 21 September 2007.

16                  Finally, on 1 October 2007, McInnes Wilson responded to the 28 September 2007 letter and stated:  “Your argument is without merit … As previously advised, the bank cheque of $4,219.50 will be retained by us in part payment of the amount due in respect of the costs estimated by Taxing Office Berry”.  Thereafter, McInnes Wilson retained the bank cheque.  I will assume that it was subsequently negotiated, as this letter suggests.

mr amos’ AMENDED notice of appeal to this court

17                  Mr Amos’ original notice of appeal to this Court was as follows:

1.                  The Federal Magistrate erred in finding the Appellants offer was a nullity.

2.                  The Federal Magistrate erred in finding that the debt was a liquidated debt at the relevant time.

3.                  The Federal Magistrate erred in his construction of the Cheques Act in finding the cheque was unconditional.

4.                  The Federal Magistrate erred in failing to adjust the costs to be assessed by the value of the cheque.

18                  This matter came before me on a number of occasions, prior to the substantive hearing of the appeal.  On one of those occasions, an issue arose as to whether Registrar Berry had jurisdiction to determine the substantive question of law and fact associated with the tender of the cheque with the letter dated 21 September 2007.  After this jurisdictional issue was raised, I granted Mr Amos leave to file an amended notice of appeal.  He did that on 25 January 2010, by adding two additional grounds of appeal as follows:

5.                  The taxing officer had no jurisdiction to make a ruling on sensitive (sic – substantive) matters of law and erred in making a final assessment which included such findings of law.

6.                  The Federal Magistrate erred in his construction of O 62 in that the Taxing officer had no jurisdiction to make proper findings on those matters raised in the above paragraphs 1-3.

19                  It is appropriate to deal with this jurisdictional issue first.  Before doing so, I should note two matters.  First, in her written submissions on the appeal, Ms Dann, for Monsour, submitted that Mr Amos required the leave of the Court to advance the two new grounds of appeal because they had not been argued before the Federal Magistrate.  In my view, the time to raise that type of objection was at the time I heard and granted Mr Amos’ application for leave to amend his notice of appeal to add those two grounds.  I therefore reject this submission.

20                  Secondly, in her written submissions, Ms Dann accepted that this Court had jurisdiction to hear this appeal under s 24(1)(d) of the Federal Court of Australia Act 1976.  Further, both parties agreed that this was an appropriate case for a single judge to exercise the appellate jurisdiction of the Court under s 25(1A) of that Act.  I might add that, shortly before this appeal was heard, s 25(1A) was repealed as part of the recent amendments to the Federal Court of Australia Act 1976 (Act No 117 of 2009, which came into operation on 1 January 2010) and s 25(1AA) now provides for this course to be the standard one in any event.

REGISTRAR BERRY HAD JURISDICTION

Contentions

21                  Despite being granted leave to raise the two new grounds of appeal challenging Registrar Berry’s jurisdiction, Mr Cooke, Counsel for Mr Amos, ultimately seemed to accept, in his oral submissions, that Registrar Berry had jurisdiction to make the rulings he did on the substantive question of law and fact associated with the tender of the cheque with the letter dated 21 September 2007.  The only qualification he put was that, relying on the decision of White J in Re Cooke [1997] 1 Qd R 15 (“Re Cooke”) at 17, Registrar Berry should, as a matter of practice, have referred those questions to this Court for determination under O 62 r 39(3) of the Federal Court Rules.

22                  Ms Dann submitted that, in exercising the power to tax costs, a Taxing Officer is exercising the powers of the Court and is undertaking the business of the Court itself.  She submitted that the Court has delegated its powers to the Registrar under s 35A of the Federal Court of Australia Act 1976 and, as such, Registrar Berry was acting within the delegated jurisdiction of the Court.

