Calderbank offers, also known as "without prejudice save as to costs" offers, are a form of settlement offer that can be made in the context of litigation or potential litigation in Australia. They are named after the 1975 case of Calderbank v Calderbank, where the court upheld the validity of a settlement offer made "without prejudice save as to costs" that had been rejected by the other party.

Calderbank offers are often made as a last attempt to settle a dispute before proceeding to trial. They can be a useful tool for parties seeking to avoid the risks and costs associated with litigation. In this Business Kitz article, we will explore the essential elements of a Calderbank offer, their advantages and disadvantages, and how they can be used effectively.

Essential Elements of a Calderbank Offer:

To be effective, a Calderbank offer must meet several essential elements. These include:

1. Offer must be made "without prejudice save as to costs"

The term "without prejudice" means that the offer is made on a confidential basis and cannot be used as evidence in court if the offer is rejected. However, if the offer is accepted and the case settles, the offer can be referred to in court when deciding who should pay the costs of the case.

2. The offer must be a genuine attempt to settle the dispute

A Calderbank offer must be a genuine attempt to settle the dispute. The offer should be reasonable, taking into account the strengths and weaknesses of the case, the costs of litigation, and the likely outcome of the trial. If the offer is seen as a tactical move or an attempt to gain an advantage in the case, it may not be effective.

3. The offer must be clear and unambiguous

The terms of the offer must be clear and unambiguous, so that there is no confusion about what is being offered. The offer should specify the amount of money being offered, the scope of any other relief being sought, and the timeframe for accepting the offer.

Advantages and Disadvantages of Calderbank Offers:

Calderbank offers have several advantages and disadvantages that should be considered before making an offer.

Advantages:

1. Reduced costs: By making a settlement offer, the parties can avoid the significant costs of going to court, including legal fees, court fees, and other expenses.
2. Certainty: A Calderbank offer can provide certainty for both parties. If the offer is accepted, the parties can avoid the uncertainty and risk of going to court. If the offer is rejected, the parties can at least have a better idea of the possible outcomes if the case goes to trial.
3. Control: By making a Calderbank offer, the parties can take control of the dispute resolution process and avoid the uncertainties of going to court. The parties can negotiate the terms of the settlement and come to an agreement that is mutually acceptable.

Disadvantages:

1. Loss of confidentiality: If the offer is rejected, the other party may use the offer to their advantage in court when it comes to the issue of costs. This means that the confidentiality of the offer may be lost.
2. Risk of cost penalties: If the offer is rejected and the case proceeds to court, the party making the offer may be liable for the other party's legal costs, even if they win the case. This is known as “indemnity costs”.
3. Risk of settlement becoming a precedent: If the offer is accepted, it may set a precedent for future cases, which could have implications for the party making the offer.

Conclusion:

In conclusion, Calderbank offers can be a useful tool for parties seeking to settle a dispute before proceeding to trial. However, to be effective, the offer must meet certain essential elements, including being made "without prejudice save as to costs," a genuine attempt to settle the dispute, and clear and unambiguous terms. While Calderbank offers have advantages such as reduced costs, certainty, and control over the dispute resolution process, they also have potential disadvantages, including loss of confidentiality, risk of cost penalties, and the risk of setting a precedent.

Legal Advice:

If you have any questions regarding the legalities surrounding Calderbank offers, please do not hesitate to contact our sister company, Legal Kitz. The Legal Kitz team are happy to assist you. Alternatively you can request to book a free 30-minute consultation with their experienced and highly qualified team via our website now. Additionally, you can also check out the Business Kitz subscription service today to access our full range of legal, commercial and employment documents to begin your business with a solid foundation that ensures compliance.