Decision
23I 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.
24Further, 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.
25Those 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.
26A 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.
27In 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.
28By 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".
29The 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.
30The 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.
31The 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.
32However, 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.
33The 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.
34In 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.
35Whether 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.
36The 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.
37For 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.
38Clearly 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.
39In 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.
40It 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.
41In 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.
42In 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.
43Taking 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.
44Essentially 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.
45It is not necessary to deal with the specific submissions summarised at [21] above.