23                  I do not consider these submissions have addressed the true source of Registrar Berry’s powers.

The Federal Magistrates Court (Bankruptcy) Rules adopt O 62 of the Federal Court Rules

24                  The original proceeding before Burnett FM was a  proceeding under the Bankruptcy Act 1966 (Cth).  As a consequence, Rule 21.10 of the Federal Magistrates Court Rules 2001, dealing with a party’s entitlement to costs in a proceeding before the Court, except bankruptcy proceedings, did not apply.  Instead, Rule 13.01 of the Federal Magistrates Court (Bankruptcy) Rules 2006, dealing with a person’s entitlement to costs in bankruptcy proceedings, applied.  It provides that such a person “is entitled to costs in accordance with O 62 of the Federal Court Rules …”.

25                  Section 86 of the Federal Magistrates Court Act 1999 (Cth) allows for the Rules of Court to make provision for, or in relation to, costs, including the costs of proceedings in the Federal Magistrates Court:  see s 86(b).  That section also provides that:  “the fees to be charged by practitioners … for the work done by them in relation to proceedings in the Federal Magistrates Court and the taxation of their bills of costs, either as between party and party or as between solicitor and client”:  see s 86(c).  Rule 13.01 clearly falls squarely within the Rule-making powers expressed in this section.

26                  In applying O 62 of the Federal Court Rules to the assessment of a party’s entitlement to costs in bankruptcy proceedings, Rule 13.01 plainly adopts all aspects of O 62, including O 62 r 39(1), which provides that:  “the Registrar, Deputy Registrar, District Registrars and Deputy District Registrars are appointed taxing officers”.  In a taxation under Rule 13 of the Federal Magistrates Court Rules (adopting O 62), these references to Registrar, Deputy Registrar, etc must be intended to refer to the Registrar, Deputy Registrar, etc of the Federal Magistrates Court.

27                  There was no suggestion from either party that Registrar Berry was not duly appointed as a Registrar in accordance with the relevant provisions of the Federal Magistrates Court Act 1999:  see ss 101 to 104.  The only question that has been raised is whether Registrar Berry had the jurisdiction to make the findings and rulings he did on the questions of fact and law in relation to the issues connected with the tender of the bank cheque with the letter dated 21 September 2007.

A taxing officer’s jurisdiction

28                  A Taxing Officer undertaking the taxation of a bill of costs has been held to be delegated as an officer of the Court to conduct the “business of the Court itself”:  see Sandback Charity Trustees v North Staffordshire Railway Co (1877) 3 QBD 1 at 4;  Garrard T/as Arthur Anderson v Email Furniture Pty Ltd (1993) 32 NSWLR 662 at 680 per Mahoney AP, Re Cooke at 17 per White J, cf Wentworth v Wentworth; Estate of Wentworth (1999) 46 NSWLR 300 at 316; [1999] NSWSC 319 per Santow J.

29                  However, some decisions of this Court have held that different considerations may arise in a federal court where a taxing officer may be exercising the judicial power of the Commonwealth:  see Boys v Australian Securities Commission [2001] FCA 1440 (“Boys”) per Carr J at [12] and Pacific Dunlop Ltd v Australian Rubber Gloves (unreported, Federal Court of Australia, 17 August 1993) (“Pacific Dunlop”) per Olney J at p 10.

30                  There is little doubt that a registrar of a federal court, whether it be the Federal Court of Australia or the Federal Magistrates Court can be delegated to exercise judicial power.  However, this delegation of power is subject to certain conditions:  that the judges of the court must continue to bear the major responsibility for the exercise of the judicial power of the court; that the delegation must not be inconsistent with the obligation of a court to act judicially; and that the decision of the registrar must be subject to review or appeal by a judge or judges of the court on questions of both fact and law:  see Harris v Caladine (1991) 172 CLR 84 at 95; [1991] HCA 9 per Mason CJ and Deane J, at 121 to 122 per Dawson J and 164 per McHugh J.

