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 Calderbank Offers |
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Author: Authors: Michelle Castle and Maurice PolkinghorneWhat is the correct approach to reviewing Calderbank offers? This question was considered in the NSW Court of Appeal case of Jones v Bradley (No 2) [2003] NSWCA 258 before Meagher, Beazley and Santow JJA.
There are two lines of authority on the question of what effect a Calderbank offer has on the court’s discretion in awarding costs. The first is that there should be a prima facie presumption that the party rejecting the offer should pay the costs of the other party on an indemnity basis from the date of the making of the offer, where that party does not receive a result more favourable from the court: Multicon Engineering Pty Ltd v Federal Airports Corp (1996) 138 ALR 425.
The second authority is that the court may have regard to an offer in circumstances where a party does not do better than the offer. However, an offer does not automatically bring a different order as to costs as all the circumstances of the case must be considered: SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323.
In that case his Honour Justice Giles said:
The making of an offer of compromise in the form of a Calderbank Letter ... where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure. [37]
The Court of Appeal held that the latter approach is to be preferred. The court said:It is worth pausing to note that the difference between the two lines of authority may be “more apparent than real” as in either approach the court must consider all the circumstances of the case: see CBA Investments Limited v Northern Star Limited (No 2) [2002] NSWCA 164. Be that as it may, we consider that the approach taken by the Court in SMEC Testing Services is correct and is the approach which should be consistently applied when dealing with Calderbank offers.
This is an excerpt from COSTS WATCH, Vol 10, No 2, March 2003, published by Thomson Lawbook Co.
April, 2004
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