Calderbank Offers: Requirements and Examples

What a Calderbank Offer Means

A Calderbank offer lets a party propose settlement while preserving a possible argument about the costs of continuing the dispute. The name comes from the English decision Calderbank v Calderbank [1975] 3 All ER 333. Australian courts apply the principle through their own costs powers and authorities.

The practical question is whether refusing the offer was unreasonable when the recipient had to decide. A later judgment is relevant, but hindsight cannot replace that assessment.

In Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 3) [2023] NSWCA 63, the NSW Court of Appeal rejected a Calderbank-based costs application. It applied the factors from Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298. The outcome shows why a monetary comparison alone cannot establish unreasonable rejection.

Indemnity costs are a more favourable basis of recovering litigation costs than ordinary party-and-party costs. The amount recoverable still depends on the applicable assessment rules and the order. It is unsafe to treat the expression as reimbursement of every dollar billed.

Requirements for a Useful Offer

A useful Calderbank letter makes the proposed settlement sufficiently definite to accept and gives the recipient a fair basis for assessing it. Use the following drafting checks to remove avoidable uncertainty.

• Identify the parties, proceeding and claims being settled. Address any cross-claim and say whether the offer resolves the whole dispute or a defined part.
• State who pays whom, the amount and the payment deadline. Describe any non-monetary relief with enough detail to implement it.
• State whether interest is included, separately payable or waived. Identify any continuing interest after acceptance or late payment.
• State the treatment of legal costs. Specify a fixed contribution, an assessment basis or each party bearing its own costs.
• Explain the concessions and the evidence supporting the offer. Identify the financial schedule and the material already available to the recipient.
• Give the acceptance method and an expiry date, time and time zone. State whether acceptance itself creates a binding settlement or whether execution of specified documents is a condition.
• Identify any releases, confidentiality obligations or consent orders. Attach necessary terms instead of leaving material obligations for later negotiation.
• Express the intended reliance on the offer for a later costs application, including indemnity costs where sought.

A demand for the full pleaded amount with onerous additional conditions may involve little practical compromise. Conversely, a modest reduction can matter where the claim is strong and a costs concession has real value. The evaluation depends on the dispute, not a prescribed discount percentage.

The NSW Court of Appeal’s reasoning in E Group Security considers timing, clarity and the extent of compromise. It also addresses the recipient’s prospects at the offer date and the warning about indemnity costs. Missing evidence and uncertain issues can explain a refusal.

The heading “Without prejudice save as to costs” signals the intended separation between settlement discussions and later costs submissions. It does not make every communication privileged or cure defective terms. The wider protection and its exceptions are explained in without prejudice communications.

A Calderbank Offer Example and Letter Structure

This fictional money-recovery example has a pleaded loss of $120,000 and a Calderbank offer to accept $90,000. The defendant disputes liability throughout. A separate dispute concerns whether a $20,000 transfer was an authorised advance that must be excluded from the loss.

The claimant’s solicitor prepares the following negotiation schedule. It shows the pleaded case and the concessions without treating a bank entry as proof of legal liability.

Schedule item	Pleaded amount	Settlement treatment	Supporting material or assumption
Transfers alleged to be unauthorised	$100,000	Included before further concession	Source statements and authority documents remain disputed
Transfer alleged to be a recoverable loss	$20,000	Excluded for settlement	Defendant says this was an authorised advance
Pleaded loss	$120,000	$100,000 after exclusion	Arithmetic only, subject to liability arguments
Further compromise	Not applicable	Deduct $10,000	Concession to resolve litigation risk and avoid further expense
Offered payment	Not applicable	$90,000	Inclusive of interest, each party bears its own legal costs

The claimant gives up $30,000 against the pleaded principal, plus the claimed interest and any claim for the defendant to pay legal costs. Those concessions do not establish that the offer is reasonable. The strength of the liability case and the documents provided remain relevant.

Where the schedule depends on many statements, FinTrace saves lawyers and forensic accountants hours of manual statement review. The service produces a searchable ledger and a findings report with direct PDF filename and page references. That gives the solicitor the underlying transactions when explaining a disputed item or concession.

Annotated Sample Wording

The following clauses illustrate a claimant’s informal civil offer on those assumptions. The lower-case fields are for the solicitor to complete. The payment and acceptance periods are drafting choices for this example, not national requirements.