31                  The first two conditions do not arise in the circumstances of this case.  As to the latter condition, a Full Court of this Court held in Pattison v Hadjimouratis (2006) 155 FCR 226; [2006] FCAFC 153 at [6] per Nicholson J, [42] per Jacobsen J and [127] per Lander J that such a review must be by way of de novo hearing.  While this decision related to a review by a Federal Magistrate of a sequestration order made by a Registrar under the Bankruptcy Act 1966 (Cth), a number of single judge decisions of this Court have held (or at least suggested in obiter) that a review of a taxation conducted by a Taxing Officer or Registrar has to be a review de novo or, to the same effect, has to be conducted as if the judge were the original decision-maker:  see Boys at [13] per Carr J, Pacific Dunlop per Olney J at p 10 and Titan v Babic (unreported, Federal Court of Australia, 11 October 1995) per Finn J at p 5.

32                  However, in Cachia v Westpac Financial Services Limited [2003] FCA 817 (“Cachia”), Hely J adopted a somewhat different approach to the review of a Taxing Officer’s decision.  His Honour reviewed each of the decisions referred to above and a number of others:  see at [18] to [24] inclusive.  At [18], he set out a part of the often quoted decision of Jordan CJ in Schweppes Ltd v Archer (1934) 34 SR(NSW) 178 at 183, which he noted was endorsed by Kitto J in Australian Coal & Shale Employees Federation v The Commonwealth (1953) 94 CLR 621, as follows:

In appeals as to costs, the principles to be applied are these.  The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed.  Where no principle is involved, and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere.  It has undoubted jurisdiction to review the Taxing Officer’s decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances … but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case.

33                  Hely J then concluded as follows (at [24]):

Not every decision made by a taxing officer is in the nature of a discretionary judgment.  For example, in the present case there was a dispute upon taxation as to the effect of an order which I made that the respondent should pay any increased costs by reason of the adjournment of the hearing from December to February of the following year.  The construction and operation of that order was a matter which the taxing officer was called upon to decide, but his decision in that respect does not involve the exercise of any discretion.  However, where what is involved is the exercise of a discretion, or the formation of a value judgment, rather than some question of principle, then I would respectfully agree with Heerey J that the Court should proceed in accordance with the principles enunciated by Jordan CJ in Schweppes’ and adopted by Kitto J in Australian Coal & Shale Employees’ Federation.  Insofar as Carr J suggests that the position of the Federal Court is somewhat different, I would respectfully disagree.  The nature of a ‘review’ of a taxing officer’s decision in the Federal Court is no different from the nature of that ‘review’ in the High Court, even though the High Court Rules, and the Federal Court Rules in relation to the ‘review’, are not identical.  It follows that I also do not agree with the proposition that the review of a taxing officer decision must be a review de novo.  What is involved in a ‘review’ of a decision will depend upon the nature of the decision and the ground on which it is sought to be impeached.

34                  It can be seen from this that Hely J rejected the view of Carr J in Boys that a Taxing Officer of the Federal Court is exercising judicial power and, for that reason, that any review of his or her decision must be a review de novo.  Instead, his Honour concluded that the nature of the review of a Federal Court Taxing Officer’s decision will depend upon the nature of the decision under review and the grounds upon which it is being challenged.  It would necessarily follow from this approach, that the Court will either conduct a review de novo, or a review in the nature of an administrative review, depending upon whether the decision involves a matter of principle, or the exercise of a discretion, respectively.

35                  However, because the decision involving a matter of principle is more often than not likely to involve the exercise of judicial power, there may not be a great deal of difference in the end result with these two approaches.  I suppose it is possible that there is a third category of cases where the decision involves a matter of principle, but it is administrative in nature and does not involve the exercise of judicial power.  This may create a difficulty in itself because it is not always easy to distinguish between an “administrative” decision and a “judicial” one:  see Crocker v Deputy Registrar of the High Court of Australia [2003] FCA 34 per Allsop J at [38] to [41] and the cases there cited.  However, as will appear later in these reasons, I do not consider I need to resolve these issues in this case.

