Costs: Calderbank Offers Can Be Accepted After Hearing Has Started

• Published date: 10 June 2020
• Author: Mr Jonathan Shaw
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Clyde & Co

The High Court has held that a Calderbank offer relating to costs could be accepted by the claimant part way through the detailed assessment hearing. The decision starkly illustrates the difference between a Calderbank offer and an offer pursuant to Part 36 of the Civil Procedure Rules.

It was held at first instance, that unlike a Part 36 offer, the Defendant's Calderbank offer was capable of acceptance without the permission of the Court, despite the hearing having started. The Defendant appealed. However, the High Court upheld the first instance decision, finding that it had been open to the Defendant to withdraw the offer at any time, or place a time limit on acceptance of the offer.

Facts

Following the conclusion of a clinical negligence claim in which the Defendant agreed to pay the Claimant's costs, the Claimant submitted a bill of costs in excess of £620,000.

On 19 August 2019 the Defendant made an offer 'without prejudice save as to costs' (a Calderbank offer) to settle the Claimant's costs at £440,000. This offer, previously made in September 2018, was clarified as being "only capable of acceptance subject to the agreement of the Defendant's costs of Detailed Assessment incurred since that date."

During the second day of a three-day detailed assessment, it was apparent that the assessment would result in the Claimant would recovering less than £440,000. The Claimant emailed the Defendant accepting the offer of £440,000.

Master Rowley held this was a valid settlement of the Claimant's claim. It was found that the Defendant had failed to protect its position and the fact that it had not done so was no reason for the judge "to say that the offer has not been validly accepted in accordance with ordinary common law principles."

The Defendant appealed.

Appeal

The appeal was heard before Mr Justice Morris.

The Defendant argued that Master Rowley should have found that the August 2019 offer came to an end after the lapse of a reasonable time which was no later than the start of the detailed assessment hearing. Further, the Defendant's offer was conditional upon the Claimant paying the specific amount of the Defendant's detailed assessment costs and not "the Defendant's reasonable costs of detailed assessment" as written in the Claimant's acceptance.

Furthermore, the Defendant argued that allowing the offer to remain open during the hearing provided a "perverse incentive" as the Defendant was in a worse position than if it had never made the offer at all...