Calderbank Offers - how to make sure the pen is mightier than the sword
We've all heard the saying "the pen is mightier than the sword", but when it comes to Calderbank offers if you want it to be "mighty" there are some key elements that you should include.
Two recent Queensland Supreme Court decisions, Barboza v Blundy & others  QSC 82 and Mallonland Pty Ltd & Anor v Advanta Seeds Pty Ltd  QSC 132, are a reminder to regularly revisit the key features of a Calderbank offer if you want it to be a "mighty" tool for pursuing a settlement, or in the absence of a settlement, indemnity costs.
What is a Calderbank offer?
A Calderbank offer is the recognised practice of making a "without prejudice" offer but reserving the right to refer to the offer in relation to costs. It derives its name from the English Court of Appeal decision in Calderbank v Calderbank.
Key features of a Calderbank Offer
The defining feature of a Calderbank offer is its form.
While not an exhaustive list, the following key features give an offer the defining form of a Calderbank offer:
- marked "without prejudice save as to costs";
- states the offer is made in accordance with the principles enunciated in Calderbank v Calderbank;
- is clear, precise and certain in its terms and is capable of acceptance;
- states clearly the time in which the offer must be accepted and provides a reasonable time for acceptance;
- provides reasons why the offer should be accepted; and
- states clearly that if the offer is rejected that the offer will be relied on for an application for indemnity costs.
An offer that isn't in the above form won't necessarily make it inadmissible, but the more an offer departs from those key features the more reasonable it may be for the other party to reject it.
Calderbank offers and indemnity costs
The party applying for indemnity costs has the onus of showing why the rejection of a Calderbank offer was unreasonable.
Some of the factors that have been considered by Courts in assessing whether rejection of a Calderbank offer was unreasonable, include:
- when the offer was made – can be made early (including prior to commencement of proceedings) or late in proceedings, but early offers will be treated cautiously if there has been limited ability to assess the other parties' cases;
- time allowed for acceptance – there is no general rule, but where possible an offer should remain open for at least the same period of time as would be required for a formal offer of settlement under the relevant Uniform Civil Procedure Rules. This was a key factor in the recent decision of Mallonland;
- genuine offer of compromise – must contain some element of a genuine compromise and not just be a demand for surrender;
- offeree's prospects of success – to be assessed at the date the offer is made and not based on the ultimate outcome of the proceedings;
- clarity of the terms of the offer – this is where the key features set out above become important; and
- foreshadows an application for indemnity costs – if the offer is not accepted.
In summary, writing a clear, well-formed Calderbank offer can be "mightier", and accomplish more, than the sword of litigation.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.