What does an English couple getting divorced nearly 50 years ago have to do with resolving disputes today? A Calderbank offer can have implications for how costs are paid by people involved in legal proceedings.
Jacqueline and John Calderbank separated in 1973 after 17 years of marriage. After they separated, there was a dispute about how the family assets. The dispute went to Court, but prior to the trial Jacqueline wrote to John telling him that she was willing to let him have the family home which was valued at £12,000. John refused the offer and the matter went to trial. At trial, John was awarded assets and money valued at £10,000 – less than what he had been offered earlier.
Because John had refused the offer from Jacqueline, and ultimately received less after going to trial, the Court said that he had unreasonably declined Jacqueline’s offer. For this reason, even though John had been somewhat successful at trial, the Court awarded legal costs against him.
So what does this mean for us today? The Court wants people to resolve disputes without resorting to legal proceedings if this is possible. To encourage people to accept reasonably settlement offer, if a party in a conflict unreasonably declines a settlement offer prior to trial, the Court could award costs against that party. The Court may decide that an offer is unreasonably declined if:
- The party declining the offer is entirely unsuccessful at trial, or
- The party declining the offer is successful at trial, but the outcome at trial is less or equal to what had been offered.
However, if there are reasonable grounds for declining an offer, the Court may not award increased costs. For example, if an offer is made to pay $50,000 to settle a dispute but includes a confidentiality clause, a party who has genuine reasons for not wanting confidentiality could reasonably decline that offer.
A letter making a Calderbank offer usually has the heading “without prejudice save as to costs”. This means that a Calderbank offer cannot be referred to in legal proceedings except if arguments need to be made about costs. This means that a Calderbank offer can propose a lower monetary amount than what is sought at trial – in fact this is usually good strategy because it increases the chances of settlement before trial which avoids the cost and risk of proceedings, and it maximizes the chances the Calderbank offer can be used to argue for increased costs if you are successful.
A Calderbank offer can be part of an effective legal strategy. We might advise you to make one because if the other party unreasonably declines it, you can ask for increased costs.
If you receive a Calderbank offer, we will talk to you about all the legal considerations, concluding your chances of success and what you could obtain through legal proceedings. This will help you make an informed choice about whether to accept a settlement offer.
If you or anyone you know could benefit from talking about what options they have to resolve conflict, contact us for a free initial consultation.
