Essential elements of a Calderbank offer

Overall requirement

The failure to accept a Calderbank offer will almost always be considered by the courts when deciding whether to order indemnity costs.

The refusal to accept an offer does not automatically result in an award of indemnity costs. The legal basis for an award of indemnity costs is when the rejection of the offer was unreasonable or imprudent. All of the circumstances must therefore be taken into consideration. It is for the party seeking indemnity costs to show that the other party acted “unreasonably or imprudently” in not accepting the Calderbank offer. This means that, for example, if the plaintiff wants indemnity costs from the defendant, it will need to show that the defendant’s rejection of the plaintiffs offer was unreasonable or imprudent.  Following these “elements” should assist a party in being able to demonstrate whether the rejection was unreasonable or imprudent.

Main elements

The following rules and elements should assist in drafting an effective Calderbank offer:

1. Give the person sufficient information to know the relevant facts in the proceedings, and so that they can appreciate the difficulties in their case;
2. Ensure that there is sufficient time to consider and accept the offer. A single day is unlikely to be enough, we usually recommend seven days for relatively simple matters and 14 days for complex matters from when the other party receives the offer. If there is a long weekend or Christmas holidays, consider extending the offer.
3. Make a compelling offer. Usually an offer will need to be less than what the court orders. For example, if you determine you will win $100,000 at trial, then you will want to make your offer less than $100,000. Sometimes it is difficult to predict what the court will offer, so this is possibly the most difficult element to fulfiil;  and  
4. Ensure that the offer outlines clear and unambiguous terms.

Best practice

Where possible, try to:

1. Place at the top of the correspondence “Without prejudice, save as to costs“;
2. Include on the letter the date you send the correspondence;
3. Tell the other party that you will rely on the offer for indemnity costs;
4. Try to keep the Calderbank offer quantifiable in monetary terms (avoid public apologies for example);
5. Do not include legal costs where possible, or otherwise fix legal costs;
6. Make offers as often as possible throughout the proceedings;
7. State that the offer is pursuant to the terms in Calderbank v Calderbank [1976] Fam 93;
8. Don’t include multiple plaintiffs in the same Calderbank offer unless they can properly assess each claim and not be disadvantaged from accepting the offer because of the inclusion of other plaintiffs;
9. Don’t lose on a dominant or separable cause of action, and if you consider there is a risk you might lose part of your case, make provisions for that, or factor that into the Calderbank offer;
10. Ensure you make a fresh offer on appeal; and
11. If safe to do so, make an allowance for interest.

Conclusion

To rely on a Calderbank offer for indemnity costs, you have to show that the other party unreasonably or imprudently rejected the offer. In order to establish this, there are elements and best practice rules that have been outlined above which should assist.

Don’t risk embarking on litigation by yourself, for fear of the financial cost being too high. We offer flexible payment arrangements, and in many cases, well-run litigation can improve your chances of an indemnity costs order, so that all or most of your legal fees are covered.

For when you need help

If you wish to make or have received a Calderbank offer, one of our experienced team of solicitors will be happy to help you. Contact Gibbs Wright Litigation Laywers today for a confidential initial consultation to explore your options.