Ballard v Multiplex
[2012] NSWSC 825
•24 July 2012
Supreme Court
New South Wales
Medium Neutral Citation: Ballard v Multiplex [2012] NSWSC 825 Hearing dates: On the papers Decision date: 24 July 2012 Jurisdiction: Equity Division - Commercial List Before: McDougall J Decision: Applications for special costs orders dismissed with costs.
Catchwords: [COSTS] - indemnity costs - offer of compromise - plaintiff does worse than offer - whether court should "otherwise order" - Calderbank letter - whether unreasonable for plaintiff to reject Calderbank offers. Legislation Cited: Civil Procedure Act 2005
Uniform Civil Procedure Rules 2005Cases Cited: Ballard v Multiplex [2012] NSWSC 426
Calderbank v Calderbank [1975] 3 All ER 333Category: Costs Parties: David Ballard (Plaintiff)
Multiplex Limited ACN 008 687 063 (First Defendant)
Multiplex Corporate Agency Pty Ltd ACN 003 070 120 (Second Defendant)
Construction Forestry Mining and Energy Union ABN 17 402 743 835 (Third Defendant)
Construction Forestry Mining and Energy Union (New South Wales Branch) ABN 17 524 350 156 (Fourth Defendant)
Andrew Ferguson (Fifth Defendant)Representation: Counsel:
J Duncan (Plaintiff)
I Pike SC (First and Second Defendants)
J Pearce (Third, Fourth and Fifth Defendants)
Solicitors:
Sagacious Legal (Plaintiff)
Clayton Utz (First and Second Defendants)
Taylor & Scott Lawyers (Third, Fourth and Fifth Defendants)
File Number(s): 2007/266587
Judgment
The plaintiff (Mr Ballard) sued the defendants, alleging a conspiracy made between them to drive him out of the demolition industry. On 3 May 2012, I gave judgment dismissing the claim, and directing entry of judgment for the defendants: Ballard v Multiplex [2012] NSWSC 426.
The orders made on 3 May 2012 included an order that Mr Ballard pay the defendant's costs. However, I reserved leave to the defendants to apply for a different or special order for costs.
Each of the defendants has moved, by notices of motion filed on 25 May 2012, for an order that its or his costs be paid on the ordinary basis up until 22 November 2010 and on the indemnity basis thereafter. Each defendant relies on an offer of compromise, or alternatively "Calderbank" letter, served on 22 November 2010.
Mr Ballard opposes the special costs orders sought.
The relevant evidence comes by affidavits from the defendants' solicitors, and is uncontentious. The parties have provided written submissions in support of their respective positions. They invited the court to deal with the applications "on the papers" and I do so.
The offers
The hearing commenced before Smart AJ on 6 September 2010. It continued, although with various adjournments, until the evidence concluded on 22 June 2011. His Honour then further adjourned the hearing to enable the parties to exchange written submissions.
In the circumstances set out at [8] of my earlier reasons, Smart AJ being unable to continue with the hearing, the matter was heard before me, on the basis (with a now irrelevant exception) of the evidence taken before Smart AJ.
One of the adjournments occurred on Friday 19 November 2010. On that day, Smart AJ adjourned the further hearing until Tuesday 23 November 2010. During this adjournment, and apparently after business hours on Monday 22 November 2010, the defendants made the offers to which I have referred.
The offer of compromise, made pursuant to UCPR r 20.26, constituted an offer by all defendants to compromise the claim on the basis that:
(1)there be a verdict for the defendants, with each party bearing his or its own costs;
(2)the offer must be accepted by serving written notice no later than 5:00pm on Friday 26 November 2010; and
(3)the offer was stated to have been made in accordance with the UCPR.
The letter under cover of which the notice of compromise was served also made the Calderbank offer. Relevantly, it stated:
Our clients have spent considerable time and resources to date in hearing the presentation of the plaintiff's case in these proceedings, and they have carefully considered the prospects of your client against our clients in his claim for damages. Having now heard the majority of the Plaintiff's case, we are instructed to inform you that our clients maintain that the position remains that there is no sustainable claim against them.
