Posted on: Jun 10, 2015
Without prejudice save as to costs offers are commonly referred to as “Calderbank” offers.
A major factor in deciding whether to bring a personal grievance will be the potential costs faced. Even if an employee succeeds, costs awarded are unlikely to cover the actual costs incurred. Further, the employer will also incur significant costs in defending a personal grievance, even when a case is of little merit. This is where a “without prejudice save as to costs” offer (“Calderbank”) can be useful.
A Calderbank is an offer of settlement made by one party to the other prior to a hearing.
If a party refuses the offer and is successful in the hearing, but is awarded an amount that is less than that contained in the offer, the party who made the offer may put the offer before the Authority or Court, for its consideration in fixing costs. The name derives from the English case of Calderbank v Calderbank[1]. An offer made “without prejudice except as to costs” (a Calderbank) is admissible on an application for costs, unlike other letters written without prejudice that should not be submitted.
A Calderbank needs to be a reasonable offer for settlement, and is intended to put pressure on the parties to discourage them from proceeding with a case that may turn out to be otherwise unproductive.
In Shanks v Agar (t/a Rod Agar & Co), the Chief Judge summed it up nicely in saying:[2]
… the reason for allowing Calderbank offers is to encourage plaintiffs to realistically assess their chances in litigation and, if possible, to settle claims before they go to a defended hearing. If a defendant wishes to concede before trial that a claim may be valid but only to a certain level, and the plaintiff refuses to accept that concession, he or she does so at his or her peril if the Court in the end awards less than the offer… The purpose of the offer is to shift the risk of the future costs from the respondent/defendant to the applicant/plaintiff.
A Calderbank offer must contain particular elements to be effective.
- The offer must be fair, clear and transparent
- Sufficient time must be allowed for consideration of the offer
- The offer should contain a contribution towards pre-offer costs (but not in an “all inclusive” way)
- The party needs to be put on notice that if the offer of settlement is not accepted, then it may be submitted to the Authority or Court in relation to the question of costs
Beware that Calderbank offers are unlikely to be given full force in the Employment Relations Authority.
We note however that, while they can be a very effective tool, a Calderbank offer will not always mean that the party making the offer will be protected from liability for all costs incurred after the offer is made. It is just one important factor in the Authority or Court’s discretion as to the awarding of costs.
Judge Inglis in the Employment Court recently said that in her view it would generally be inconsistent with the statutory imperatives underlying the Act for significant costs awards to be imposed on unsuccessful litigants in the Authority, and that giving full force to Calderbank offers in that forum would likely have a chilling effect on employees pursuing grievances at first instance, with the spectre of a significant costs liability out of all proportion to the likely outcome.[3]
[1] Calderbank v Calderbank [1975] 3 All ER 333
[2] Shanks v Agar (t/a Rod Agar & Co) [1996] 2 ERNZ 578 at 581
[3] Stevens v Hapag-Lloyd (NZ) Ltd [2015] NZEmpC 28
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