Without prejudice save as to costs

Re: [court and proceeding number], [claimant] v [defendant]

Our client offers to settle all claims in this proceeding on the following terms. The defendant will pay the claimant $90,000 within 14 days after acceptance. This sum includes all interest claimed up to acceptance. Each party will bear its own legal costs of the proceeding and settlement. No further interest is payable if payment is made on time. If payment is late, the claimant retains its rights to seek interest available by law on the unpaid settlement sum.

On payment, the claimant will discontinue the proceeding. The parties agree that no order for costs will be sought on discontinuance. The settlement releases only the claims pleaded in this proceeding. It requires no confidentiality term or further deed.

The offer excludes the disputed $20,000 advance and makes a further $10,000 concession against the remaining $100,000 principal claim. The attached schedule identifies the transactions and supporting documents supplied to you.

Accept by an unconditional written notice received at [solicitor email] by [expiry date, time and time zone]. Acceptance creates a binding settlement on these terms, without execution of further documents.

If this offer is not accepted and our client obtains a result more favourable to it, our client intends to rely on this letter on costs. Our client will seek indemnity costs incurred after expiry of the offer, subject to the court’s discretion.

The first paragraph fixes the sum and separates interest from legal costs. The second defines the release and the consequence of payment. Its express costs agreement also avoids leaving discontinuance costs unaddressed.

The remaining clauses explain the compromise and how acceptance works. They state an intended costs application without promising its outcome. Check the notice and discontinuance procedure of the actual court before using the structure.

Reusable Letter Structure

For a different matter, retain the sequence but replace every substantive term with the client’s authorised proposal. Use a heading, party and proceeding details, then a short explanation of the dispute being compromised.

Set out the payment or other relief next. Include interest, costs and implementation terms before the acceptance clause. Finish with the expiry details and the intended costs reliance. Attach the supporting schedule and any document whose execution is required for settlement.

If a deed is required, resolve its release scope and material obligations before sending the offer. A proposal subject to an unspecified “usual deed” can leave the recipient unable to assess the bargain.

Response Time and Assessment Before Acceptance

There is no universal Calderbank offer time limit in Australia. The recipient needs a reasonable opportunity to understand the terms and assess the dispute. The complexity of the case and what the recipient already knows affect that opportunity.

A short period can be difficult to justify where a schedule introduces new transactions or supporting records arrive with the offer. Prior negotiations and an agreed factual basis can reduce the work needed. Hearing proximity matters, but urgency does not supply missing evidence.

Before advising on a response, assess these matters separately.

1. Compare the offer with realistic outcomes on liability and quantum. Test the disputed assumptions in the schedule instead of starting from the pleaded total.
2. Identify the interest and legal costs payable under each outcome. Compare the same components so a costs-inclusive offer is not mistaken for a principal-only figure.
3. Assess enforcement and recoverability. A larger judgment against an insolvent defendant can be commercially worse than a funded settlement.
4. Estimate future unrecoverable costs and the costs risk of refusing. Record the information available when the client decides.

If material records are missing, request the specific documents and a justified extension before expiry. Confirm any extension in writing. Preserve the original deadline unless the offeror agrees to change it.

For acceptance, confirm the exact terms, the parties’ authority and whether the proposed notice meets the acceptance condition. A response that changes the payment period can be a counter-offer. Its effect on the original offer depends on the terms and applicable rules.

For rejection or a counter-offer, record the client’s instructions and the reasons supporting the decision. State any replacement sum and its treatment of costs and interest. In family proceedings, the court rules contain their own provisions about counter-offers and acceptance.

Calderbank Offer vs Offer of Compromise

A Calderbank letter relies on the court’s costs discretion. A formal offer of compromise uses a procedure prescribed by the rules of the particular court. The two routes can have different requirements and different costs consequences.

For a concrete civil comparison, the following table uses Part 25 of the Federal Court Rules 2011. Other courts have their own rules. A Federal Court period must not be copied into a state proceeding without checking that court’s procedure.

Issue	Informal Calderbank letter	Federal Court Part 25 offer
Form	Clear settlement letter with intended costs reliance	Signed notice in Form 45, served and not filed
Costs and interest	Express terms needed to define the bargain	Rule 25.03 requires the costs position and permits separate principal and interest amounts
Acceptance period	Assessed for reasonableness in the circumstances	A stated acceptance period must be at least 14 days under rules 25.05 and 25.08
Acceptance method	Governed by the offer terms and applicable law	Notice in Form 46 served while the offer remains open
Costs after non-acceptance	Offeror argues that refusal was unreasonable	Rule 25.14 supplies consequences for specified outcomes, subject to the court’s powers

For example, rule 25.14(3) addresses an applicant whose unaccepted offer is beaten by the judgment. It provides for ordinary costs before the prescribed point and indemnity costs afterwards. The court can make an inconsistent order under rule 1.35.

