Calderbank offers and whether an offer must be beaten in monetary terms.

After the claimant lost at trial, he argued that costs should not be awarded against him because the defendant had recovered no more than it would have done had it accepted the claimant’s earlier Calderbank offer. The judge at first instance held that the defendant had done significantly better at trial and the Court of Appeal agreed with that decision. In reaching that conclusion, it also held that although the Calderbank offer was in terms which were capable of acceptance, so as to give rise to a contract, the judge was nevertheless entitled to consider whether an offeree acting reasonably would have required further clarification before considering whether to accept the offer.

A further point which the Court of Appeal considered was whether CPR r36.14(1A) applied by analogy to the Calderbank offer. CPR r36.14(1A) provides that a claimant obtains a “more advantageous” judgment than its offer where, if it is a money claim, it does “better in money terms by any amount, however small”. The defendant had sought to argue that the same approach should apply in all cases where there has been an offer to settle, whether under Part 36 or in Calderbank terms. The court should simply ask itself whether the order at trial is better, to any degree, than the offer which was made, rather than adopt the more “open-textured” approach to the application of a “more advantageous” test adopted in Carver v BAA Plc (see Weekly Update 14/08). That argument was rejected by the Court of Appeal. Part 36 and the court’s general discretion as to costs under CPR r44 are two separate regimes with separate purposes. No rigid test need be applied to Calderbank offers - the court has a wide discretion, even if that might result in some uncertainty as to whether an offer has been beaten  or not.

COMMENT: There are several reasons why a party might choose to make a Calderbank offer instead of a Part 36 offer (eg it might want to specify a costs consequence which it wouldn’t otherwise get under Part 36). For a party which fails to beat its Calderbank offer at trial but can show that the litigation had still not been “worth the fight”, this case provides another reason why a Calderbank offer can be better in some circumstances.