What is a Calderbank Offer or Letter?

A Calderbank offer, named after the case of Calderbank v Calderbank [1975] 3 All ER 333, is a type of settlement offer made in civil litigation. This offer is typically made on a “without prejudice save as to costs” basis, meaning that it cannot be presented as evidence during the trial to prove liability or fault. However, it can be used after the trial to determine who should pay the legal costs. The purpose of a Calderbank offer is to encourage parties to settle disputes early and avoid the costs and time associated with going to trial.

A Calderbank letter serves several strategic purposes:

  • Encourages Settlement: It provides a formal method to propose settlement terms without admitting liability, encouraging parties to consider settlement seriously.
  • Cost Implications: If a Calderbank offer is unreasonably refused and the refusing party does not achieve a better outcome in court, they may be ordered to pay the legal costs of the offering party from the date the offer was made.

What Key Items MUST Be in a Calderbank Offer?

To ensure that a Calderbank offer is effective, it must include certain key elements:

  1. Clear and Precise Terms: The offer must be detailed and specify the exact terms of settlement, including any amounts to be paid and any other conditions.
  2. Without Prejudice Save as to Costs: This statement must be included to ensure that the letter cannot be used as evidence of liability but can be referred to when determining costs.
  3. Reasonable Time for Acceptance: The offer should allow the recipient a reasonable period to consider and respond to the offer.
  4. Costs Implications Warning: The offer should clearly state that if the offer is not accepted and the matter proceeds to trial, the party rejecting the offer may face adverse costs consequences if they do not achieve a better outcome than what was offered.
  5. Sincerity and Genuineness: The offer must be genuine and made in good faith. It should reflect a realistic, genuine attempt to settle the dispute.
  6. Refer to Calderbank Case:  The offer is made in accordance with the principles enunciated in Calderbank v Calderbank.It is also important to note that a well-crafted Calderbank offer should outline the specific reasons why the offer is reasonable and why it would be unreasonable not to accept.  This can help in persuading the other party to seriously consider the offer.

 

When to Use a Calderbank Offer?

Calderbank offers are particularly useful in several scenarios:

  1. Pre-Litigation: Making an early Calderbank offer before formal litigation begins can set a tone of reasonableness and willingness to settle, potentially avoiding the need for court proceedings.  It also starts the clock ticking on ability to potentially recover significant legal costs if the Court awards more than what is in the offer.
  2. During Litigation: At any stage of litigation, a Calderbank offer can be used to prompt the other party to reconsider their position, especially if new evidence has emerged or the case dynamics have changed.
  3. Before Final Hearing: As the trial date approaches, making a Calderbank offer can serve as a final attempt to avoid the costs and risks of a full trial.
  4. Complex Cases: In complex litigation where the costs are likely to be significant, Calderbank offers can be a strategic tool to limit financial exposure and also put pressure on the other side to settle.
 

Making a Calderbank offer can be a strategic move in litigation, especially in complex cases where legal costs can escalate quickly. It demonstrates a willingness to settle and can shift the cost burden if the offer is unreasonably refused. If the opposing party rejects the offer and fails to achieve a better outcome in court, they may be liable for costs incurred from the time the offer was made.

Conclusion

Understanding and effectively using Calderbank offers can be a crucial element in civil litigation strategy. They encourage early settlement and can significantly impact the cost implications of a case. If you are involved in litigation and considering a Calderbank offer, consult with experienced legal counsel to ensure the offer is drafted correctly and serves your strategic objectives.

Call to Action

If you need assistance with drafting a Calderbank offer or have questions about how to use them effectively in your case, contact Milicevic Lawyers. Our experienced team can provide the guidance and support you need to navigate complex legal disputes efficiently and cost-effectively.

Disclaimer: This article is provided as general information only. Get your own legal and professional advice on your circumstances before taking any action or making any decision.

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