Debt Collection Tools: Calderbank Offers
Hi, my name is Adam Stewart, Debt Collection Expert and owner of Debt Recoveries Australia. We send a lot of Calderbank offers each week. Some of our clients have been asking exactly what they are. So I thought of talking about Calderbank offers this week.
WHAT IS A CALDERBANK OFFER?
A “Calderbank offer“ is named after the decision in Calderbank v Calderbank, an important case from the English Court of Appeal.
It is a written offer made in full and final settlement of a claim, inclusive of any claim for legal costs, made on a without prejudice basis. Being made on this basis, the party making the offer expressly reserves the right to notify the court of the offer if and when the question of costs in the matter arises.
Where 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 unreasonably rejected the offer. Consequently, any award for court costs made to the winning party may be reduced severely, or the winning party may be ordered to pay the costs of the losing party. The critical question is whether the rejection of the offer was unreasonable in the circumstances.
WHAT MAKES AN EFFECTIVE CALDERBANK OFFER?
An effective Calderbank offer should note that it is made in accordance with the principles expressed in Calderbank v Calderbank.
In considering whether a rejection of a Calderbank offer was unreasonable, a Court should ordinarily have regard to 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, assessed as at the date of the offer;
- The clarity with which the terms of the offer were expressed; and
- Whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejection of it. 
The stage at which the offer was made and the time allowed to the party to consider the offer will be crucial in determining the reasonableness of rejecting the offer.
- At a minimum a Calderbank offer would normally be open for at least the time provided by a formal offer, not less than 14 days after service of the offer on the other party; 
- 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.
While not determinative, it may be sensible to provide a sufficiently detailed explanation of the reasons for making the Calderbank offer and of the terms and consequences of the offer. Because it is not unreasonable to reject an offer that leaves the offeree in reasonable doubt as to what is being offered, an offer accompanied by a sufficiently detailed explanation is more likely to place the offeree on notice as to the extent of compromise being made. Ultimately, this will assist the Court to determine whether it was reasonable in all the circumstances for the offeree to reject the offer.
GOODS AND SERVICES TAX
The offering party should specify whether the Calderbank offer includes or excludes GST. 
FOOTNOTESHazeldine’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)
Supreme Court (General Civil Procedure Rules) 2005, Part 2
 Rj Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd  WASCA 128