Compliance with Calderbank principles does not establish compliance with Part 25. A defective formal offer also does not automatically become an effective Calderbank letter. Decide which route is intended and draft expressly for it.

State-court formal offers

Select the court before drafting the document. NSW uses the Uniform Civil Procedure Rules (UCPR). Victoria’s Supreme, County and Magistrates’ Courts each have their own Order 26.

Forum	Written offer and acceptance	Withdrawal and costs
NSW civil proceedings	Rule 20.26 governs the offer’s required content and acceptance period. Serve written acceptance under rule 20.27. Use the official UCPR forms collection with the applicable rules, rather than a Federal Court form.	Apply the withdrawal provisions in Part 20 and costs provisions in Part 42. Ordinary costs must be addressed under the NSW rules instead of copying the costs-inclusive fictional Calderbank example.
Victorian Supreme Court	Order 26 of the Supreme Court rules requires a written offer stating that it is served under that Order and specifying the costs position. A limited acceptance period must allow at least 14 days. Serve written acceptance before the applicable expiry or judgment.	Withdrawal while open requires a court order. Rule 26.08 addresses outcome-based costs consequences, subject to the court ordering otherwise.
Victorian County Court	Use County Court Order 26, including its written-document requirements and express costs position. The limited period is at least 14 days, with written acceptance served before the applicable expiry or judgment.	The court must permit withdrawal while the offer remains open. Apply County Court rule 26.08 to the actual result and offer terms.
Victorian Magistrates’ Court	The Magistrates’ Court rules require the Order 26 statement, prescribed document format and costs position. Its limited acceptance period is at least seven days. Serve written acceptance before the applicable expiry or order.	Withdrawal while open requires a court order. Rule 26.08 has its own scale-cost consequences, including specified 25% increases. Do not import a superior court’s indemnity-cost result.

The Victorian rules prescribe document content and format, so a request for an “offer of compromise form” starts with the chosen court’s current rules. An offer’s acceptance deadline differs from the deadline for paying an accepted settlement. Withdrawal of an offer also differs from withdrawing acceptance after non-payment.

For the Federal Court, obtain Forms 45 and 46 from its current forms collection. The Federal Circuit and Family Court of Australia (FCFCOA) uses the family-law written-offer route described below. A Federal Court Form 45 is not a universal family-law offer form. Use the FCFCOA’s current consent-order forms where that procedure applies to recording the agreement.

Family Law and Later Costs Applications

In proceedings under the Family Law Act 1975, the starting point is that each party bears their own costs. Section 114UB permits a just costs order where circumstances justify one. A written settlement offer and its terms are among the matters the court must consider.

The court also considers financial circumstances and legal aid, conduct in the proceeding, non-compliance with previous orders and whether a party was wholly unsuccessful. It can consider other relevant matters. The ordinary civil expectation that costs follow success cannot simply be applied to a property proceeding.

The Federal Circuit and Family Court of Australia’s costs guidance explains the usual own-costs position and the exceptional nature of indemnity costs. The broader framework is covered in family law costs.

For proceedings governed by the Family Law Rules 2021, rule 4.06 requires a written offer that is served and not filed. Rule 4.07 controls disclosure of without prejudice offers, with exceptions for applications relating to an offer and costs applications.

Rule 4.09 provides for written acceptance and lodging a draft consent order after acceptance. Rule 4.11 separately requires genuine offers in financial or property proceedings within its prescribed timetable. A Calderbank heading alone does not satisfy these procedural obligations. Resolve the final recording method through the property settlement agreement process appropriate to the matter.

For a later costs application, preserve the complete offer with its attachments. Keep evidence of delivery and all responses or extensions. Retain the supporting financial schedule as it stood when the recipient considered the offer. Keep a separate comparison with the eventual orders and the supporting costs records.

Compare substance as well as dollars. A cash payment and a superannuation split have different practical effects. Changed valuations, debt allocation and new disclosure can also complicate whether the result is better than the offer. Build the application around the applicable costs power and the evidence of the recipient’s decision at the time.