Calderbank offer: What is a Calderbank offer?

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Calderbank offer: What is a Calderbank offer?

Calderbank offer: What is a Calderbank offer?

Author: Nathan Haynes

What is a Calderbank offer?

A Calderbank offer is in essence an offer of settlement without prejudice. They are however distinct in that they are ‘without prejudice’ with the exception of their use in relation to the courts calculations when awarding costs.

If a Calderbank offer is made and it is not accepted, then it may, after the matter had been finalized, be produced to the court for the court to determine whether given the nature of the offer, it is just in the circumstances to award indemnity costs.

When making determinations as to costs a court will consider two main aspects of a Calderbank offer:

  1. Whether there was a genuine offer of compromise.
  2. Whether it was unreasonable for the offeree not to accept the offer.[1]

When exercising their discretion, the court will consider these two elements in line with the following factors:

  1. The clarity of the offer
  2. The reasonableness of the offer
  3. The time constraints placed on the offeree to accept the offer.

 

Clarity:

A Calderbank offer requires clarity and specificity. It must be clear and precise about the terms of the offer being made to ensure that the offeree is able to easily understand what is being offered and reasonably asses the advantages associated with it.

The ACT Court of Appeal held in the case of Kemp v Ryan(2012) that:

“the terms of the settlement offered must be unambiguously clear [and the offer] must be capable of being accepted and thereby concluding the proceedings by creating a binding contract.”[2]

In addition, it is essential that a Calderbank offer provide a clear intention that the offer is to be relied on in respect of costs if it is not accepted.

Barret JA in Whitney v Dream Developments Pty Ltd (2013), held that it is essential that a Calderbank offer provides an:

“indication by the offeror that the letter might be deployed as a basis for seeking a special costs order in the event of that party’s ultimate success in the action.”[3]

 


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Reasonableness:

The offer must be such that it provides a Calderbank offer must be a “genuine offer of compromise”.

This is discretionary and there is little in terms of set standards, to determine what would meet this standard, with the ultimate determination highly dependent on the circumstances.

In Leichhardt Municpal Council v Green, Santow JA held that the question to be asked is:

“whether the particular offer in the circumstances represented a genuine attempt to reach a negotiated settlement, rather than merely to trigger any costs sanctions”[4].

 

Time:

A successful Calderbank must provide sufficient time for the offeree to accept the offer. The exact length of time is unclear and is better determined in relation to each particular case. However, it is generally recommended that a period of 14 to 28 days is granted.

 

The usefulness of Calderbank offers in the recovery of debts:

Given their nature Calderbank offers are particularly useful when attempting to recover a debt. Calderbank offers are uniquely suited to debt recovery as they are able to clearly define the terms of settlement and work to place pressure on the offeree to accept reasonable settlement, shortening the dispute and lowering the costs associated with the matter.

In addition, as debt recovery most often deals with liquidated debts and clearly defined fact scenarios it is easier for an offeree to evaluate their prospects of success throughout the entirety of the process. This in and of itself leans towards an agreement to settle, as such when a genuine offer is made, particularly when it may affect the final costs awarded in the matter it is likely to be accepted.

 

The importance of approaching a Calderbank offer with care.

Calderbank offers have strict guidelines for how they should be structured and the offers that will be considered to be genuine, because of this it is always advisable to seek legal assistance when considering settlement through this process.

Our team at ADC legal are experts at drafting Calderbank offers suited to each individual scenario. To get a better understanding of the process of responding to any claims made against you please feel free to contact our team at ADC Legal Litigation Lawyers on 1300 799 820 or email them at email@adclegal.com.au.

 

 

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