Alternative Dispute ResolutionCommercial LawFamily LawNewsCalderbank v Calderbank – the intricacies that arise from a case most litigators cite daily

So, who were they?

Calderbank v Calderbank [1975] 3 All ER 333 (EWCA) – it is a case those in the legal profession are all too familiar. It is the case relied upon when making a ‘Calderbank Offer’.  While litigators are familiar with the key features of a Calderbank offer, clients will usually not understand its complexities.

Calderbank v Calderbank – what happened?

After a marriage of 17 years, Mr and Mrs Calderbank separated and filed for divorce, which was duly granted. During the difficulties of dividing the matrimonial assets (including a house which was in Mr Calderbank’s sole name) the matter was referred to the Family Court and the Judge awarded Mr Calderbank only £10,000.00 out of the matrimonial pool of £78,000.00, plus legal costs. However, prior to trial, Mrs Calderbank had proposed an offer that Mr Calderbank keep the home. The trial judge was of the opinion that this house was worth about £12,000, which was £2,000 more than Mr Calderbank later obtained at trial.

Mrs Calderbank, unhappy with the outcome, appealed on two grounds, most relevantly that as Mr Calderbank had obviously declined a reasonable pre-trial settlement offer, he should not be entitled to legal costs for unnecessarily prolonging the legal proceedings.

The Court decided that if a winning party in litigation refuses an earlier settlement offer made by the losing party, the losing party may produce the settlement offer as evidence towards the appropriate level of costs payable. In practice, if the winning party’s award of damages is less than the earlier settlement offer, the losing party may have to pay less costs to the winning party than normal. The Court held that the legal proceedings had been unnecessarily prolonged by Mr Calderbank’s earlier refusal to accept Mrs Calderbank’s settlement offer of around £12,000.

Calderbank Offer

A Calderbank offer is essentially a written offer made on a without prejudice basis.  It is made expressly reserving the right to bring the offer to the notice of the Court on the question of costs if the result for the party served with the offer is not more favourable than what has been offered.

Key Features

The defining features of a Calderbank offer is in 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 – there is no set time however what has generally been considered ‘reasonable’ is not less than seven days;
• 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 or oppose it on a costs argument.

It is vital to consider the intricacies of a Calderbank offer, not only to propose a compelling offer of settlement, but also to ensure that the offer you are proposing knows your client potential has a right for indemnity costs in the instance the other side does not better your offer at a trial judgement.