What is a Calderbank Offer?

Author: Ian Aldridge, Progressive Legal

Court hearings can last a long time and the costs can quickly add up. Before you know it, you might find yourself in court for weeks, facing expenses that could reach hundreds of thousands of dollars. To avoid this scenario, it’s worth considering if a Calderbank offer is a good choice for you.

Calderbank offers are a practical way to settle a dispute without the need for expensive and prolonged court cases. In this article, we’ll explain what a Calderbank offer is, including its features, background, what it needs to include, and the consequences of rejecting one.

What is a Calderbank Offer?

A Calderbank offer is a written proposal from one party to another aimed at settling a disagreement. Its main goal is to promote negotiation over costly court battles. These offers help settle disputes at a cost lower than what going to trial might incur for both sides.

What are the characteristics of a Calderbank offer?

A Calderbank offer includes several key aspects when being created and evaluated. A standout feature is their ‘without prejudice save as to costs’ nature.

These offers must be serious and available for a reasonable amount of time. If one is turned down without good reason, the party who rejected it may have to pay extra legal costs.

A Calderbank offer also serves as a safeguard for those who might otherwise face unnecessary expenses. They are widely recognised in almost all disputes in Australia, with the exception of criminal cases.

What is the origin of Calderbank offer?

The concept of the Calderbank offer comes from a landmark English Court of Appeal case,  Calderbank v Calderbank [1975] All ER 333, known as “Calderbank.” This case set the precedent that if a party successfully wins a case but had earlier rejected a reasonable settlement offer, this fact can influence decisions about who pays the court costs.

The case involved Mr. and Mrs. Calderbank disputing over assets after their divorce. Mrs. Calderbank made a reasonable settlement offer before the court proceedings, which Mr. Calderbank declined. Even though Mr. Calderbank won the case, he was ordered to pay the legal costs because his rejection of the settlement offer was deemed unreasonable and prolonged the process unnecessarily.

What should a Calderbank offer contain?

1. The phrase “without prejudice save as to costs”

This ensures the offer is considered in cost decisions if not accepted.

2. Clarity, precision and certainty in its terms

This makes the offer straightforward and understandable. As seen in  Kemp v Ryan [2012] ACTCA 12, the offer needs to be “sufficiently clear” to form a binding contract, avoiding any ambiguous terms.

3. Ability to be accepted

This ensures the offer is actionable.

4. A reasonable timeframe of acceptance

There is no fixed ‘reasonable’ time for acceptance. The typical recommendation is between 14 to 28 days, though this can vary depending on the context.

5. A statement that it follows the principles established in Calderbank v Calderbank 

This indicates that if the offer is declined and the offering party achieves a better outcome in court, they may seek indemnity costs.

6.  Include reasons as to why the Calderbank offer should be accepted

This isn’t essential, however it’s recommended. Including reasons for acceptance can strengthen the offer’s perceived reasonableness, as seen in NMFM Properties Pty Ltd v Citibank Ltd [2001] 109 FCR 77 (No 2). 

This can influence the decision on indemnity costs, though as noted in Macquarie Bank Ltd v National Mutual Life Association of Australasia Ltd, specifying reasons for potential failure or why the offer should be accepted is not a strict requirement. 

What happens if you refuse a Calderbank offer?

Refusing a Calderbank offer doesn’t automatically lead to indemnity costs against you, but it is a significant factor courts consider when deciding on such costs.

Judges look at whether rejecting the offer was unreasonable or unwise, also checking if the offer met all the criteria of a Calderbank offer.

The party asking for indemnity costs must show the refusal was unreasonable. If the court agrees the rejection was unreasonable, it often results in indemnity costs being awarded.

Key takeaways

A Calderbank offer may be the most suitable option for you if you are seeking settlement negotiations. It encourages genuine compromise and negotiation where a formal offer is undesirable.

It can be an excellent way to avoid long and expensive trials in court and be beneficial for both parties. Parties must reasonably consider Calderbank offers to avoid unnecessary costs, even if you are successful in court. 

If you have questions about whether to make or accept a Calderbank offer, or how to do so, contact our dispute resolution lawyers by requesting our advice below or calling us on 1800 820 083.

Calderbank Offer FAQs