Did you know – The principles for when offers can be relied upon to obtain a cost advantage were first outlined in the case of Calderbank v Calderbank (1975) 3 ALL ER 333, hence the term “Calderbank-offer”. The critical question the Court will ask when considering a Calderbank-offer is whether the rejection of the offer was unreasonable in the circumstances. In assessing the “reasonableness” of an offer, the Court has set out the following essential elements of what should be included when a Calderbank offer is made:
- The terms of settlement must be clear and it should be recorded that the offer is made as a “Calderbank offer”.
- The offer must be genuine and set out your contention. An explanation must be given as to why the offer should be accepted. For example, in the case of a credit hire car claim, that the duration of hire is inconsistent with the repair duration.
- It should be marked with the words “Without Prejudice Save As To Costs” (or something similar). This means that the offer can be relied upon in Court when establishing which party will pay legal costs in a proceeding, but cannot be used by the other party to prove any concession or admission made in the offer.
- It should record that indemnity costs will be applied for in the event a more favourable result is obtained. This will allow an application being made, following the outcome of the hearing of the matter, for the other side to pay costs in certain jurisdictions above the normal scale costs (on an indemnity basis).
- The time period open for acceptance of the offer must be noted and reasonable in the circumstances so as to allow the other party sufficient time to consider an acceptance of the offer. The circumstances of each claim will determine how long a reasonable period would be, however in general a period of 14 days is reasonable within the context of a pre-litigation offer.
When I act for the party that is seeking a recovery, I usually end the offer with the paragraph “The offer is open for acceptance for a period of 14 days. Should the offer not be accepted and my client obtains a judgment more favourable than the offer being made, then this correspondence will be used on the issue of costs with an application being made for indemnity costs or costs on a solicitor and client basis from the date of this correspondence. Such application will be in accordance with the principles applied in Calderbank – v – Calderbank (1975) 3 ALL ER 333.”
When I act for the party who has to pay the other party’s claim, I end the offer with the paragraph “The offer is open for acceptance for a period of 14 days. Should the offer not be accepted and your client obtains a judgment less favourable than the offer being made, then this correspondence will be used on the issue of costs with an application being made for indemnity costs or costs on a solicitor and client basis from the date of this correspondence. Such application will be in accordance with the principles applied in Calderbank – v – Calderbank (1975) 3 ALL ER 333.”
About me (Fred van Reede) – I’ve been an insurance litigation lawyer for more than 20 years and I’m responsible for the William Roberts team that does all Queensland, South Australia and Western Australia matters.
