A Calderbank offer is a vital strategic tool for resolving disputes in litigation. These offers allow parties to make settlement proposals that can have significant implications on costs if the dispute proceeds to court. In this article, our expert litigation lawyers explore what Calderbank offers, how to use them effectively, and the benefits they can provide in managing legal disputes.
If you’re considering a Calderbank offer or need advice on how to respond to one, contact our expert litigation solicitors at 0207 459 4037 or book a Free Consultation through our online booking form.
What is a Calderbank Offer?
A Calderbank offer is a settlement proposal marked “without prejudice save as to costs,” meaning that if the offer is not accepted, it cannot be referred to during the trial itself. However, if the case goes to court, the offer can be presented when deciding who should bear the costs. Essentially, Calderbank offers encourage settlement and protect the offering party’s position on costs.
Example: Consider a case where Best Builders Ltd. offers to settle a commercial dispute with Green Solutions for £50,000 via a Calderbank offer. If Green rejects the offer and the court later awards them only £45,000, the court may order Green to pay Best Builders’ legal costs. This puts pressure on both parties to carefully consider reasonable settlement proposals.
How Does “Without Prejudice Save as to Costs” Work?
The term “without prejudice” ensures that the content of the offer remains confidential during the trial, meaning it cannot be used to prejudice the offering party’s case. The “save as to costs” element means that, while the offer is protected during the trial, it becomes relevant if the case goes to a costs hearing. The court may consider the offer when deciding which party should pay the legal costs, particularly if the rejecting party receives a less favourable outcome.
Example: In a dispute between Oak Estates and Urban Engineering Ltd. Oak Estates offers to settle the case for £100,000 with a Calderbank offer. Urban Engineering rejects the offer, and after the trial, they are awarded only £90,000. The court may penalise Urban Engineering by ordering them to pay a portion of Oakwood’s legal costs due to their refusal of a reasonable settlement.
Calderbank vs. Part 36 Offers: Key Differences
Both Calderbank offers and Part 36 offers are designed to encourage settlements, but they have key differences. See the comparison table below to help you understand how each works:
| Feature | Calderbank Offer | Part 36 Offer |
| Flexibility | Offers flexibility in setting terms and conditions. | Must comply with strict procedural rules (e.g., 21-day minimum acceptance). |
| Costs Consequences | Costs are at the court’s discretion based on reasonableness. If costs are not agreed, they are subject to detailed assessment. | Costs consequences are automatic if the rejecting party fails to achieve a better outcome at trial. If costs are not agreed, they are subject to detailed assessment. |
| What is Detailed Assessment? | In Calderbank offers, costs may be part of a global offer or assessed separately. If not agreed, costs are assessed in detail by the court to decide how much the winning party can recover. | Under Part 36, costs are assessed by detailed assessment if not agreed, where the court reviews each cost claimed by the winning party to ensure they are reasonable and proportionate. |
| Applicability | Used in small claims, arbitration, or cost-only proceedings where Part 36 does not apply. | Primarily used in most types of court proceedings (but not small claims or cost-only proceedings). |
| Formality | Less formal, allowing parties to tailor the offer to suit the case. | More formal, with stricter rules and specific language required. |
When to Use a Calderbank Offer
1. As a Defendant Seeking to Avoid Part 36 Automatic Costs
For defendants, a Calderbank offer is particularly useful in cases where you want to avoid the automatic costs consequences of Part 36 offers. If a claimant makes a Part 36 offer and you reject it, you could automatically be liable for the claimant’s costs if they achieve a better result at trial. However, with a Calderbank offer, the court has discretion and can consider the reasonableness of both the offer and the rejection before deciding on costs.
For example, suppose Smith’s Furniture is being sued by HomePro Supplies and wants to propose a settlement without triggering automatic cost penalties. Smith’s makes a Calderbank offer of £75,000. If HomePro rejects the offer and achieves a lesser outcome, Smith’s can argue that their offer was reasonable, and the court can decide whether HomePro should pay Smith’s legal costs, rather than the automatic imposition of costs that would come with a Part 36 offer.
