Understanding Calderbank offers in litigation
Litigation is expensive. The Court typically decides how the costs of litigation will be allocated after the trial. In most cases, the unsuccessful party in Court will then be required to pay the successful party’s legal costs. However, something known as a Calderbank offer could change this financial outcome.
What is a Calderbank offer?
A Calderbank offer is an offer of settlement in writing, headed with the words “without prejudice, save as to costs”. It is valid if it represents a genuine attempt to resolve the dispute outside of Court. It can determine who will be ordered to pay the costs of the proceeding, and how much they are required to pay.
How is a Calderbank offer applied?
Rejecting a Calderbank offer and failing to obtain a more favourable result does not automatically lead to a costs award made against the recipient. If the Calderbank offer is rejected and the case then proceeds to court, the party who made the proposal can choose to show the court that given the final result, it was unreasonable for the other party to reject their settlement offer. The Court would then assess whether it should in fact be the other party would be liable for Court costs since they declined a reasonable settlement offer and have chosen to absorb Court resources on the case, resulting in adverse costs.
A Calderbankoffer must meet the following requirements:
- It must be marked with “without prejudice, save as to costs”;
- It must be a genuine compromise;
- The offer must be in clear terms and a final offer, not subject to any further negotiation;
- Generally, should not be inclusive of costs (though authorities are not uniform on this);
- The offer must state that, if the offer is not accepted, then a special order, such as for indemnity costs, will not be sought;
- The offer must be open for a reasonable period (usually 14 days); and
- The offer must give the other party a reasonable chance to consider the strength of the offeror’s case;
What does a Calderbank offer include?
Your Calderbankoffer should clearly set out the terms of your offer including:
- if you wish to provide for interest in the offer, clearly stipulate:
- the commencement and end time in which the interest will accrue;
- the rate at which the interest is charged;
- the amount upon which such interest is charged; and
- whether interest is simple or compound.
- if including costs as part of your offer:
- ensure that you clearly state the amount or whether it is to be agreed or assessed or taxed; and
- be sure not to create any confusion as to the nature of costs payable, that is, whether its party-party costs (as would normally be inferred) or solicitor-client costs.
Key takeaway about Calderbank offers
When making a Calderbank offer, it really is a matter of offering the right amount for settlement at the right time. An experienced dispute lawyer can offer you the best advice and experience to get the best outcome for your situation.