Calderbank Offer or Offer of Compromise?

Calderbank and Offer of Compromise aim to settle disputes early, save time and costs, and protect parties. They differ in form, substance, and utility.

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Both a Calderbank and Offer of Compromise serve the same dual purpose: to provide parties an opportunity to settle proceedings early to save on time and costs and where absent settlement, to protect the offering party by having the offer confidential and protection with costs.

In practice a Calderbank Offer and Offer of Compromise have their nuances in form and substance, as well as utility and when they are to be used depends on the circumstances of each case.

What is a Calderbank Offer?

A Calderbank offer comes from English case Calderbank v Calderbank1 and in Victoria has precedence followed in the case of Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2)2.

A Calderbank offer is where a party makes an offer on a “without prejudice basis” meaning they seek to resolve the proceedings to save costs and time through a confidential setting. Where the offer is rejected and that rejection is unreasonable in the circumstances the party who made the offer may be awarded indemnity costs if they are successful at the Court or Tribunal and the award of damages is less than the offer in the Calderbank offer.3

The factors the Court consider for making a Calderbank offer are:

  • The stage of the proceeding at which the offer was received;
  • The time allowed to the offeree to consider the offer;
  • The extent of the compromise offered;
  • The offeree’s prospects of success, assessed as at the date of the offer;
  • The clarity with which terms of the offer were expressed;
  • Whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.

With this in mind, the form of a calderbank offer usually is in writing (but may be oral) and includes:

  • Marked “without prejudice save as to costs”;
  • Makes clear the circumstances and grounds of the case and what the offer from the party is;
  • States the offer is made in accordance with Calderbank v Calderbank and where in Victoria Hazeldines Chicken Farm Pty ltd v Victorian Workcover Authority (No 2);
  • States that if the offer is rejected it will be relied upon if the applicant is successful in Court or Tribunal for an application of indemnity costs;
  • Stipulate a reasonable timeframe for response;

What is an Offer of Compromise?

In Victoria all the Tribunal and Courts allow for an offer of compromise to be made by a party. Like a calderbank the offer of compromise has the intent of settling the dispute between the parties.

An offer of compromise may be served at any time from commencement of proceedings before verdict or judgment in respect of the claim to which it relates.

Whilst each Tribunal and Courts have their own rules that should be observed before completing an offer of compromise generally an offer of compromise has the following form and substance:

  • The offer must be in writing, prepared in accordance with the relevant rules or act and have a statement to the effect that it is served in accordance with the Order or Section it is under.
  • The offer may be made without prejudice or with prejudice and where not stipulated is to be treated as without prejudice.
  • The offer must specify the amount of money and when that money is to be paid which unless it otherwise provides, is to be taken to be an offer providing payment for the sum within 28 days after acceptance of the offer.
  • The offer must state it is either inclusive of costs or costs to be paid or received in addition to the offer.
  • The time to accept the offer is stipulated and to be no less than 14 days after service to the other party.

An offer of compromise cannot be withdrawn during the time it is open to be accepted unless the Court otherwise orders.

A person with a disability can make or accept an offer of compromise but where accepting the Court must approve before it becomes binding.

Consequences of failure to accept an offer of compromise depend on the party making the offer, the type of claim, the favorability of the decision and the Tribunal or Courts it is made in but have the same affect of protecting against costs of the offering party either with an ordinary applicable basis or indemnity basis.

Which do I choose: A calderbank offer or offer of compromise?

Generally an offer of compromise is used where making an offer of money. Compare a Calderbank offer which serves its utility best when parties are looking to resolve the dispute by means other than an offer of money or a combination of money and non-money remedies.

For example, in a domestic building dispute, where the dispute is to rectify defects, the Tribunal handing down judgment can only award the recovery of damages and not rectification of the works, however under a Calderbank offer a party can ask for further remedies such as the Contractor to rectify the defective building work.4

This article does not have the purpose of being exhaustive with when and how a Calderbank Offer or Offer of Compromise applies. Any queries and if you would like to discuss your individual circumstances please contact Warlows Legal.

1 [1975] All ER 333.
2 [2005] VSCA 298.
3 Ibid, [23] (per Warren CJ, Maxwell P, Harper A.J.A).
E.g. Mt Cotton Constructions Pty Ltd v Greer (No 2) [2017] QCAT 98.

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