15/09/2016, 03:24:PM
15/09/2016, 03:24:PM
Calderbank Offers – what are they?
Disputes are an inherent part of life. Nobody wants a dispute, though they naturally occur due to difference of opinion on issues that are standing. As most prudent people would appreciate, the best solution is an amicable outcome without the need to litigate in either a tribunal or court on the disputed matter.
One of the methods to bringing a dispute to an end is through the use of offers of compromise that incorporate the so called Calderbank offer.
So what is a Calderbank offer?
This type of offer originates from the English case Calderbank v Calderbank [1975]. This case concerned whether a ‘without prejudice’ offer to settle, could have the confidentiality waivered in order to rely upon the proposed offer in seeking an application for indemnity costs.
Our society from a public policy and private interest point encourages offers of compromise to settled disputed matters, which aims and does reduce costs of litigating.
Offers of compromise occur daily in many aspects of life, whether it be working in an office or building site, compromise is a part of what we do and what makes society develop and move forward.
Sometimes the disputed argument is a matter of principle and is well founded but just not worth pursuing to the end due to the cost to litigate. Legal costs are just not about what comes out of your savings account, but more so, how much emotionally it will take away from you with stress, worry and the impact on your immediate family and work life. This is not saying that you should throw away a well-founded claim, but more so to consider the entire consequence of the dispute, and what is the best way to reach a resolution so you can move forward with your life.
In relation to offers of compromise the court in Cutts v Head [1984] made a very clear statement how such offers should be considered when a Calderbank offer is used:
“If a party is exposed to risk as to costs if a reasonable offer is refused, he is more rather than less likely to accept the terms and put an end to the litigation. On the other hand, if he can refuse reasonable offers with no additional risk as to costs, it is more rather than less likely to encourage mere stubborn resistance.”
Putting this case point in an example, lets say there is a dispute on breach of contract, and Party A is the one that has been wronged, and Party B is the person that committed the wrong. Now if Party A wants $80,000 settlement, and Party B has offered $60,000 on the basis of a Calderbank offer, and if Party A refuses and pursues the claim to full litigation and wins, but only receives and Order to be paid $45,000, Party B may apply for a costs claim against Party A, for failure to accept a reasonable offer from the date which it was made.
The basic rule as to costs in court proceedings is that costs follow the event, subject to the courts discretion. The making of a Calderbank offer is one of the discretions the court may consider in issuing a costs order relative to the parties.
Calderbank offers relate to indemnity costs, and if a party is successful at litigating their dispute, whether it be a tribunal or court, the successful party may seek a different cost order than when costs follow the event due to the Calderbank offer.
Offers of compromise are important tools in attempting to reach a resolution of a dispute without proceeding to a full hearing and judgement, and should be considered at an early outset in the dispute between the parties.
The drafting of offers of compromise need to be carefully prepared and reasonable on the circumstance. So before you start that claim, get that legal advice to protect your legal rights and interests.
The comments in the aforementioned do not constitute legal advice and are general in nature, and if legal advice is required please contact: John Melis at Legal AU Pty Ltd (03) 9999 7799
Legal AU Pty Ltd Lawyers are “Liability limited by a Scheme approved under Professional Standards Legislation.”