36                  Since this jurisdictional issue was not raised before Burnett FM, he was not required to consider it.  However, his Honour was required to consider the nature of the review he had to conduct of Registrar Berry’s decision.  After referring to the decision of Hely J in Cachia ([2009] FMCA 742at [12] to [16]), he concluded (at [2009] FMCA 742 at [16]) that, since Registrar Berry’s decision did not involve the exercise of a discretion, but rather the application of a principle, it should be reviewed in accordance with the views expressed by Hely J in Cachia at [24] – see [33] above.  While he does not say so thereafter in  his reasons, it is implicit from these references to Cachia and the way in which his Honour proceeded to conduct his review of Registrar Berry’s decision, that he conducted a review de novo.

Registrar Berry’s decision

37                  There is a number of aspects of the findings and rulings made by Registrar Berry that indicate he may have been exercising judicial power.  In order to demonstrate this, it is necessary to briefly describe the findings and rulings he made in his initial taxation decision and in his reconsideration decision on the questions of fact and law that arose in connection with the tender of the bank cheque with the letter dated 21 September 2007.

38                  While the reasons for his initial taxation decision do not contain express findings or rulings in relation to each of the submissions made on behalf of Mr Amos, a fair reading of those reasons reveals that Registrar Berry concluded:

·                    while the offer contained in Monsour’s solicitors letter of 11 April 2007 was not formally withdrawn, it lapsed as a result of the course of events that occurred after 11 April 2007 and before 21 September 2007;

·                    in those circumstances, it was not open to Mr Amos to tender a cheque for $4,291.50 to Monsour’s solicitors on 21 September 2007 on the condition that he was accepting the offer contained in the letter of 11 April 2007, as if that offer was still open to be accepted; and

·                    the tender of the cheque for $4,291.50 was not proper consideration to compromise Monsour’s claim for costs which, by 21 September 2007, had been estimated in a much larger sum than $4,291.50.

39                  As Registrar Berry noted in his reasons for his reconsideration decision, the issue that occupied most of the time at the hearing:  “related to the cheque sent by [Mr Amos’] solicitors to [Monsour’s solicitors] by a letter dated 21 September 2007 ”.  In his reasons for decision, he therefore recorded, in some detail, the submissions of counsel for the parties and the authorities they relied upon going to that issue.  He then concluded that:

·                    there was no contract between the parties evidenced by the correspondence passing between their solicitors; and

·                    there was no accord and insufficient consideration.

40                  In reaching the latter conclusion, Registrar Berry appears to have relied upon the fact that, at the stage the cheque for $4,291.50 was sent, it must have been apparent that the costs payable by Mr Amos were substantially more than the amount of that cheque.  He also relied upon the observations of Pincus JA in McMahon’s (Transport) Pty Ltd v Ebbage [1999] 1 Qd R 185 (“McMahon’s”) at 195 and the decision in Bagnall v National Tobacco Corporation of Australia Ltd (1934) 34 SR (NSW) 421.

Conclusion – Registrar Berry had jurisdiction

41                  As I have already observed, there is a number of aspects of Registrar Berry’s findings and rulings that indicate he was exercising judicial power in making them.  They include (but are not limited to) the fact they involve the application of legal criteria to facts as found and the determination of pre-existing rights and obligations.  Both of these processes are characteristic of (although not unique to) an exercise of judicial power:  see Lutton v Lessels (2002) 210 CLR 333; [2002] HCA 13 at 345; per Gleeson CJ; 357 and 360 per Gaudron and Hayne JJ; 374 to 376 per Kirby J; and 388 per Callinan J.  Further, his determination that there was no contract formed in the circumstances is one that traditionally involves the exercise of judicial power:  see Federal Commissioner of Taxation v Munro (1926) 38 CLR 153; [1926] HCA 58 at 175 per Isaacs J and Attorney-General (Cth) v Breckler (1999) 197 CLR 83; [1999] HCA 28 at [40].

