What services does a calderbank provide? A “Calderbank offer” is named after the decision in the important case of Calderbank v Calderbank from the English Court of Appeal.
It is a written offer made without prejudice in full and final settlement of a claim, including any claim for legal costs. Because the offer is made on this basis, the party making it expressly reserves the right to notify the court of the offer if and when the issue of costs in the case arises.
If a party refuses a Calderbank offer to settle a matter, it proceeds to trial, and that party is successful but their award is less than the declined settlement offer, they will be held to have rejected the offer unreasonably. As a result, any award for court costs made to the winning party may be severely reduced, or the winning party may be ordered to pay the losing party’s costs. The crucial question is whether the offer’s rejection was unreasonable in the circumstances.
WHAT MAKES A GOOD CALDERBANK OFFER?
An effective Calderbank offer should include a statement that it is made in accordance with the principles stated in Calderbank v Calderbank.
A Court should ordinarily consider the following factors when determining whether a rejection of a Calderbank offer was unreasonable:
- The point in the proceedings at which the offer was rejected
- The amount of time given to the offeree to consider the offer
- The extent of the offered compromise
- The offeree’s chances of success as of the date of the offer
- The clarity with which the offer’s terms were expressed; and
- Whether the offer foreshadowed an application for indemnity costs if the offeree rejected it.
TIME
The stage at which the offer was made, as well as the time allowed for the party to consider the offer, will be critical in determining whether rejecting the offer is reasonable.
A Calderbank offer would normally be open for at least the time specified in a formal offer, but no less than 14 days after service on the other party.
If time is not an issue, it is best to choose a longer time frame, such as 21 – 28 days.
If time is of the essence, what is considered reasonable will be determined by the facts of the case.
CLARITY
While not required, it may be prudent to provide a sufficiently detailed explanation of the reasons for making the Calderbank offer, as well as the terms and consequences of the offer. Because it is not unreasonable to reject an offer that leaves the offeree in reasonable doubt about what is being offered, an offer accompanied by a sufficiently detailed explanation is more likely to alert the offeree to the extent of compromise being made. Finally, this will help the Court determine whether the offeree’s rejection of the offer was reasonable in all the circumstances.
GOODS AND SERVICES TAX
The offering party must specify whether the Calderbank offer is GST inclusive or GST exclusive.
If you have any further questions, please contact our Legal-Litigation Lawyer Nikola Fratric on (03) 9999-1122 or by email nik.fratric@adclegal.com.au.