We are also informed that the Union Defendants share our clients' view stated above.
In a genuine attempt to resolve the proceedings without incurring any further unnecessary costs by the parties, we are instructed to make an offer, jointly with the Union Defendants, to settle this matter at this time on the basis that verdict be entered for the Defendants and that each party bear their own costs (Offer).
This Offer is made in accordance with the principles set out in Calderbank v Calderbank [1973] 3 All ER 333.
This Offer is open for acceptance by your client up until 5pm on Friday, 26 November 2010, at which time, if not accepted by your client, it will lapse.
...
Mr Ballard did not accept either of the offers.
The parties' submissions
The first and second defendants (Multiplex) note that Mr Ballard "wholly failed on every substantive issue both as to liability and as to damages". That is a succinct but fair summary of the outcome following from the orders that I made on 3 May 2012, giving effect to the detailed reasons that I delivered on that day. Thus, Multiplex submitted, the final judgment was "not more favourable to [Mr Ballard] than either the Offer of Compromise, or the Calderbank letter".
As to the offer of compromise, on which Multiplex placed primary reliance, the submission was made that it was "a valid Offer of Compromise and "open for a reasonable period". The latter submission was advanced because the offer "was made after 44 days of hearing, and during a short period that the hearing was in fact adjourned". Multiplex submitted that, in those circumstances, there was no reason for the court to "otherwise order", so as to deflect the usual costs consequences of non-acceptance of the offer in the context of the outcome of the proceedings (see UCPR r 42.15A).
Alternatively, Multiplex submitted, the implied rejection of the Calderbank offer was unreasonable.
The third, fourth and fifth defendants (the Union defendants) adopted and relied upon the submissions for Multiplex. Further, they relied on evidence from their solicitors, Mr Riches, dealing among other things with costs. Mr Riches noted that the total costs incurred by the Union defendants exceeded $2 million, of which a little less than half (about $960,000.00) had been incurred by 22 November 2010.
Mr Ballard opposed the orders sought. He accepted that the offer of compromise was one that complied with the UCPR. However, he submitted, the circumstances in which it was made should enliven the discretion to "otherwise order". He submitted that it was not necessary that the circumstances be "exceptional".
The submissions for Mr Ballard placed great weight on the context in which the offers were made. They noted that the offers were made after business hours at the end of a short adjournment of the hearing, which was due to resume on the following day: Tuesday, 23 November 2010. They noted (and this does not appear to have been controversial, although I have not gone to the transcript to confirm it) that on 24 November 2010, Smart AJ raised, apparently for the first time and without notice, the question of reference out of certain issues. Debate on this was said to have lasted through to Monday, 29 November 2010.
At the time the offer was made, the case for Mr Ballard had not been closed. The accounting expert, Mr Samuel, had not been called. In addition, certain questions were in due course referred out to a referee, and the hearing before the referee occupied some six days between 28 February and 10 March 2011.
Further, the submissions for Mr Ballard continued, "it could not be said that [his] case was destined to fail upon the evidence called to 22 November 2010". They noted that proof of the alleged conspiracy required "acceptance of the evidence and credibility of a few key "third-party" witnesses". That is correct. Mr Ballard's case failed (as to liability) because I did not accept the credibility, and thus the evidence, of those key witnesses.
At the time the offer was made, the defendants had not gone into evidence. Indeed, so far as I know, they had not indicated any decision, provisional or otherwise, to go into evidence. Thus, as the submissions for Mr Ballard stated, it was unclear how the key evidentiary conflicts that had been flagged in the affidavits filed for each party and in cross-examination would be resolved.
The submissions for Mr Ballard stated further that:
(1) the Calderbank offer did not set out the reasons why Mr Ballard's claim would fail and, thus, why Mr Ballard should accept the offer;
(2) there was no real compromise, because the Calderbank offer did not offer any payment to Mr Ballard; what it sought was capitulation, with a concession in respect of costs; and
(3) thus, it was not unreasonable for Mr Ballard to reject the Calderbank offer.