2. In Small Claims and Cost-Only Proceedings
In small claims disputes or solicitors-only detailed assessment proceedings, Part 36 offers do not apply. Calderbank offers are the best option in these cases to encourage settlement and protect your position on costs. For a detailed discussion of why Part 36 does not apply to cost-only proceedings, see our article “Does Part 36 Apply to Solicitors Act Detailed Assessment Proceedings?”.
3. To Encourage Early Settlement
A Calderbank offer made early in litigation can signal a willingness to resolve the matter without a costly trial. This shows the court that you are acting reasonably and proactively, which could influence its decision on costs later.
4. In Complex or High-Stakes Disputes
In disputes with unpredictable outcomes, a Calderbank offer can shift the balance of power. By making a fair settlement proposal, you pressure the opposing party to consider the risks of going to trial, where they might face significant cost penalties.
5. Before Major Litigation Stages
Making a Calderbank offer before key stages—such as disclosure or expert testimony—can prompt the other party to settle before incurring significant legal expenses. This can help you avoid the high costs associated with taking the case all the way to trial.
Our Successful Case Study: Helping a Couple Recover £100,000
At Go Legal, our expert lawyers have a track record of successfully recovering significant sums through strategic litigation approaches, including the use of Calderbank offers.
Case Study: Problem
A couple in London invested over £100,000 into a property purchase and development deal arranged by another company. When the transaction fell through, they did not receive their investment back for almost a year, despite numerous promises from the company’s director.
Outcome
Our lawyers were instructed to pursue bankruptcy proceedings against the director, who had personally guaranteed the investment. Within just three weeks of instruction, we recovered the full £100,000, along with £14,000 in interest and 100% of our clients’ legal costs.
How We Did It
We developed a strategic plan tailored to the situation. By using a combination of litigation tactics and negotiation, we were able to settle the dispute quickly and effectively, recovering the full amount owed plus interest and legal fees. Our clients were extremely pleased with the swift outcome.
If you are dealing with non-payment or an outstanding dispute, contact us today for a Free Consultation at 0207 459 4037 or complete our booking form online to schedule a consultation.
Costs Consequences of Refusing a Calderbank Offer
If a Calderbank offer is refused and the rejecting party fails to achieve a better result at trial, the court may penalise them by ordering them to pay the offeror’s costs. Unlike Part 36 offers, where cost penalties are automatic, Calderbank offers give the court broad discretion to consider the circumstances of the case.
Key Factors the Court Considers:
- Timing: Was the offer made early enough to give the other party a reasonable opportunity to consider it?
- Reasonableness: Was the offer fair and reasonable given the strength of both parties’ cases?
- Conduct: How did both parties behave during the litigation? The court will weigh the conduct of both sides when deciding on costs.
Case Law on Calderbank Offers
Our lawyers have set out below an overview of key legal precedents concerning Calderbank offers, providing essential insights into their application and judicial interpretation:
| Case | Details | Key Takeaways |
| Calderbank v Calderbank [1975] | This landmark case involved a matrimonial dispute. Mrs. Calderbank offered to transfer property before trial, but Mr. Calderbank refused. The court later awarded him a smaller sum, and Mrs. Calderbank was awarded costs due to his refusal of a more favourable offer. | Refusing a reasonable settlement can result in costs penalties if the court deems the offer was reasonable. |
| Reed v Reed [2004] EWCA Civ 887 | The court ruled that settlement offers marked simply as “without prejudice” could not be referred to during costs assessments, as they lacked the specific “without prejudice save as to costs” wording. | Precise wording is crucial in settlement offers to ensure they can be referred to when determining costs. |
| Pickfords Ltd v Celestica Ltd [2003] EWCA Civ 1741 | This case dealt with general settlement offers rather than Calderbank offers. The court considered whether a second offer implied the withdrawal of a previous one. The court ruled that depending on the context, new offers could imply withdrawal of prior ones. | When making multiple offers, including Calderbank offers, it is important to clarify if a new offer supersedes the previous one. |
Common Questions About Calderbank Offers
Q1: What should a Calderbank offer include to be effective?
A Calderbank offer should be marked “without prejudice save as to costs” and outline clear terms for settlement, including the amount, actions to be taken, and a time limit for acceptance. It should also provide a rationale explaining why the offer is fair, which can increase its credibility if presented during a costs assessment.
