Court hearings can last weeks and costs can quickly add up to hundreds of thousands of dollars. Many businesses cannot fund ongoing litigation and often it does not make commercial sense to litigate a dispute in court. As a result, the vast majority of commercial litigation matters settle outside of court. One way parties achieve this is by using Calderbank offers. This article explains what a Calderbank offer is and what you should take into account if you have received an offer.
Calderbank Offers 101
A Calderbank offer is an offer of settlement made by one party to another in an attempt to resolve the dispute. It must be a genuine compromise open for a reasonable period of time. An important feature of a Calderbank offer is that it is made ‘without prejudice, save as to costs’. This means that neither party can present the offer as evidence in court, except when determining which party must pay costs and the amount of those costs.
Considering the Calderbank Offer
You should fairly consider all Calderbank offers you receive. When considering the offer, there are three important considerations to keep in mind.
1. Prospects of Success at a Final Hearing
Your lawyer can provide you with advice on your prospects of success. They can also help you decide whether to accept a Calderbank offer or, alternatively, draft a reasonable counter-offer.
2. The Value of Your Case
Make sure you are realistic about the value of your claim and modest in your estimates. It may be useful to think about how your claim value compares to the costs you will incur to carry the case forward. Balance these considerations against the Calderbank offer you have received. Remember that it can often be 9-12 months before you find yourself at a hearing.
3. The Cost of ‘Winning’
Imagine succeeding at a final hearing, only to find out the opposing party has empty pockets – not exactly a favourable result. Think about whether the other party will be able to pay if you ‘win’, or whether their funds may be chewed up preparing for the hearing.
Not Accepting the Calderbank Offer
Each party should seriously and genuinely consider any offer of settlement they receive. A court may feel your rejection is unreasonable if an offer is a reasonable compromise, expressed clearly and precisely. If this is the case, the court may order you to pay the other party’s court costs.
However, you do not have to accept a Calderbank offer. If you are not given sufficient time to consider the offer, or it is too early to determine the full extent of each party’s position, acceptance may not be the right course of action. If you do not accept the offer, consider making a reasonable counter-offer. It is always better to try to negotiate, rather than put up a brick wall.
A Calderbank offer can be a powerful tool in settlement negotiations. It can encourage parties to negotiate candidly and make a genuine effort to reach a compromise. Parties must reasonably consider all Calderbank offers made, or risk an unfavourable costs order even if they do ‘win’.
If you have questions about whether to make or accept a Calderbank offer, or how to do so, get in touch with LegalVision’s litigation lawyers on 1300 544 755 or fill out the form on this page.
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