What’s a Calderbank Offer? (2019 Update)
Settlement offers are often made in legal disputes before trial. Here we'll explain what a Calderbank Offer is and what it could mean if you reject one.
If you’re involved in a legal dispute, you may have come across a Calderbank Offer. If you have, it’s important to understand what it means. This is particularly relevant if you reject the offer and the other party is successful at trial.
The name itself comes from the famed case Calderbank v Calderbank. Here, it was held that the earlier refusal of a settlement offer can make the losing party liable for costs.
What does it do?
A Calderbank Offer informs the offeree that:
- The offer being made is reasonable;
- If the judgement made is less favourable than the offer made, the party making the offer may recover costs.
Calderbank offers aim to prevent settlement offers from being rejected unreasonably. Further, these offers can help avert unnecessary litigation. These offers also assist the Courts by providing an added incentive to settle outside of Court. Calderbank Offers are usually in writing, but can also be oral (noting that this may be harder to prove in Court).
They often include the phrase ‘without prejudice save as to costs’ and provide a deadline for acceptance. You can also use a Calderbank Offer before or during litigation. However, you must use it prior to the delivery of judgement.
Lucy is in a legal dispute with Jeff over a contract breach. Jeff offers Lucy $60,000 to resolve the dispute. Jeff’s lawyer sends this as a letter to Lucy’s lawyer and writes that it’s to act as a Calderbank Offer. Lucy refuses, as she is seeking $100,000 in the proceedings. The matter proceeds to trial and Lucy receives $20,000. Jeff is able to claim costs as the amount Lucy was awarded in the trial is less than what he offered her earlier.
In determining whether to give effect to a Calderbank Offer, the Court will consider:
- Whether there was a genuine offer of compromise; and
- Whether rejecting the offer was reasonable.
If a Judge finds that rejection of the offer was unreasonable, this will support the other party’s claim for costs.
Is a ‘Calderbank Offer’ the same as an ‘Offer of Compromise’
A Calderbank Offer is not the same as an offer of compromise. Whilst they are both devices to sanction unreasonable rejection of settlement offers, the certainty they give parties as to costs is different.
A Calderbank Offer leaves costs to the discretion of the Court. In contrast, an offer of compromise gives more predictability and more certainty in the indication of a costs order. For example, an offer of compromise can be by way of nominating a sum of money, percentage or specified scale of paying costs.
If you are considering litigation, it is important to understand the implications that a Calderbank Offer can have on your case. This also extends to whether you accept or reject any settlement offers.
Whilst a Calderbank Offer isn’t complicated in theory, in practice this is much different. To use or deal with one effectively, the advice of a lawyer will be necessary.
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Ashlee is a legal intern working in the content team at Lawpath. She is interested in information technology law, and all things innovation. Ashlee is currently completing a Dual Degree of Law/Commerce at the University of New South Wales.