Macdonald Rudder Lawyers

Last modified on 12/23/2015

Disclaimer: No liability accepted. Use this information at your own risk


Rational Objective Focused
Call us on (08) 9328 9788


Class (major classification):

Calderbank; costs on appeal; indemnity costs


133 It is well-established that where a party does not accept a Calderbank offer the court will not depart from the ordinary rules as to costs unless, in the circumstances, the offeree's failure to accept the offer was unreasonable:Ford Motor Company of Australia Ltd v Lo Presti[2009] WASCA 115;Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)(2005) 13 VR 435; [2005] VSCA 298 [23];Brymount Pty Ltd v Cummins (No 2)[2005] NSWCA 69 [16]. The party who made the offer bears the onus of establishing that its rejection was unreasonable and an offeree will not be found to have acted unreasonably in rejecting an offer except on clear grounds:Ford Motor Company of Australia Ltd v Lo Presti[19], [21] - [22]. Whether a refusal was unreasonable will depend upon all the circumstances and will always involve matters of judgment and impression:Hazeldene's Chicken Farm[24]. Generally, it will not be unreasonable for an offeree to reject an offer that leaves the offeree in any reasonable doubt as to what is being offered:Grbavac v Hart[1997] 1 VR 154, 155.
134 In this case, the failure of the appellant to accept the offer cannot be said to have been unreasonable. The offer made by the respondent was explicit in its terms. The offer was for a total sum of $270,000. That was less than the sum of $283,283.35 the appellant recovered at trial because it did not include an amount for GST. I do not accept the respondent's

(Page 37)

    submission that the appellant ought reasonably to have understood the offer to include the payment of GST. In my respectful view, the primary judge correctly found that the appellant was not unreasonable in understanding the offer as excluding any payment for GST. In any event, to the extent there may have been any doubt as to whether the offer included GST the appellant was not unreasonable in rejecting it. I do not consider it was incumbent upon the appellant to enquire whether the offer was intended to include a further payment for GST not mentioned in it.
135 In my view, there was no basis for the respondent's contention that a conventional estoppel arose which prevented the appellant departing from a common assumption of the parties that the offer meant that the respondent would pay a further amount equivalent to the GST. I am not persuaded that such a common assumption was made out. In any event, as his Honour found, no such estoppel was capable of arising on the facts.
136 I would dismiss these grounds of cross-appeal.

Peter Willis v Health Communications Network Ltd (No 2) [2008] NSWCA 2 (8 February 2008)
Secure Parking (WA) Pty Ltd v Wilson & Anor [2005] WASC 264

11 Counsel for the second defendant agreed with the relevant principles relating to an offer of compromise advanced by the plaintiff. Those principles are as follows. The rejection of a "Calderbank" letter does not of itself create an entitlement for a special costs order, see Optus Networks Pty Ltd v Leighton Contractors Pty Ltd [2002] NSWSC 450 at [94] and Templeman J in Eastland Technology Australia Pty Ltd & Ors v Whisson & Ors [2002] WASC 150 (supplementary decision given 30 August 2002). In Optus Networks, Hunter J said at [94]:

"The role of offers of compromise as a factor in the exercise of discretion has been the subject of numerous cases, one of which is that of Hamilton J in Cumming v Sands [2001] NSWSC 706 in which his Honour expressed the approach to offers of compromise in that context as follows:
'The parties agree (correctly) that the critical question is whether the first defendant has acted unreasonably in refusing to accept the plaintiff's offer of settlement. In determining this the court looks to all the circumstances of the case: see Nobrega v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133 [20], [21]; SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 [37], [43] and [85]. In the latter case Giles JA said at [37]:'
"The making of an offer of compromise in the form of a Calderbank letter (from Calderbank v Calderbank [1976] Fam 93) where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure: see for example John S Hayes & Associates Pty Ltd v Kimberley-Clark Australia Pty Ltd (1994) 54 FCR 201; MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (1996) 70
FCR 235"."

Indemnity costs for unreasonably rejected offer can run from the date of the offer: Pourzand v Telstra Corporation Ltd [2012] WASC 210 (S)

Costs\Indemnity Costs
Calderbank offer
Indemnity Costs\Costs

Copyright 2012 - 2016 Macdonald Rudder | All Rights Reserved | Liability limited by a scheme approved under Professional Standards Legislation