Calderbank Offers in South Australia
From time to time we are instructed to make a “Calderbank offer”. The concept of a Calderbank offer has its genesis in an English Case of Calderbank v Calderbank
- a matrimonial dispute in which the wife had written a ‘without prejudice’ letter containing an offer of settlement and had also made an offer in an affidavit filed in the proceedings, and
- the Court of Appeal ruled that it was not possible to rely on the ‘without prejudice’ letter but it could rely on the offer made in the affidavit.
In England the practice of a ‘Calderbank offer’ was expanded outside family disputes by the Court of Appeal in Cutts v Head
In Australia the practice of making a ‘Calderbank offer’ was endorsed by the New South Wales Supreme Court in Messiter v Hutchinson
“The purpose of a Calderbank letter is, after all, essentially the promotion of settlement of disputes”
[4].
The practice of sending a ‘Calderbank letter’ has since grown. In particular it has been used to support applications for costs on a solicitor/client or indemnity basis. However there are a number of important considerations to bear in mind when making such an offer costs are always in the discretion of the Court
It is highly unlikely that a Calderbank letter will have any effect where the Court Rules provide for the filing of offers or the payment of money into Court. In MGICA (1992) Ltd v Kenny & Good Pty Ltd & Anor (No 4)
“Notwithstanding the policy of encouraging settlement of litigation, it should not be assumed that the mere writing of a ‘Calderbank letter’ generates the same presumptive entitlement to indemnity costs that is provided for in O 23”
Similarly in Morris v McEwen [2005] SASC 284 the defendant did not file his offer in accordance with rule 40 of the District Court Rules. It was therefore not accepted that the plaintiff should receive his costs up to 14 days from the filing of the offer and the defendant should receive his thereafter. The Calderbank letter in this matter was not accepted to have the same affect as though an ordinary Rules of Court offer had been filed. The Court said:
“In order for effect to be given to a Calderbank letter, it should be framed in terms which are consistent with the spirit and intent of Rule 40”.
The existence of such a letter is however a matter that the Court can take into account when exercising its discretion
It is important to be aware that “all inclusive” offers are not considered to be effective
The Court will only have regard to the Calderbank offer when the terms of the offer are more favourable to the successful party than the judgment.
Typically, additional costs incurred after the stated offer will not be recoverable by the party who rejected the offer when the offer was reasonable in the circumstances and should have been accepted. Pursing litigation after a reasonable Calderbank offer is inconsistent with the “Court’s desire to encourage the parties to settle their differences without the need for litigation”.
Therefore when making a decision on whether or not to serve a ‘Calderbank letter’ one must consider:
1 whether or not a filed offer should be made. If it can, then this avenue should be pursued in preference to the informal approach;
2 the offer must not be “all inclusive”, and
3 the existence of such a letter is only one factor that the Court can take into account when exercising its general discretion.
Revised May 2009
[1] [1984] 1 AllER 597
[2] (1984) Ch 290
[3] (1987) 10 NSWLR 525
[4] Supra 528
[5] S 40 of the Supreme Court Act
[6] See Cretazzo v Hombandi (1975) 13 SASR 4
[7] (1996) 140 ALR 707 at 711 and see Duke Group Ltd (In liq) v Pilmer & Others (unreported) SCGRG-92-1874 Judgment No 56699 [1998] SASC 6699.
[8] See Waller & Waller v Flinders Medical Centre & Burns (No 4) (unreported) (2004) SADC 83
[9] See Smallacobe v Lockyer 114 ALR 568
[10] Morris v McEwen [2005] SASC 284 per Besanko J.