42                  However, I do not consider I need to decide, in this case, whether or not Registrar Berry was in fact exercising judicial power.  This is so because, even if he was doing so in making these findings and rulings, I have already concluded that Burnett FM conducted a review de novo of his decision.  That being so, the requisite and relevant condition for the exercise of judicial power, ie that it had to be subject to a review de novo, was met, albeit that it was applied through the different process of reasoning outlined by Hely J in Cachia, ie the decision involved an issue of principle.

43                  For these reasons, I consider that, even if Registrar Berry was exercising judicial power in making the findings and rulings he did on the questions of facts and law in relation to the tender of the bank cheque with the letter dated 21 September 2007, he had the jurisdiction to do so.  It would be all the more so, if he was making administrative decisions as a Taxing Officer in the conduct of the business of the Court.  Finally, I should add that, in either capacity, his jurisdiction to act was obviously not affected by his decision not to refer these questions to the Court under O 62 r 39(3).  I therefore reject Mr Cooke’s submission to this effect.

44                  Grounds 5 and 6 of Mr Amos’ appeal must therefore be rejected.

No offer in letter of 21 september 2007

The other four grounds of appeal

45                  I now turn to consider Mr Amos’ other four grounds of appeal:  see [17] above.  These grounds all allege error in the decision of Burnett FM.  They appear to be constructed so as to follow the approach Burnett FM adopted.  In his reasons for decision, Burnett FM decided to consider the six grounds of review before him (see [6] above) under three headings: 

·                    whether the tender of the cheque with Mr Amos’ solicitors letter of 21 September 2007 was effective to achieve accord and satisfaction for, or a compromise of, the debt;

·                    whether the debt was a liquidated debt at the time the cheque was tendered; and

·                    whether the tender of the cheque amounted to an unconditional tender under the provisions of the Cheques Act such that Monsour’s solicitors subsequent retention of the cheque amounted to an acceptance of full payment for the debt. 

46                  In one way or another, these grounds of appeal all involve the effect of the tender of the bank cheque for $4,291.50 with Mr Amos’ solicitors’ letter of 21 September 2007.

The decision of Burnett FM

47                  After a comprehensive examination of the relevant facts and authorities on the issues (above), Burnett FM concluded that:

·                    because of the intervening events, the terms of the offer contained in the letter of 11 April 2007 were not open to be incorporated in the purported offer in the letter of 21 September 2007; and therefore that purported offer failed for uncertainty and it was also a nullity:  see [2009] FMCA 742 at [27], [28] and [44].

·                    Mr Amos’ solicitors letter of 21 September 2007 was not effective to impose a contractual obligation on Monsour to the effect that the acceptance of the enclosed cheque would amount to a full and final payment of Mr Amos’ debt:  see [2009] FMCA 742 at [36] and [39] to [43];

·                    because Registrar Berry’s estimate had not been objected to as at 21 September 2007 (it was ten days later – see [4] above), it constituted a liquidated sum.  Given that fact, the payment of a lesser amount could not amount to consideration for the discharge of that liquidated debt:  see [2009] FMCA 742 at [57] and [58];

·                    because the purported offer in the letter of 21 September 2007 was not a  valid offer, it could not constitute a condition of the tender of the enclosed cheque and that cheque was therefore tendered unconditionally:  see [2009] FMCA 742 at [44] and [71] to [72].

48                  In reaching these conclusions, Burnett FM, like Registrar Berry before him, was particularly persuaded by the observations of Pincus JA in McMahon’s at 195.

Contentions

49                  In summary, Mr Cooke contended that the tender of the bank cheque on the terms contained in the letter of 21 September 2007, when assessed objectively, constituted an offer to pay the amount of the bank cheque in full and final satisfaction of all Monsour’s claims for costs.  He submitted there were three matters that supported that conclusion:  the unpaid costs was the only issue outstanding between the parties; the cheque was a bank cheque; and the letter stated the cheque was paid in full and final payment.  He also submitted the words “full and final payment” placed a condition on the tender of the cheque.  Finally, he submitted that Monsour accepted the offer and the condition attached to the tender of the bank cheque by retaining it.