The defendants submitted, in reply, that none of the matters relied upon were sufficient to deflect the operation of r 42.15A. They relied on the fact that Mr Ballard had not given evidence of the reasons why it was that he had rejected the offers, and submitted that, in those circumstances, the court could draw the inference that he had not given any, let alone proper, consideration to the offers.
Decision
I start with the offer of compromise. That offer was made after many days of a hearing in which, so far as my reading of the transcript has revealed, virtually every aspect of Mr Ballard's case, both substantive and procedural, was fiercely contested. Mr Ballard, and those of his witnesses who had been called, had been subjected to lengthy, gruelling and repetitive cross-examination. It is fair to say, looking back from the relative calm of chambers and considering only the affidavits, statements, transcript and other evidence, that Mr Ballard did not fair well in cross-examination, and that his key witnesses faired worse. However, it is significant, in my view, that the offer was not made at a time when, objectively, it was likely that Mr Ballard could review and assess what had passed with any degree of detachment.
Further, the offer of compromise allowed, in substance, no more than four days for consideration. At the time the offer of compromise was made, it must have been contemplated that each of those four days was a hearing day; and in fact, this proved to be the case. No doubt, it would have been open to Mr Ballard and his legal advisers to put aside the numerous matters that, in the ordinary way, would have been requiring their attention during those four hearing days, and to give attention to the offer of compromise. But in my view, it is quite unreasonable to expect them to have done so.
Those considerations are given greater weight by the fact (which, as I have said, appears to be non-contentious) that on the first of those four days, Smart AJ raised the question of reference out of certain issues; and debate on that proposal continued over the second, third and fourth of those days and thereafter. It is hardly surprisingly that the parties (including Mr Ballard) and their legal advisers focused their attention on an issue which, clearly, Smart AJ thought to be sufficiently important to require extended debate at that stage of the hearing.
A calm, dispassionate and rational analysis of all the evidence that had been given might have led to the conclusion that there were significant obstacles lying in the way of acceptance of much of it; in particular, of acceptance of the crucial parts of it. But I fail to see that it could have been in any way relevantly unreasonable (to divert for a moment to language more customarily used in relation to Calderbank offers) for Mr Ballard and his legal advisers to drop what they were doing, ignore the question raised by Smart AJ, and focus on the analysis which proper consideration of the offers would have required.
In my opinion, the offer of compromise, viewed objectively by reference to the time at which was made and the circumstances in which it was made, must have been a significant distraction from what one would expect were the tasks on which Mr Ballard and his legal advisers were focusing. The significance of that distraction is emphasised, as I have suggested already, by the need to turn to the proposal for reference which Smart AJ raised on 24 November 2010.
By UCPR r 20.26 (7)(b), an offer of compromise made less than two months before the date sent down for a commencement of a trial "must be left open for such time as is reasonable in the circumstances".
The concession explicitly made in the submissions for Mr Ballard, that the offer was one complying with the rules, may include an acceptance of the proposition that a sufficient time was allowed for acceptance. In any event, since the submission, that insufficient time was allowed for acceptance, was not put (and, thus, the submissions in reply for the defendants did not respond to the point), I will not pursue further the question of whether there was a sufficient compliance with r 20.26(7)(b). However, that does not mean that the circumstances which might have raised the question of compliance with that paragraph have become irrelevant.
The submission that was put, clearly and unequivocally, from Mr Ballard was that the circumstances in question justified the court in ordering otherwise, so as to deflect what would otherwise be the operation of r 42.15A. In my view, that submission should be accepted.
The purpose of the provisions of the rules relating to offers of compromise (including in this, the provisions that deal with the consequences, in terms of costs) is to encourage compromise by, among other things, requiring parties who make, or to whom are made, offers of compromise to give careful and serious consideration to the offer. A party to whom an offer is made, who does not accept it and who does worse than the offer (and this is a very broad and insufficient paraphrase of the various circumstances that may arise) will suffer the burden of indemnity costs unless the court orders otherwise. The discretion to "otherwise order" is one that must be exercised judicially, taking into account the underlying policy of the relevant provisions of the rules.
