What is a Calderbank offer?
A Calderbank offer is a "without prejudice except as to costs" settlement offer named after the English case Calderbank v Calderbank [1975] 3 All ER 333. It is a common law alternative to the formal Offer of Compromise under the court rules. If the offer is rejected and the rejecting party does no better at trial, the offeror can seek indemnity costs from the date of the offer. Calderbank offers are used where formal offers are not available or where tactical flexibility is needed.
Formation requirements
A valid Calderbank offer must: be clearly expressed as "without prejudice save as to costs" (or equivalent); be in writing; contain a genuine compromise (not merely "pay me everything I want"); specify a reasonable time for acceptance; and explain the costs consequences. Hollingdale v Sydney Local Health District (No 2) [2016] NSWSC 1829 sets out the modern tests in NSW.
Calderbank vs Offer of Compromise
A formal Offer of Compromise under UCPR rule 20.26 in NSW (and equivalents in other states) has automatic costs consequences — indemnity costs if the offeree does worse. A Calderbank offer gives the court discretion. Formal offers are more certain; Calderbank offers are more flexible (no strict form, can be made in circumstances where formal offers cannot). Many litigators make both in parallel.
When courts award indemnity costs
Not every rejected Calderbank offer triggers indemnity costs. The court asks whether rejection was "unreasonable" in all the circumstances — considering the stage of proceedings, information available to the offeree, the amount of the offer, the clarity of costs warning, and the reasonableness of the rejection at the time. The test is not "with hindsight, could you have done better?" — it is "was rejection unreasonable at the time?".
How I draft Calderbank offers
I draft Calderbank offers with the required formal elements, an accurate costs warning, and a genuine compromise component. For commercial and personal injury lawyers this is a high-volume routine task. I also assess received Calderbank offers and provide the "reasonableness" analysis for client advice.
Common issues
- Calderbank offers without a costs warning are weaker — always include the warning
- An offer to pay "all of what you claim" is not a genuine compromise
- Early Calderbank offers (before full disclosure) are often judged as made without enough information
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