Accepting a Calderbank Offer after a Hearing has Begun

MEF v St George’s Healthcare NHS Trust

What is a Calderbank Offer?

A Calderbank offer is a settlement offer made on a “without prejudice save as to costs” basis. This type of offer is made pursuant to the principles which were established in the case of Calderbank v Calderbank. “Without prejudice” means that the offer will not compromise the party’s right to litigate.

It can be used as an alternative to a Part 36 Offer however, the costs consequences of a Calderbank offer are at the complete discretion of the Court. In order for a Calderbank offer to be valid, the offer should be clearly expressed to be “without prejudice save as to costs”, addressed to the other party, or their Solicitor in clear and precise terms. Furthermore, the Calderbank offer should be a genuine compromise that warrants consideration.

 

The Difference Between a Calderbank Offer and a Part 36 Offer

A Part 36 Offer is notorious for having rigid rules and low levels of discretion, whereas a Calderbank offer is generally much more flexible as it is not governed by strict procedural rules. Moreover, a Calderbank offer can be helpful when settling disputes that a Part 36 Offer would not apply to. For example, the small claims track and arbitration proceedings.

 

The Benefits of Making and Accepting a Calderbank Offer

The Calderbank offer to settle is of value as it can often result in a costs order in your favour, even if you lose. It can also result in a larger costs order if you are the winning party.

Also, as the following case shows, there is much more flexibility with a Calderbank offers as to acceptance timeframes (though a Part 36 Offer can be accepted after it expires unless it has been withdrawn, but it must remain ‘open’ for atleast 21 days to be valid).  For instance, a Calderbank can state to be open for acceptance for only 14 days. Therefore, if the offer is termed as such, it may still be open for acceptance after the hearing has begun.

 

MEF v St George’s Healthcare NHS Trust

When a Calderbank offer is made to a Claimant, can they accept the offer once the hearing has begun if there is no set time limit?

Until recently, this question had not been explored. However, in the recent case of MEF v St George’s Healthcare NHS Trust regarding the issue of costs, the Claimant accepted the Calderbank offer on the second day of the detailed assessment hearing. The acceptance of the Calderbank offer was approved by the Judge.

In the few months before the detailed assessment hearing took place, negotiations occurred between the two parties whilst the detailed assessment proceedings had begun. These concluded on 19th August 2019 when the paying party made a Calderbank offer to the Claimant consisting of a £440,000 settlement.

The Claimant did not accept or reject this offer and instead waited for the three day detailed assessment hearing, which had been listed for the 17th September 2019. By the end of the second day, the Claimant’s solicitors had sent an email to the Defendant accepting their original offer, much to the Defendant’s dismay.

By this stage of the hearing, the Court heard that the Claimant stood to recover less than £440,000 if it ran to conclusion. Mr Justice Morris noted that the Claimant would have risked being ordered to pay the Defending party’s costs, had they not accepted the offer either before, or during the assessment.

He further added that because the Defendant’s Solicitors had not set a limit for the time the offer remained open, nor had they withdrawn the offer, the Claimant could still accept and hold the Defendant to the Calderbank offer that was made on the 19th August 2019.

Mr Justice Morris stated:

“It was always open to the Defendant to put a time limit on the offer. Equally it was open to it to withdraw the offer at any time. This is so even once the hearing had started. “

If this offer had been a Part 36 Offer, then the Claimant would not have been able to accept the same, and further if they had been able, they would have likely suffered costs consequences for the offer having expired.

The important lesson for the paying party to take from this case is that Calderbank offers, if worded poorly, do not expire as soon as one enters the Court. Therefore any Calderbank offers made in detailed assessment proceedings should expressly state a time limit, or should be withdrawn before the initiation of Court proceedings, if the offeror does not wish for it to be accepted at a later date.

 

How Can ARC Costs Assist?

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