How do you stop legal costs from mounting in litigation? What weapons are available to a reasonable Defendant who wishes to shut down litigation at an early stage? How does a Defendant transfer the risk of legal costs to a Plaintiff?
Lodgements, tenders and Calderbank offers are methods by which a Defendant can make an offer to settle a Plaintiff’s claim. If the offer is not accepted and a Court subsequently awards less than the sum offered, all of the legal costs from the date of the offer are generally awarded to the Defendant.
Whereas lodgements and tenders can only be made at certain times after the issue of proceedings, a Calderbank offer can be made both before the litigation commences and during the course of a Hearing. As such, it can be a very useful tool for both insured and uninsured Defendants.
What is a Calderbank offer?
A Calderbank offer is a letter written by one party, generally the Defendant, to the Plaintiff, making an offer to resolve the litigation. It should be marked “without prejudice save as to costs”, or else it may be shown to the Court at the outset, which could influence the Court’s views on both liability and quantum. Any Calderbank offer should be unequivocal in its terms; in other words, it should deal with the issue of how the costs of the proceedings to date are to be treated, it should have a date by which the offer has to be accepted, and it should make clear the consequences of not accepting the offer.
Initially, Calderbank offers were used only in matrimonial proceedings and take their name from a 1975 case of Calderbank V Calderbank, but they are now more common in general litigation. They are becoming more commonly used because the Courts have demonstrated a willingness to impose costs penalties on Plaintiffs who do not accept reasonable offers or refuse outright to engage in negotiations. These subtle shifts in judicial conduct have been noted not only by Defendant’s legal advisors, but also by those advising Plaintiffs. The more frequently that costs penalties are imposed against the Plaintiff, the more often Calderbank offers will be taken seriously. An offer which puts the Plaintiff on risk of the proceedings, even if it represents 90 per cent of the Plaintiff’s legal advisors’ view of the value of the claim is likely to provoke a resolution or alternatively an indication from the Plaintiff’s solicitors that a small increase in the offer will resolve the claim. Over time, if an insurer or solicitor develops a reputation as someone who will not move off the Calderbank offer, so much the better, because the Plaintiff’s legal advisors will know not to expect a better offer at the Hearing.
Origin of the Calderbank Letter
While the first judicial recognition of Calderbank offers was in 1992 in the case of O’Neill V Ryanair, they were not recognised in the procedural rules until 2008 with the passing of Statutory Instrument 12 of 2008. The instrument amends Order 99 in relation to the Courts’ consideration of costs and allows the Court to “have regard” to any offer in writing “to satisfy the whole or part” of the other party’s claim. That is important because it allows Defendants to carve out elements of the Plaintiff’s claim that may involve significant costs and Court time and leave perhaps only items which may, for example, fail for want of causation.
These days, Courts are less inclined to award costs in respect of Court time that has been wasted on unsuccessful elements of a claim. In Dardis V Poplovka, Judge Barr awarded two days costs of a Hearing against a Plaintiff for unnecessarily prolonging the case by two days with an unsuccessful loss of earnings claim. In the 2016 decision of the Court of Appeal in Shannon V O’Sullivan, Mr and Mrs Shannon were awarded €90,000 and €130,000 respectively for general damages in the High Court. The Court of Appeal reduced the general damages of each Plaintiff’s claim to €40,000 and €65,000 respectively. The Defendant had served Calderbank letters offering €42,000 and €72,000 respectively and therefore neither Plaintiff beat the Calderbank offer. Judge Irvine in her judgement clearly endorsed the use and efficacy of Calderbank offers. She said, “it would not be just and fair on the Defendants… to be affixed with paying their own costs in respect of two appeals which they considered were unwarranted, having regard for the offers which they made”.
Calderbank offers are useful weapons for a Defendant to serve and the earlier the better. In addition, if the Defendant is out of time to serve a tender or lodgement, then a Calderbank offer is definitely worthy of consideration.
If you have any queries in relation to Calderbank letters, Lodgements or Tenders, please contact Liam Collins.