Calderbank - Tender Offer

The high level of costs is a constant bugbear and a legitimate business concern for any organisation involved in litigation. In a jurisdiction like Ireland where the unsuccessful party has to pay the costs of the victor as well as its own, defendants have an incentive to bring litigation to a speedy conclusion by settlement and avoid the expense of a trial. What can a defendant do to get a reluctant or un-cooperative plaintiff to sit up and take notice of entreaties to settle.

The Lodgment

The Rules of the Superior Courts ("RSC") lay down procedures to help defendants focus the minds of plaintiffs. Order 22 of the RSC permits payments into court. This allows a defendant to pay into court a sum of money in satisfaction of a claim and is more commonly known as a lodgment. The lodgment has to be made at specific points in the legal proceedings and outside of those particular timelines the permission of the court must be sought.

In non personal injuries actions the procedure involves the actual lodgment of money into the courts office. Personal injuries cases differ since the introduction of S.I. 328 of 2000: Rules of the Superior Courts (No. 5) (Offer of payment in lieu of lodgment) 2000, which allows certain qualified parties (including indemnifiers authorised in the State as an insurance undertaking) to make a tender offer in lieu of a lodgment. In other words a qualifying party does not have to make an actual payment into court.

The advantage of making a Lodgment

Once a lodgment is accepted, other than completing some minor procedural issues, the litigation is usually at an end. It is only when a lodgment is not accepted, the matter proceeds to trial and the plaintiff fails to achieve a sum in excess of the lodgment that the penal costs' provisions in the RSC are applied. Under Order 22 Rule 6, the plaintiff is entitled to the costs of the action up until the time the lodgment was made, but crucially the defendant is entitled to the costs of the action from the time the lodgment is made. As the latter period will include the trial of the action, the plaintiff becomes liable for the defendant's solicitors costs, barristers fees and experts' fees. Consequently the costs can amount to a significant sum.

The making of a lodgment by a defendant is a useful tactical tool as Order 22 Rule 6 (3) clearly states that "...the defendant shall be entitled to the costs of the action ..." (except in cases of minors). While the advantage of a lodgment is...