What is a Calderbank Offer?

Calderbank v Calderbank

Calderbank v Calderbank [1975] 3 All ER 333 (EWCA) was a decision of the English Court of Appeal that has had a significant impact on Australian Law; this decision is the origin of the term ‘Calderbank Offer.’

But before we go through what a ‘Calderbank Offer’ actually is, let’s take a look at the case itself:

Mr and Mrs Calderbank were like any one of us. They were married for 17 years, had three children until they separated and filed for divorce. Whilst the divorce was granted there were major difficulties on who should keep what.

The main point of contention was the family home, and what a home it was.

Mrs Calderbank had inherited about 80,000 pounds including a house from her parents, but the house was registered under Mr Calderbank’s name. It wasn’t the matrimonial house, but Mr Calderbank’s parents lived there.

When referred to the Family Court, Mrs Calderbank, “made an application under s 17 of the Married Womenʹs Property Act 1882 seeking a declaration that the matrimonial home… was her property beneficially.”  Mr Calderbank then, “made application under ss 23 and 24 of the [Matrimonial Causes Act 1973] seeking financial provision or alternatively a property adjustment order.”

On 13 January 1975 Mr Calderbank received a lump sum order of 10,000 pounds plus legal costs.

Mrs Calderbank however had already offered him 12,000 pounds and she stated in an affidavit, “I am willing, and have always been willing, to make over to the [husband] the house at Alderley Edge.” Importantly, the judge was of the opinion that this house had a value of 12,000 pounds.

Mr Calderbank could have, without a trial, received an asset of the value of 12,000 pounds from Mrs Calderbank. Instead, they went to trial and he received 2,000 pounds less than her original offer.

Mrs Calderbank appealed to the England and Wales Court of Appeal (UK) and one of her grounds was that as Mr Calderbank had declined a reasonable offer of settlement before the trial, the legal proceedings were prolonged unnecessarily and therefore he should be liable to pay the legal costs of both parties.

The Outcome:

The Court decided that if a winning party to a litigation matter refuses a settlement offer by the losing party which was higher than the amount awarded to the winning party, then the losing party may produce the settlement offer when the court comes to award costs for the dispute. If the winning party refused a settlement offer better than what they were awarded then the losing party could claim the winning party should pay their costs given the winner could have avoided the costs altogether had they accepted the offer.

The Court reversed the burden of paying costs onto Mr Calderbank for unnecessarily prolonging the legal proceedings and incurring those costs.

Your Strategy:

In litigation you should always be conscious of your costs. They can form a significant part of the settlement amount, if someone puts a Calderbank offer to you, then you should consider it very seriously because it means they are likely to bring that offer to the attention of the court when you discuss costs at the end. You should be careful as a plaintiff when considering these offers because if you are awarded less than the offer you could be on the hook for the other party’s legal costs which could seriously erode the amount of money you receive.

Likewise, as a defendant you want to be considering making realistic Calderbank offers to the Plaintiff to encourage them to accept an offer or cause them to be liable to pay your legal fees.

Find the full judgement here: Microsoft Word – Calderbank v Calderbank 1975.doc (nadr.co.uk)