50                   Ms Dann submitted Mr Amos’ solicitors’ letter of 21 September 2007 did not amount to an offer, or impose any condition on the tender of the bank cheque.  In the circumstances, Monsour was, therefore, entitled to retain the bank cheque in part payment of the amount due by Mr Amos for its costs.

Ground 1 – no valid offer

51                  Turning then to the first ground of appeal, while Burnett FM used the word “nullity” in his reasons, the essence of his decision on this aspect was that the tender of the bank cheque with the letter of 21 September 2007 did not constitute a valid offer to settle Monsour’s costs debt for the sum of $4,291.50.  In my view, Burnett FM was plainly correct in reaching this conclusion. 

52                  The question whether the letter from Mr Amos’ solicitors of 21 September 2007 amounted to a valid offer or, for that matter, placed a condition on the tender of the bank cheque, is a question of fact, not law:  see Day v McLea (1889) 22 QBD 610 (“Day”) at 613;  Dunrae Manufacturing Ltd v CL North & Co Ltd [1988] 2 NZLR 602 at 604; and F.T. Jeffrey Pty Ltd v Evington Holdings Pty Ltd (unreported, Full Court of the Supreme Court of Victoria, 24 November 1977).

53                  Before turning to consider the terms of the letter of 21 September 2007, it is convenient to deal with a matter that I consider undermines Mr Amos’ case in this appeal that the letter dated 21 September 2007 contained an offer in itself.

54                  It may be noted from the summary of Mr Cooke’s submissions that he did not pursue a claim that the offer contained in Monsour’s solicitors’ letter of 11 April 2007 was still open to be accepted and was, in fact, accepted by the letter of 21 September 2007.  In fact, Mr Cooke made it clear in his oral submissions that Mr Amos now accepted that the offer contained in the letter of 11 April 2007 lapsed after it was not accepted on or about that date.

55                  As can be seen from the decisions of Registrar Berry and Burnett FM, Mr Amos had pursued this claim quite strenuously before them.  Burnett FM summarised his conclusion about it in one of the concluding paragraphs of his reasons ([2009] FMCA 742 at [72]) as follows:

Here the respondent, perhaps being too clever by half, tendered the cheque in purported acceptance of an offer that was no longer capable of acceptance or by way of counter offer which was meaningless and not capable of being accepted by the applicant.

56                  And further (at [73 a)]:

An offer was made by the applicant which offer was accepted by the respondent.  Alternatively the respondent’s offer constituted an offer accepted by the applicant:  I reject those submissions as there was no offer by the applicant available for acceptance.  The respondents offer was meaningless in the circumstances and was not capable of giving rise to contract.

57                  In my view, there is much about the letter of 21 September 2007 to support these conclusions that it was a futile attempt to accept the offer in the 11 April 2007 letter, that had long since lapsed.  They include that:  it referred exclusively to the letter of 11 April 2007, it enclosed a copy of that letter; and, most significantly, it enclosed a bank cheque for the exact amount stated in that letter, ie $4,291.50.

58                  Viewed against this background, Mr Amos’ change of position to abandon any claim that the letter of 21 September 2007 effected an acceptance of the offer contained in the letter of 11 April, combined with the peculiar features of the letter of 21 September 2007 I have mentioned above tend, in my view, to undermine the case Mr Amos now seeks to put that the letter of 21 September 2007 instead contained an offer in itself.

59                  Turning then to the contents of the letter of 21 September 2007 itself and the circumstances in which it was sent.  To begin with, the letter itself was not expressed in the terms of an offer.  Neither the word “offer”, nor any similar word, was used anywhere in it.  The operative words of the letter were “full and final payment”.  The word “settlement” was not used, as one would expect in a letter seeking to make an offer to compromise a debt.  The letter does not contain the usual “without prejudice” notation that one would expect to see on a letter emanating from a firm of solicitors seeking to make an offer to compromise a debt.  The letter did not refer to the recently completed assessment of costs, which involved the most recent quantification of the costs debt the letter was purporting to compromise.  Instead, the letter referred to the letter of 11 April 2007 (and enclosed a copy) and enclosed a bank cheque for the exact amount stated in that letter.  I have already commented on this peculiarity above.  Finally, the bank cheque enclosed was for $4,291.50.  Given that this was less than one-quarter of the most recent quantification of the costs debt at $17,397.46, it defies commercial reality to suggest that such a relatively small amount was being tendered as an offer in full and final payment of that debt.

