Offer To Settle

What is an offer to settle?

An offer to settle occurs when a party to a trial proposes an out of court
settlement to the other party before the finality of their matter in
court.

Such an offer does not necessarily need to be monetary compensation.

It could be in the form of abstinence, compensation, or even to perform

a certain act. An offer to settle provides the parties with some form of 
incentive as: 

1. It allows both parties to save on legal cost (other than the cost of
instituting a claim in court), provided that the parties are willing to
accept the terms of the offer;
2. It allows both parties to agree to a sum which both parties are willing to
part with/receive instead of leaving the calculation of damages to the
court; and
3. The offending party does not have to admit to any liability.
The principle governing an offer to settle is laid down in Order 22B of
the Rules of Court . Such an offer:

1. Can be made  and withdrawn at any time before the court decides on
the outcome of the matter between the parties in court; and
2. If such an offer to settle specifies the time in which one party needs to
accept the offer, such an offer is deemed to be withdrawn when the
time expires.
An offer to settle can be made to multiple parties jointly or individually
if they are more than one party in proceedings.
How to make/ accept/
withdraw an offer to settle?
Process Form Remarks

Form 1. The terms of the offer must be set out in numbered paragraphs.
Making an offer
34
2. Set out the time in which the other party is to accept the offer.

Withdrawing an Form 1. It can be withdrawn at any time, even if there is a clause specifying the
offer 35 offer at a certain date  .

1. Set clearly the terms of accepting such an offer.

Form 2. Can accept the offer at any time before the determination of the case, of
Accepting an offer
36 withdrawn.
3. Upon acceptance of such an offer, the court can incorporate the terms in

- the court must not know of such an offer even if it is not accepted
until all questions of liability and relief other than cost have been
determined by the court  as this allows the court to make an impartial
and independent assessment of the damages and claims of the matter
without the influence of knowledge of the offer to settle, or at the very
least, is seen to be making an impartial and independent assessment of
the damages and claims.
CALDERBANK V CALDERBANK was an important English Court of
Appeal decision establishing the concept of a "Calderbank Offer". A
“Calderbank Offer” can often be identified by the disclaimer "without
prejudice, save as to costs".
After a marriage of 17 years, Mr and Mrs Calderbank separated and
filed for divorce, which was duly granted.
However substantial difficulties arose regarding the division of the
matrimonial assets of £78,000, consisting of the £80,000 Mrs
Calderbank had previously inherited during the relationship from the
estates from the death of both her parents. Complicating matters
further, the matrimonial home was registered under only Mr
Calderbank’s name (for fiscal reasons), and he continued to live in
this property after the divorce.
The matter was referred to the Family Court, and the judge awarded
Mr Calderbank the modest amount of £10,000 (out of the total assets
of £78,000), as well as court costs.
However prior to the matter going to trial, Mrs Calderbank had made
the following offer via no less than the form of an affidavit, "I am
willing, and have always been willing, to make over to the [husband]
the house at Alderley Edge", which Mr Calderbank declined.
While this house was not the matrimonial home (it was rented by Mr
Calderbank’s father, and Mr Calderbank's mother lived there), the
trial judge was of the opinion that this house was worth about
£12,000, which was £2,000 more than Mr Calderbank later obtained
at trial.
Mrs Calderbank, not happy with the outcome, appealed on two
grounds, that the courts had no legal jurisdiction to make such a
property division and, of most legal significance, that as Mr
Calderbank had obviously declined a reasonable pre trial settlement
offer, he should not be entitled to legal costs for unnecessarily
prolonging the legal proceedings.

the Court decided that if a winning party in litigation refuses an

earlier settlement offer made by the losing party, the losing party
may produce the settlement offer as evidence towards the
appropriate level of costs payable. In practice, if the winning party’s
award of damages is less than the earlier settlement offer, the losing
party may have to pay less costs to the winning party than normal.
On the facts, the Court upheld the lower court's quantum of the
£10,000. However, the Court reversed the burden of paying legal
costs from Mrs Calderbank onto Mr Calderbank. The Court held that
the legal proceedings had been unnecessarily prolonged by Mr
Calderbank's earlier refusal to accept Mrs Calderbank's settlement
offer of around £12,000.

How does it work?

A Calderbank offer must generally be in writing. It must state that it is “without
prejudice save as to costs” and that it is made pursuant to the principles established
in Calderbank v Calderbank (or a statement to that effect). “Without prejudice”
means that the settlement offer is without prejudice to the party’s right to initiate or
continue litigation, and the letter cannot be tendered as evidence in any proceeding.
The exception “save as to costs” means that if the case proceeds to judgment, the
offer can be relied on in court when determining who will pay the costs of the
proceeding. For example, whether the unsuccessful party should pay costs at all if
they made a reasonable offer, or whether a successful party should have its costs
paid on an ‘ordinary’ basis (also known as party/party costs), or an ‘indemnity’ basis
(in which case all reasonably incurred costs are awarded).
Distinction with offers of compromise
Under rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), a
party can make an offer of compromise, which is different to a Calderbank offer. 
Offers of compromise under the rules must not include an amount for costs and
must not be expressed to be inclusive of costs. It was said in Whitney v Dream
Developments Pty Ltd  that “[t]he use of the phrase “exclusive of costs” suggests
that what is intended is that a compliant offer will not deal with costs at all”.
Accordingly, while offers of compromise must not refer to costs (and are taken to be
exclusive of costs), Calderbank offers may be made inclusive of costs.