• Calderbank Letter Template Pdf
• Calderbank Letter Template Printable

• From Calderbank v Calderbank 1976 and originally confined mainly to family property disputes, an offer of settlement made before the trial of an action and contained in a letter written ‘without prejudice’, but expressly reserving the right to bring the letter to the notice of the judge on the issue of costs after judgment in the action.
• A Calderbank offer provides greater flexibility than a Part 36 offer because it is not governed by strict court rules. This is a great advantage because it allows the party making the offer (the 'offeror') to be creative when making their offer, especially when putting forward terms about the length of time the offer remains open for acceptance.

Calderbank Letter Template Pdf

“…without prejudice, save as to costs”

WHAT THEY ARE

However, there are still some circumstances in which Calderbank letters remain a useful mechanism. For more information, see Practice note, Calderbank offers, Standard documents, Calderbank letter from solicitors acting for a defendant (with drafting notes) and Without prejudice save as to costs settlement offer letter from a claimant (with.

A “Calderbank offer“ is named after the decision in Calderbank v Calderbank, an important case from the English Court of Appeal.

It is a written offer made in full and final settlement of a claim, inclusive of any claim for legal costs, made on a without prejudice basis. Being made on this basis, the party making the offer expressly reserves the right to notify the court of the offer if and when the question of costs in the matter arises.

Where 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 unreasonably rejected the offer. Consequently, any award for court costs made to the winning party may be reduced severely, or the winning party may be ordered to pay the costs of the losing party. The critical question is whether the rejection of the offer was unreasonable in the circumstances.

AN EFFECTIVE CALDERBANK OFFER

The offer should note that it is made in accordance with the principles expressed in Calderbank v Calderbank.

In considering whether a rejection of a Calderbank offer was unreasonable a Court should ordinarily have regard to the following:

• The stage of the proceedings at which the offer was rejected;
• The time allowed to the offeree to consider the offer;
• The extent of the compromise offered;
• The offeree’s prospects of success, assessed as at the date of the offer;
• The clarity with which the terms of the offer were expressed; and
• Whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejection of it.[1]

TIME

The stage at which the offer was made and the time allowed to the party to consider the offer will be crucial in determining the reasonableness of rejecting the offer.

• At a minimum a Calderbank offer would normally be open for at least the time provided by a formal offer, not less than 14 days after service of the offer on the other party;[2]
• If time is not a critical factor it is prudent to nominate a longer time period, such as 21 – 28 days;
• If time is a critical factor, what is considered reasonable will depend on the individual circumstances of a matter.

CLARITY

While not determinative, it may be sensible to provide a sufficiently detailed explanation of the reasons for making the Calderbank offer and of the terms and consequences of the offer. Because it is not unreasonable to reject an offer that leaves the offeree in reasonable doubt as to what is being offered, an offer accompanied by a sufficiently detailed explanation is more likely to place the offeree on notice as to the extent of compromise being made. Ultimately this will assist the Court to determine whether it was reasonable in all the circumstances for the offeree to reject the offer.

GST

The offering party should specify whether the Calderbank offer includes or excludes GST.[3]

SOURCES

[1]Hazeldine’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)

[2] Supreme Court (General Civil Procedure Rules) 2005, Part 2

[3]Rj Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128

Court hearings can last weeks and costs can quickly add up to hundreds of thousands of dollars. Many businesses cannot fund ongoing litigation and often it does not make commercial sense to litigate a dispute in court. As a result, the vast majority of commercial litigation matters settle outside of court. One way parties achieve this is by using Calderbank offers. This article explains what a Calderbank offer is and what you should take into account if you have received an offer.

Calderbank Offers 101

What is a Calderbank Offer?

A Calderbank offer is an offer of settlement made by one party to another in an attempt to resolve the dispute. It must be a genuine compromise open for a reasonable period of time. An important feature of a Calderbank offer is that it is made ‘without prejudice save as to costs’. This means that neither party can present the offer as evidence in court, except when determining which party must pay indemnity costs and the amount of those costs.

Indemnity costs refers to the reasonable legal costs that you incur throughout the court proceedings, including:

• fees;
• charges;
• expenses; and
• remuneration.

This means that Calderbank offers play a role in informing the judge’s decision when it is a question of costs. While legal costs are generally paid by the losing party in a court case, this burden can be reversed in the event of a rejected settlement offer.

For example, an employee might sue you for wrongful termination. You can try to offer them a reasonable out of court settlement, but they may refuse it. If they win the case in court and are awarded a similar remedy, then you can raise the original offer as evidence that the former employee should bear the burden of paying their own costs as well as your legal costs. This is because they have unnecessarily extended the legal proceedings by refusing to accept your reasonable offer.

Why is it Called a Calderbank Offer?

The terminology of a “Calderbank offer” comes from the landmark case of Calderbank v Calderbank. This important decision established the idea that when a successful party in a case refuses to accept an earlier settlement offer from the unsuccessful party, this rejection of the offer can be used as evidence when deciding who is responsible for financing the legal costs of the case.

Calderbank Letter Template Printable

For this to be the case, the terms of the offer outlined in the Calderbank letter must be reasonable and comparable to the sum awarded by the court.

Considering the Calderbank Offer

You should fairly consider all Calderbank offers you receive. When considering the offer, there are three important considerations to keep in mind.

1. Prospects of Success at a Final Hearing

Your lawyer can provide you with legal advice on your prospects of success. They can also help you decide whether to accept a Calderbank offer or, alternatively, draft a reasonable counter-offer.

2. The Value of Your Case

Make sure you are realistic about the value of your claim and modest in your estimates. It may be useful to think about how your claim value compares to the costs you will incur to carry the case forward. Balance these considerations against the Calderbank offer you have received. Remember that it can often be 9-12 months before you find yourself at a hearing.

3. The Cost of ‘Winning’

Imagine succeeding at a final hearing, only to find out the opposing party has empty pockets – not exactly a favourable result. Think about whether the other party will be able to pay if you ‘win’, or whether their funds may be chewed up preparing for the hearing.

Not Accepting the Calderbank Offer

Each party should seriously and genuinely consider any offer of settlement they receive. A court may feel your rejection is unreasonable if an offer is a reasonable compromise, expressed clearly and precisely. If this is the case, the court may order you to pay the other party’s court costs.

However, you do not have to accept a Calderbank offer. If you are not given sufficient time to consider the offer, or it is too early to determine the full extent of each party’s position, acceptance may not be the right course of action. If you do not accept the offer, consider making a reasonable counter-offer. In the process of dispute resolution, it is always better to try to negotiate, rather than put up a brick wall.

Key Takeaways

A Calderbank offer can be a powerful tool in settlement negotiations. It can encourage parties to negotiate candidly and make a genuine effort to reach a compromise. Parties must reasonably consider all Calderbank offers made, or risk an unfavourable costs order even if they do ‘win’.

If you have questions about whether to make or accept a Calderbank offer, or how to do so, get in touch with LegalVision’s litigation lawyers on 1300 544 755 or fill out the form on this page.

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