by Fergal Mullins March-31-2021 in Healthcare Law, Dispute Resolution & Litigation

Calderbank Offer – A Cost-Saving Mechanism

Given the general rule in Ireland that costs follow the event, the unsuccessful litigant is obliged to pay the costs of the victor as well as their own. Therefore, particularly in matters where liability is not at issue, defendants have an incentive to resolve matters as quickly as possible, by making full use of the various cost-saving mechanisms available to them.

One such cost saving mechanism is a Calderbank offer, which has been put on a statutory footing due to the enactment of the Legal Services Regulation Act 2015 (LSRA 2015) and specifically section 169(1)(f).

Calderbank offers are written offers of settlement made “without prejudice save as to costs”. They are particularly useful mechanisms to assist defendants in trying to facilitate the early resolution of a claim particularly because there is flexibility around when they can be made and it is not necessary to physically lodge funds in court.


The Role of Calderbank Offers – Contrasting Schools of Thought

Until fairly recently, there was debate regarding whether or not Calderbank offers had a place in personal injuries proceedings.  This was due to Order 99 Rule 1(A)(1)(b) of the Rules of the Superior Courts which stated that a Court could consider such settlement offers, in considering the awarding of costs in any action “other than an action in respect of a claim or counterclaim concerning which a lodgment or tender offer in lieu of lodgment may be made in accordance with Order 22”. 

This seemed to suggest that a court could not consider a Calderbank offer if a lodgment or tender offer could be made in the case and since lodgments/tenders can be made in personal injuries actions, Calderbank offers had no place. Nonetheless, Calderbank offers have been used in personal injury proceedings to good effect in achieving settlements even if the courts were not often called upon to consider them in the context of a dispute around costs.


LSRA 2015 – Calderbank Offers on a Statutory Footing

The LSRA 2015 and specifically section 169(1)(f), puts an end to any debate around whether and when Calderbank offers have a place in civil litigation, including personal injuries action. 

Section 169(1) of the LSRA, states that “a party who is entirely successful in civil proceedings is entitled to an award of costs against a party who is not successful in those proceedings unless the court orders otherwise, having regard to the particular nature and circumstances of the case, and the conduct of the proceedings by the parties”.

Section 169 then goes on to list out various factors to be taken into account by the court including section 169(1)(f) “whether a party made an offer to settle the matter the subject matter of the proceedings, and if so, the date, terms and circumstances of that offer.”

The enactment of the LRSA 2015 is therefore a welcome development for defendants, as it strengthens the arsenal of tools available in their efforts to resolve personal injury matters expeditiously by removing any debate over the legitimacy of Calderbank offers.


Calderbank Offers – Points to Consider

Certain points should be borne in mind when making Calderbank offers:

  • It will be for the Defendant to petition the Court that the offer was such that it ought to displace the principle that costs follow the event, and it will be for the Court to determine the extent to which that principle should be displaced. 
  • The Court will specifically scrutinise the date of the offer. Once liability & quantum investigations are finalised, the earlier the offer is made in the litigation process the better in order to minimise costs and increase the potential costs burden on the Plaintiff, should they fail to beat the amount offered.
  • The offer should be clearly time limited so the Plaintiff can clearly understand how long the offer remains open. The Plaintiff should be afforded sufficient time to consider the offer carefully and take advice.  An offer that remains open for 24 hours without good reason will likely not be looked on as favourably as an offer remaining open for 21 days.
  • The Plaintiff should be advised of the Defendant’s intention to refer to the letter at the conclusion of proceedings in order to ground an application to fix the Plaintiff with the costs of defending these proceedings, to include all reserved costs or costs in respect of discovery.
  • The Court will also look closely at the circumstances of the offer and it is likely it will consider, for example, whether it was made with or without admission of liability and if the latter, the extent to which that position was reasonable.

Given the broad wording of section 169(1) of the LRSA 2015, which allows the Court to consider both the nature and circumstances of the case, and the conduct of the parties, it is arguable that a plaintiff may struggle to avoid a costs penalty should they unreasonably reject a Calderbank offer and proceed to only marginally exceed it at trial. It remains to be seen how the Courts will approach awarding legal costs in such circumstances.


Calderbank Offers – Recent Case-Law

The recent 2020 Court of Appeal decision in Higgins v Irish Aviation Authority1  provided one of the first judicial interpretations of section 169(1) of the 2015 LSRA. Justice Murray stated that a Calderbank offer can “assume decisive importance in determining what order for costs is just”. However, Justice Murray’s remarks must be qualified by the fact they arose in the context of a case involving an appeal to the Court of Appeal on an assessment of damages by the High Court.

Nonetheless, Justice Murray also noted that although the phrase “costs follow the event” appears in the marginal note of section 169 of the LSRA 2015, it does not feature in the section itself and has been purged completely from Order 99 of the Rules of the Superior Courts (which was consequentially recast in order to give effect to LSRA 2015). This observation by Justice Murray perhaps reflects the slight shift away from the general rule that “costs follow the event” in the LSRA 2015.

In short, Calderbank offers are likely to be a consideration in the determination of costs in all forms of civil litigation, including personal injury actions, and it behoves defendants to make use of them where appropriate.

If you have queries in relation to Calderbank offers or any of the issues raised in this article, please contact Fergal Mullins or any member of the Healthcare Team at Hayes.

1 Higgins v Irish Aviation Authority [2020] IECA 277

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