60                  So, in summary, and contrary to Mr Cooke’s submissions, the failure of the letter to mention the most recent stage in the ongoing costs dispute between the parties, coupled with the enclosure of a bank cheque for less than one-quarter of the amount of the quantification of the costs debt made at that assessment without any indication in the letter that this was being done by way of an offer to compromise the costs debt, provides telling evidence that the letter should not be found, as a fact, to contain an offer to settle Monsour’s costs debt.

61                  Furthermore, I also agree with the conclusion reached by Burnett FM based upon the observations of Pincus JA in McMahon’s:  see at [48] above.  Even if this letter of 21 September 2007 constituted an “offer” (I consider it is clear that as a matter of fact it did not), it was one that attempted to impose upon Monsour a contractual obligation to the effect that the retention of the bank cheque enclosed would constitute a full and final payment of its costs debt.  As Pincus JA observed in that case:    “… the law does not allow the imposition of an obligation in contract to be achieved by a stipulation that it shall be deemed to be imposed if the prospective obligor performs a stipulated act …”.

62                  For these reasons, I consider Mr Amos’ first ground of appeal has no merits.

Ground 2 – Immaterial whether liquidated debt

63                  As to Mr Amos’ second ground of appeal, if the letter did not contain a valid offer to compromise Monsour’s costs debt (see above) and did not impose an effective condition on the bank cheque enclosed to the effect that it was tendered in full and final payment of Monsour’s costs debt (see below), it is immaterial, in my view, whether that costs debt was liquidated or unliquidated.  In either event, the offer or condition was not efficacious in compromising the debt.  For these reasons, Mr Amos’ second ground of appeal has no merits.

Grounds 3 and 4 – No condition on the tender of the bank cheque

64                  As to the third and fourth grounds of appeal, Mr Cooke submitted that the statement in the letter of 21 September 2007 that the bank cheque was tendered in “full and final payment of your client’s costs in relation to the petition” placed a condition on the tender of the bank cheque such that it could only be negotiated on those terms.  He relied upon s 27 of the Cheques Act 1986, which states:  “Subject to section 28, the delivery of a cheque by the drawer or an endorser may be shown to have been conditional, or for a special purpose only, and not in order to issue the cheque or transfer it by negotiation, as the case may be”.  He also relied upon the decision in Homeguard Products (NZ) Ltd v Kiwi Packaging Ltd [1981] 2 NZLR 322 (“Homeguard Products”) to the effect that banking a cheque with such a condition attached to it, and then repudiating the condition, precludes the person doing so from asserting any right to disclaim the condition and treat the cheque only as a payment on account:  see at 333 per Mahon J.

65                  In his decision, Burnett FM dealt with the similar submissions before him in the following way ([2009] FMCA 742 at [72]):

In this case for reasons I have earlier addressed I am satisfied that there was no efficacious offer extant. Given the cheque was forwarded in support of a non-efficacious offer it was by default forwarded unconditionally. It follows that this case was not the kind referred to Mahon J in Homeguard Products (NZ) Limited v Kiwi Packaging Limited (supra) (of a “simple and familiar case... of a disputed debt where the debtor sends a cheque for a lesser sum on condition that it be accepted in full settlement”).

