Calderbank offers

A “Calderbank” offer is named after the decision in Calderbank v Calderbank [1975] 2 All ER 333. A Calderbank offer is typically a written offer made on a without prejudice basis save as to costs.  A Calderbank offer must generally be in writing. It must state that it is “without prejudice save as to costs” and that it is made pursuant to the principles established in Calderbank v Calderbank (or similar). “Without prejudice” means that the settlement offer is without prejudice to the party’s right to initiate or continue litigation, and the offer cannot be tendered as evidence in any proceeding. The words “save as to costs” mean that should the case proceeds to judgment, the offer may be relied on in court to determine who will pay the costs of the proceeding. For example, if a reasonable offer was made, should the unsuccessful party should pay costs at all, or whether the successful party should have its costs paid on an ‘ordinary’ basis (known as party/party costs), or an ‘indemnity’ basis (so that all reasonably incurred costs are awarded). Therefore a  Calderbank offer is an “all-in” offer made inclusive of any claim for legal costs. It is a precise amount offered in full and final settlement of the claim so there is no need to go to the trouble of calculating what amount of legal costs will be assessed over and above the amount of a formal offer of compromise. If a more favourable result is achieved at court, the offer can be tendered to the court in support of a request for indemnity costs from the time the offer was made.

The court will consider a number of factors such as whether the offer was reasonable and a genuine attempt to settle the litigation, if the offer was clear in its terms, and if it was left open for a reasonable period of time for acceptance, such as, a period of say 14 to 28 days.

In Meldov v Bank of Queensland [2015] NSWSC 378 Justice Slattery reviewed the principles relating to Calderbank offers, and observed the following:

A party making the offer must give a reasonable time for the other party to consider the offer and take legal advice before deciding whether or not to accept the offer.

A party who makes the offer must prove to the court that the other party’s failure to accept the offer was unreasonable.

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There is no presumption that a successful party who makes an offer that is rejected, and that achieves a better result than what they offered, will be awarded indemnity costs

Whether the rejection of an offer was unreasonable is to be assessed by reference to the circumstances at the time the offer was made, and

The issue of costs should be clearly dealt with in the offer, the offer should state whether the offer is inclusive or exclusive of the costs of the dispute.