Q2: When is the best time to make a Calderbank offer?
A Calderbank offer can be made at any stage of the dispute, but it is most effective when both parties understand their positions and the potential outcomes. Early in the litigation process, it can serve as a strategic tool to pressure the other party to settle, but it may also be beneficial to wait until after key evidence has been exchanged.
Q3: Can a Calderbank offer be withdrawn, and how should this be done?
Yes, a Calderbank offer can be withdrawn at any time before acceptance. To withdraw an offer, provide written notice to the other party and clearly state that the offer is no longer open. Keep records of this withdrawal for future reference in case it is brought up during litigation.
Q4: What happens if a Calderbank offer is rejected?
If a Calderbank offer is rejected and the case proceeds to court, the offer can be presented during the costs assessment. If the rejecting party fails to secure a better result, the court may order them to pay the offeror’s costs.
Q5: Can I negotiate terms in a Calderbank offer?
Yes, the recipient can negotiate or make a counteroffer. However, making a counteroffer generally implies rejection of the original offer, so both parties should carefully consider the implications before responding.
Q6: Is a Calderbank offer legally binding once accepted?
Yes, once accepted, a Calderbank offer creates a legally binding contract. The terms of the settlement must be adhered to, and failure to comply can result in further legal action to enforce the agreement.
Q7: What are the risks of making a Calderbank offer?
The main risk is that the court has discretion when deciding costs consequences. Unlike Part 36 offers, where cost implications are automatic, the court may choose not to penalise the rejecting party if it finds the offer was not reasonable or if the circumstances do not warrant it. Drafting a clear, reasonable offer mitigates this risk.
Q8: Can a Calderbank offer be used in arbitration or other forms of dispute resolution?
Yes, Calderbank offers can be used in arbitration, mediation, and other forms of alternative dispute resolution. They are versatile and not limited to court proceedings, making them an effective tool for various dispute contexts.
Q9: How does the court decide if a Calderbank offer was reasonable?
The court considers factors such as the timing of the offer, its clarity, and whether it represented a genuine attempt to settle the dispute. If the court finds that the offer was reasonable and that the rejecting party acted unreasonably, it may impose costs penalties on the rejecting party.
Q10: Can I make multiple Calderbank offers during the course of litigation?
Yes, you can make multiple Calderbank offers. However, be mindful that a new offer may imply the withdrawal of a previous one. It is important to specify in the new offer whether it supersedes the earlier ones to avoid any ambiguity.
Our Winning Approach to Calderbank Offers and Commercial Litigation
Effectively leveraging Calderbank offers requires strategic planning and expertise. Our commercial litigation team has a proven track record of using Calderbank offers to secure favourable settlements in a range of disputes, from small claims to multi-million-pound cases. Our approach includes:
- Free Initial Consultation: Get tailored advice from a qualified lawyer on making or responding to a Calderbank offer.
- Customised Strategy: We develop a bespoke litigation strategy designed to maximise your chances of settlement and minimise risk.
- Expert Analysis: Our team will analyse the cost implications and benefits of using a Calderbank offer, ensuring you are fully informed of your options.
- Secure Communication: Use our secure portal, Go Transfer, for confidential document sharing.
- 24/7 Support: Access a WhatsApp group with your legal team and a 24/7 chat feature for prompt responses and ongoing support throughout your case.
- Flexible Funding: We offer flexible payment options, including fixed fees and “no win, no fee” arrangements to suit your financial needs.
Contact our expert commercial litigation team today at 0207 459 4037 or book a Free Consultation through our online form.
Leveraging Calderbank Offers for Strategic Settlement
Calderbank offers are a powerful tool for resolving disputes efficiently while protecting your financial interests. When used strategically, they can influence the outcome of settlement negotiations and safeguard your position on costs if the case proceeds to court.
By drafting a clear and reasonable offer, you increase your chances of a favourable result—whether through settlement or litigation. If you’re considering making or responding to a Calderbank offer, our experienced team can guide you through the process. Contact us today at 0207 459 4037 or book a Free Consultation online to ensure your interests are fully protected.