66                  The facts in this case are quite similar – although not as strong for Mr Amos – to those in Prosser v Barrie (t/as Bargold Constructions) (1994) 62 SASR 312 (“Prosser”).  In that case, the solicitors for the applicant sent a letter to the solicitors for the respondent in the following terms: 

Our client encloses a cheque in the sum of $6,304.40 in full and final settlement.  Should this cheque be banked by you, you are accepting in full and final settlement our client’s offer of compromise.  Should the offer not be acceptable, the cheque should be returned to our offices.  In these circumstances our client will withdraw all offers and instruct us to defend any claim you may make.

67                  The solicitors for the respondent replied in a letter in the following terms:

We are in receipt of your letter and cheque …  We do not agree that this is the final payment nor will we accept a conditional payment, but will deduct this amount from the moneys still outstanding.

68                  Matheson J reviewed a number of authorities (at 319 to 322) dealing with similar factual situations, including Day and Harris v Jenkins [1922] SASR 59.  He also reviewed a number of New Zealand authorities, including Homeguard Products and a decision of Haines House Haulage Co Ltd v Gamble [1989] 3 NZLR 221 (“Haines House Haulage”), both of which were relied upon by Mr Cooke.  Significantly, given Mr Cooke’s reliance upon both these cases, Matheson J noted (at 321) that Homeguard Products had been criticised in subsequent cases in New Zealand, including in Haines House Haulage, as follows (at 223):

This decision of Mahon J has been the subject of a number of learned articles and has been referred to in a number of decisions of other Judges.  I think it correct that the decision of Mahon J on this point does not represent the current view of this Court.  I do not find it necessary to summarise the cases because that exercise has been very comprehensively done by Smellie J in Dunrae Manufacturing Ltd v CL North & Co Ltd [1988] 2 NZLR 602.

69                  Matheson J ultimately found no error in the arbitrator’s conclusion – the case involved an application to review an arbitrator’s decision – that:  “The principle of accord and satisfaction would appear to require a meeting of the minds …  In this matter, … there appears to have been very little if any at all” (at 324).  In the process, he observed that:

It seems to me as a matter of ordinary common sense, that if at the time a person receives a cheque he writes a letter saying that he is not accepting the cheque in full settlement, it will be hard to hold that he was behaving in such a way as to make people think that he was.  It may be that the cheque was forwarded on condition that it be accepted in that way.  It is possible that taking the cheque in those circumstances would amount to conversion, but if the debtor then sued the creditor for conversion, the creditor could counterclaim for the amount of this debt.

70                  Applying those principles to the present case, it may be noted, first, that the letter of 21 September 2007 was much more obscure than the terms of the letters in Prosser:  specifically, it referred to the letter of 11 April 2007 but not the offer contained in it, and tendered a bank cheque in the exact amount stated in that letter, when the offer contained in that letter had lapsed.  Secondly, the letter did not go on to clearly state the condition that was included in the Prosser letters, that should the enclosed cheque be banked by Monsour, it would be accepting it in full and final settlement of all Monsour’s costs claims.  Instead, it simply said “… your client’s costs in relation to the petition”.  Finally, it did not state, as per the Prosser letters that, should the offer (there is no mention of the word “offer” at all) not be acceptable, the bank cheque should be returned. 

71                  In addition to these factors, there is this.  Within days of receiving the bank cheque, Monsour’s solicitors wrote back to Mr Amos’ solicitors stating, among other things, that they would hold the bank cheque in part payment of the amount due in respect of the costs debt and “under no circumstances does retention of these moneys constitute a waiver of our client’s entitlement to the entire amount of costs in accordance with the taxing officer’s estimate”.

72                  In all these circumstances, I find as a matter of fact that the statements in the letter of 21 September 2007 did not operate to place a condition on the tender of the bank cheque such that Monsour’s solicitors’ retention of it amounted to an acceptance of the amount of the cheque in full and final payment of Monsour’s costs debt.

73                  It follows that Mr Amos’ third and fourth grounds of appeal also have no merits.

conclusion

74                  Since none of Mr Amos’ six grounds of appeal has any merits, his appeal must be dismissed.

75                  I will hear the parties on the question of costs.

Associate:

Dated:         16 July 2010