Claims Recovery Tools: What is a Calerbank Offer?
Every week, we send out a large number of Calderbank offers. Some of our clients have inquired as to what they are. So I decided to talk about Calderbank offers this week.
WHAT EXACTLY IS A CALDERBANK OFFER?
A “Calderbank offer” is named after the decision in the important case of Calderbank v Calderbank from the English Court of Appeal.
It is a written offer made without prejudice in full and final settlement of a claim, including any claim for legal costs. Because the offer is made on this basis, the party making it expressly reserves the right to notify the court of the offer if and when the issue of costs in the case arises.
If a party refuses a Calderbank offer to settle a matter, it proceeds to trial, and that party is successful but their award is less than the declined settlement offer, they will be held to have rejected the offer unreasonably. As a result, any award for court costs made to the winning party may be severely reduced, or the winning party may be ordered to pay the losing party’s costs. The crucial question is whether the offer’s rejection was unreasonable in the circumstances.
What to Include for the Perfect CALDERBANK OFFER?
An effective Calderbank offer should include a statement that it is made in accordance with the principles stated in Calderbank v Calderbank.
In determining whether a rejection of a Calderbank offer was unreasonable, a Court should ordinarily consider the following:
• The stage of the proceedings at which the offer was rejected
• The time allowed to the offeree to consider the offer
• The extent of the compromise offered
• The offeree’s prospects of success, as of the date of the offer
• The clarity with which the terms of the offer were expressed and whether the offer foreshadowed a subsequent offer. [1]
TIME
The stage at which the offer was made, as well as the time allowed for the party to consider the offer, will be critical in determining whether rejecting the offer is reasonable.
If time is not a critical factor, it is prudent to nominate a longer time period, such as 21 – 28 days; if time is a critical factor, what is considered reasonable will depend on the individual circumstances of a matter.
CLARITY
While not required, it may be prudent to provide a sufficiently detailed explanation of the reasons for making the Calderbank offer, as well as the terms and consequences of the offer. Because it is not unreasonable to reject an offer that leaves the offeree in reasonable doubt about what is being offered, an offer accompanied by a sufficiently detailed explanation is more likely to alert the offeree to the extent of compromise being made. Finally, this will help the Court determine whether the offeree’s rejection of the offer was reasonable in all the circumstances.
GOODS AND SERVICES TAX
The offering party must specify whether the Calderbank offer is GST inclusive or GST exclusive. [3]
If you would like Debt Recoveries Australia to prepare a Calderbank offer for you, please contact us at 1300 799 511 or https://debtrecoveries.com.au/contact-us/.
If you require an insurance recoveries professional, please contact Debt Recoveries Australia at 1300 799 511. You can also reach out to me via email at debtrecoveries@debtrecoveries.com.au or Skype at debtrecoveries.