However, I do not see anything in that policy that requires the court to conclude that a party to whom an offer is made should put aside all other business, and turn its attention to the offer, so as to seek to avoid the burden of indemnity costs.
The context in which the application of the relevant rules falls to be considered includes s 56 of the Civil Procedure Act, which directs the court and the litigants to focus on the just, quick and cheap resolution of the real issues in dispute.
In the context of part heard and fiercely contested litigation, where parties have spent very substantial sums of money on preparation and have significant legal teams appearing for them, the command of s 56 requires that each party be ready to proceed, so as to present its case (offensive or defensive) with proper dispatch in the time that the court is able to make available. It is in my view inimical to the operation of s 56 that a party should be deflected from this by being required to deal with distractions.
Whether or not an offer of compromise should be characterised as a distraction is something is something to be considered taking into account the circumstances in which it was made. Taking those circumstances into account in the present case, I think it is fair to characterise the offer as, objectively, a distraction; and a significant one. In saying that, I do not mean to suggest that the offer was made with the intention of distracting Mr Ballard and his legal advisers, only that, necessarily, proper consideration of it must have had that effect.
The text of the Calderbank portion of the letter under cover of which the offer of compromise was served made it clear that both offers were put on the basis that the defendants "have carefully considered the prospects" that Mr Ballard might succeed, and had maintained their view "that there is no sustainable claim". Implicit in that was the proposition that the totality of the evidence led from Mr Ballard was unlikely to be accepted, and thus that the conspiracy case must fail.
For Mr Ballard to consider that proposition, it would have been necessary for his legal advisers to go back over the evidence, to give attention to the question of credibility, and to consider the extent to which the court might (or might not) form a view based on the demeanour of the witnesses. The dispute was entirely fact-driven, and resolution of the questions of fact was dependent entirely on resolution of questions of credibility.
Clearly enough, in the ordinary way, the trial judge would be expected to take into account considerations of demeanour. Unfortunately, in the circumstances that eventuated, that did not happen; I was deprived of that valuable advantage. But there was no reason for the parties to think, in November 2010, that Smart AJ would not see the matter through; and that his Honour would not, in forming his views on credibility and deciding questions of fact, take advantage of the substantial help that his impressions of demeanour would afford.
In short, proper assessment of the proposition underlying the defendants' offer did not involve simply some quick analysis of the evidence. It would have required reflection on the questions of credibility that had been agitated extensively. In particular, it would have required careful attention to be given to considerations of demeanour.
It is notorious - the court cannot but be aware - that the pressure on a litigant's legal team is extreme when their client's case is being put: that is to say, when their client's evidence is being adduced. That is particularly so when, as was the case here, every question was fiercely contested.
In this case, the issue raised by Smart AJ on 24 November 2010 meant that Mr Ballard's advisers were required to turn aside from the press of work that, no doubt, was engaging them when the offer was made and to deal, on short notice, with that issue.
In my view, it is hardly surprising that Mr Ballard and his legal advisers focused on the presentation of his case and on the question of reference out raised by the trial judge; or that they did so instead of diverting their attention to the offers that had been put.
Taking all those matters into consideration, and paying due regard to the rules dealing with offers of compromise and the policy underlying those rules, I conclude that the circumstances do justify the court in ordering otherwise, for the purposes of r 42.15A.
Essentially for the same reasons, I conclude that it was not unreasonable for Mr Ballard to have rejected (as at least by implication he did) the Calderbank offer. I do so, in short, because I do not think that it was unreasonable for him and his legal advisers to focus on the myriad tasks requiring their attention (including the novel proposition that there should be a reference out of some issues) rather than to divert their attention away from preparation, and away from the question clearly regarded by Smart AJ as significant, to the offer that had been made.
It is not necessary to deal with the specific submissions summarised at [21] above.
Orders
I order that each of the notices of motion filed on 25 May 2012 (for the first and second defendants, and for the third to fifth defendants) be dismissed with costs. I order that those costs be set off against costs otherwise payable to the defendants.
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Decision last updated: 31 July 2012