What is a Calderbank offer, and when it should be used?
A Calderbank offer, otherwise known as a “Without Prejudice Save as to Costs” offer, is a tactic that can be used to settle a dispute for a lower amount and avoid going to a court trial.
This tactic is named after a case from 1975 in the English Court of Appeal, between Mr and Mrs Calderbank.
A Calderbank offer is an offer made by one party to the other side of a dispute. It puts the other side on notice that if the dispute goes before a court, and the outcome is less favourable to the other side than the Calderbank offer being made to them, the party making the offer is entitled to more of their costs of the trial process being recovered, as the court may take into account the offer when they decide on the costs awarded.
It was decided in the 1975 Calderbank v Calderbank case that the offer, made by Mrs Calderbank before the dispute proceeded to the courts, showed she had a willingness to settle the dispute. If Mr Calderbank had accepted the offer that was made to him before trial, then he would have actually been in a better position as the judgment was less favourable to him than Mrs Calderbank’s offer, and neither party would have had to go through the court process. It was also held by the court that Mrs Calderbank was entitled to her costs as from the date that she made her willingness to settle known.
Either side of a dispute can make a Calderbank offer. If the defender of a dispute offers to settle out of court but for a lower amount than is being pursued, and the plaintiff rejects the offer, this Calderbank offer may be taken into account by the Judge when costs are being awarded. The plaintiff may be successful in their claim against the defendant in court, but for a lower amount than what the defendant offered them to settle out of court in their Calderbank offer. In this situation, the Judge can reduce the costs that are payable by the defendant to the plaintiff, leaving the plaintiff with an even lower amount in the end than first sought.
In the same dispute, it may be the plaintiff that makes a Calderbank offer to the defendant to accept to settle out of court for a lesser amount than they were originally claiming. If the defendant thinks they may get a better outcome at trial and refuses this offer, and the plaintiff is awarded a greater amount at trial than their Calderbank offer, the plaintiff may be able to seek increased costs from the defendant.
It is important to weigh up carefully whether to make or to reject a Calderbank offer. It is important to work out if you would want to make such an offer, and when you would make it, as costs are awarded from the date a Calderbank offer is refused. It is equally important to consider at what point you would want to refuse an offer, and similarly when you would be prepared to accept it and settle the matter without proceeding to court.