What is a Calderbank Offer in family law?

A Calderbank offer in family law is a settlement proposal made in a formal letter intended to encourage the opposing party to settle, often to avoid the costs of continuing to trial.

This type of offer can help shape the potential costs orders that the court may later impose if the dispute continues to litigation. 

Understanding Calderbank Offers in Family Law

A Calderbank offer is a strategic tool used in legal disputes to encourage settlement before reaching trial. 

Essentially, it is a written settlement offer, which if unreasonably refused, may lead to cost penalties against the party who rejected the offer. This is because the family court can consider the reasonableness of rejecting a Calderbank offer when deciding who should bear the costs of legal proceedings.

Common situations where they are used are:

• Encouraging Settlement: A Calderbank offer can pressure the opposing party to settle by highlighting the risk of paying not only their own legal fees but potentially those of the other party if the final judgement is not more favourable than the offer.
• Cost Management: It provides a clear indication of one party’s position and willingness to resolve the matter, potentially reducing ongoing legal costs by curtailing the length of the dispute.

The Legal Framework Surrounding Calderbank Offers

While Calderbank offers are not explicitly codified in the Family Law Act, they are recognised under the common law due to their implications on cost orders. 

When one party makes a Calderbank offer that is not accepted, and the case proceeds to trial with a similar or less favourable outcome for the rejecting party, the court may order the rejecting party to pay additional costs. 

This is often termed as “costs thrown away,” which refers to costs that could have been avoided had the offer been accepted.

The effectiveness and enforceability of a Calderbank offer hinges on a few grounds:

1. The offer must be clear and unambiguous, specifying the terms of settlement comprehensively.
2. It should be reasonable, not only in the amount or terms offered but also considering the timing of the offer and the circumstances surrounding the case.
3. Although a formal format is not mandated like in Offers to Settle under specific court rules, it is typically made in writing and should clearly state that it is made ‘without prejudice save as to costs’. This designation means the contents of the offer cannot be used in the trial as evidence, except when arguing about the costs.

“Without prejudice save as to costs”

This is a commonly used phrase in written correspondence between lawyers. 

Use of this phrase “without prejudice save as to costs” allows the parties to make offers and negotiate freely without fear that their words will be used against them in court, except in disputes about the payment of legal costs. 

It is like lawyers being able to communicate with each other ‘off the record.’

Strategies for Making a Calderbank Offer

Crafting an effective Calderbank offer in family law requires careful consideration of several strategic factors. Firstly, the timing of the offer is important. 

An offer made too early may not take into account all relevant information and may be dismissed as premature or unrealistic. Conversely, an offer made too close to the trial date might not provide the opposing party with adequate time to consider the proposal, possibly leading to its rejection on the grounds of insufficient contemplation time. 

Ideally, a Calderbank offer should be made once substantial facts of the case are clear but while there is still enough time for the parties to seriously consider and negotiate the terms.

Secondly, the specificity and comprehensiveness of the offer’s terms are also important. A well-crafted Calderbank offer should include detailed terms that address all contentious issues between the parties, such as asset division, child support, and custody arrangements. 

It should also clearly outline the consequences of accepting or rejecting the offer. 

Assessing the Risks and Benefits

One major benefit is the potential to avoid the uncertainty of trial outcomes. By settling, parties can control the resolution process more directly, creating an agreement that is mutually acceptable rather than risking an unfavourable judgement imposed by the court. 

Furthermore, Calderbank offers can significantly reduce legal costs and emotional stress by shortening the duration of litigation.

However, there are also risks to consider. If the offer is not accepted, and the case proceeds to trial, there is always the chance that the court does not regard the offer as having been reasonable. 

This could result in the offering party not receiving the expected costs protection, even if they achieve a favourable outcome at trial. 

Additionally, making a Calderbank offer might be seen as a sign of willingness to compromise, which could potentially weaken a party’s negotiating position if the offer is rejected. 

Timing 

The effectiveness of a Calderbank offer is greatly influenced by its timing. 

Ideally, such an offer should be made at a strategic point in the litigation process where enough information has been exchanged to allow both sides to make informed decisions, but before the costs of continuing to trial escalate. 

For instance, presenting a Calderbank offer after key discoveries and before pre-trial conferences can provide a tactical advantage, encouraging settlement when all parties have a clear understanding of the strengths and weaknesses of their cases.

Responding to a Calderbank Offer

When a party receives such an offer, it needs to considered whether the terms are fair and reasonable based on the current understanding of the case and the likely outcomes if the matter proceeds to trial. 

The recipient must consider not only the immediate terms but also the long-term impacts of accepting or rejecting the offer. 

Rejecting a reasonable Calderbank offer can carry a financial risks, including the potential burden of paying both parties’ legal costs if the final judgement is not substantially more favourable than the proposed settlement. 

Thus, a cautious approach that weighs all potential consequences is essential for making an informed decision.

Alternatives to Calderbank Offers in Family Law Disputes

While Calderbank offers are a popular mechanism for encouraging settlements, several alternatives can also be effective. 

Offers of Compromise, for instance, follow specific rules under court procedures and may have mandatory formats and consequences distinctly stipulated, which differ from the more flexible Calderbank offers. 

Mediation and collaborative law are other strategies that prioritise a cooperative approach over adversarial tactics, fostering a more amicable negotiation environment. 

These methods encourage parties to work together with their lawyers and, sometimes, a neutral third party (such as a mediator) to reach a mutually agreeable resolution without the formalities of court-imposed decisions. 

Wrapping it up

Calderbank offers are commonly used in the negotiation process of family law disputes. They can be wisely used to provide a clear pathway to resolution by outlining specific settlement terms to another party. 

But while effective, they are not the only avenue available – alternatives like mediation may in specific circumstances be more suitable to resolving family disputes amicably.

If you are dealing with the complexities of a family law dispute, consider booking a consultation with a MovementLegal team member to explore your options and to get a clear sense of the way forward.