By Andrew Behman, an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group
In our earlier post about settlement negotiations “Agreement in principle” – is it binding?“, we discussed the an offer that was agreed to “in principle” and what that means. The offer that we talked about was a Calderbank offer.
What is it?
A Calderbank offer is a type of settlement offer designed to put the offeror in a position to ask the court to make an indemnity costs order, if the offerer succeeds in the litigation beyond the amount offered. An indemnity costs order is an order that the less successful party pay a larger portion of the other party’s costs. Normally ‘costs follow the event’ – which means that an unsuccessful party will be ordered to pay the successful party’s costs of litigation. However normally, because of the way the costs assessment process works, only a portion of the successful party’s actual costs will be recoverable. However by making a Calderbank offer, a party to litigation can improve the chances of recovering a significantly higher proportion of those costs. These offers are based on the principles outlined in the English case of Calderbank v Calderbank  3 All ER 333.