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The effect of a Calderbank offer



Moshos v. French (No. 3) [2014] NSWSC 1417

This recent New South Wales Supreme Court case considered whether a Calderbank offer ought to have been accepted by an unsuccessful Plaintiff and whether costs should be awarded on an indemnity basis.

In a previous judgment, the Court rejected the Plaintiff’s claim that he made a binding contract with the First Defendant. The parties thereafter agreed that an Order should be made dismissing the proceedings. The Defendants sought an Order that some of their costs should be paid on an indemnity basis due to the failure of the Plaintiff to accept a Calderbank offer. The Plaintiff resisted that Application and further submitted the Defendants should not have the costs of the Affidavit and ought to pay the costs of the Application.

The Calderbank letter was sent by email on 11 April 2014 noting that the Plaintiff’s claim seemed to be unsupported by the totality of the evidence. The offer read “in order to facilitate a resolution of the dispute without recourse to a hearing and on the basis that our clients take a commercial view of the matter, we are instructed to offer that the proceedings be discontinued with each party to pay its own costs. This offer is made under the principles in Calderbank v. Calderbank [1975] 3 ER 333 and remains open for a period of fourteen (14) days from the date of this letter”.

The Plaintiff, who was unrepresented at the time, did not respond to the letter. The matter had already been set down for hearing to commence on 5 May 2014. The Court was of the view that the result obtained by the Plaintiff was less favourable than the position he would have been in had he accepted the Calderbank offer. Further, the Court noted there was no presumption that indemnity costs will be awarded in circumstances where a Calderbank offer is not accepted. Two questions need to be considered. Firstly, was there a genuine offer of compromise and secondly, was it unreasonable for the offeree not to accept it?

The Court accepted that the offer was a genuine offer of compromise and it remained open for acceptance for a reasonable period. However, the extent of the compromise was not great and was made at a time when the Defendants’ evidence was incomplete. Further, it was also made at a time when the Plaintiff was not legally represented and it did not foreshadow that an Application made be made for indemnity costs in the event that it was not accepted. As such, the Court ordered the Plaintiff pay the Defendants’ costs of the proceedings on an ordinary basis.