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Lawyers often refer to a settlement offer as a “Calderbank Offer”. The term comes from the English case Calderbank versus Calderbank [1976] Fam. Law 93;
[1975] 3 All ER 333; [1975] 3 WLR 586; [1976] Fam. 93.
Calderbank was a dispute under English family law. In this case, the appeals court ordered a husband to pay the wife her expenses from the date (see below) on which she made an offer of compromise to the husband. The reason the court made this decision was that the husband should have accepted this offer, thus avoiding the need for a hearing on the matter.
Costs in civil matters
In civil cases, the usual rule is that the losing party pays the victorious party’s costs (see, for example, rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW).
Costs in criminal matters
In criminal matters, it is unusual for costs to be awarded. There are defined circumstances under which charges can be ordered: see, for example, Sections 116 to 118 and Sections 212 to 216 of the Criminal Procedure Act 1986 (NSW). 9
Costs in family law cases
In family law proceedings, each party bears its own costs – see Section 117 (1) of the Family Law Act.
According to Section 117 (2) of the Family Act, however, a family court has a wide discretion when allocating costs “… if the court is of the opinion that there are circumstances that justify this …” (see Penfold and Penfold ( 1980) 144 CLR 311; 5 Fam.LR 579; In the marriage of Collins (1985) 9 Fam.LR 1123; FLC 91-603 FC).
Section 117 (2A) of the Family Law lists the factors that a family court must take into account when deciding on costs.
Financial circumstances of each party
According to section 117 (2A) letter A, the court has to examine the financial circumstances of each party.
An inequality of the financial circumstances of the parties can justify a cost decision in favor of the financially weaker party (see In der Ehe von Kelly (No. 2) (1981) 7 Fam. LR 762).
This factor alone can be enough to trigger a cost assignment. However, the court must consider all relevant factors before deciding whether to make a decision on costs. If the weaker party has acted unjustifiably, it does not receive a cost order (see, for example, In The Marriage of Fisher (1990) 13, Fam. LR 806; FLC 92-127).
Legal assistance
The court must consider whether a party is legally assisted and the terms and conditions for granting legal aid – see Section 117 (2A) (b).
Behavior of the parties
According to Section 117 (2A) Letter C, the court must take into account the behavior of the parties in connection with the proceedings.
This is a crucial factor in determining whether a cost order should be placed.
Most frequently, cost orders in accordance with Section 117 (2A) Letter C are issued against a party if they have led to an inappropriately prolongation of the proceedings or if they have made the case excessively expensive for the other side (see e.g. In the marriage of Jensen) (1982) 8 Fam. LR 594; FLC 91-263).
Oral or written submission of false or misleading evidence may, in an appropriate case, be a circumstance that justifies a decision on costs: see Penfold and Penfold (1980) 144 CLR 311; 5 family LR 579.
Has a party violated the court orders?
Each party is obliged to comply with all court orders. This includes engagements related to disclosure, filing of documents and valuation of assets.
If a party has violated a court order, Section 117 (2A) Letter D authorizes the court to make a decision on costs against this party.
Was a party completely unsuccessful?
It is unlikely that the fact that either party was completely unsuccessful (see Section 117 (2A) (e)) alone is sufficient to justify a decision on costs. This is because this subsection is to be interpreted in conjunction with Section 117 (1) which provides the general rule that each party should bear their own costs.
An example of this service factor is Re Collins and the Victorian Legal Aid Commission (1984) FLC 91-508. In Collins, the court ordered the unsuccessful party to bear the other party’s costs because the trial had no prospect of success and it was wrong that the other party “was left in litigation with the Pyrrhic victory, but with a substantial one Cost accounting that he never should have incurred. “
Has a party made a written offer to reach an agreement?
Pursuant to Section 117 (2A) (f), the court must consider whether a party has made a written settlement offer and the terms of that offer.
In the Calderbank v. Calderbank case, on August 10, 1974, the woman had offered to transfer to the husband a house his mother occupied for about £ 12,000 in exchange for the evacuation of the intended family home. The husband declined the offer.
The court ruled that the wife should be declared the beneficial owner of the house and that the husband should be paid £ 10,000 out of the proceeds from the sale of the family house.
The woman’s offer was thus better than what the court ultimately ordered.
In the appeal proceedings, the appeal court dealt with the question of costs. Lord Justice Cairns stated:
I have come to the conclusion that this was an offer that the husband should have accepted in the circumstances of this case and that, since he stuck to this procedure and received a lump sum back less than the value of this house, the right The order would be that he should have costs until August 14th and then the woman should have her costs for the proceedings before the following court.
So the gravamen of Calderbank is:
- When Party A makes Party B an offer; and
- The court ultimately decides against Party B, who is less favorable than Party A’s offer;
- Then Party B should pay Party A’s costs from the date of the offer.
The Calderbank principle applies in family law cases.
In Browne versus Greene (2002) 29 Fam. LR 428; FLC 93-115;
[2002] In Fam. CA 794, the full family court stated: “… Failure to comply with a reasonable offer when the parties have sufficient knowledge at the time of the offer to adequately examine it is something that is very important arrives Normally a considerable weight should normally be given … “See also Lad v Gittings (2014) 52 Fam. LR 71; [2014] FamCA 439; BC201451537.
Other relevant matters
Other matters that the court considers relevant are also to be taken into account in accordance with Section 117 (2A) Letter G.
What do the terms “compensation costs”, “attorney / customer costs” and “party / party costs” mean?
Attorney / client costs are the costs a lawyer charges a client for legal services. An attorney / client expense order (or compensation expense order) is a court order against an unsuccessful party that seeks to reimburse (or compensate) the successful party for their reasonable legal costs.
Party / party cost is the legal cost of the successful party that a court will ask an unsuccessful party to pay. This amount is invariably less than an order for compensation costs.
In family law cases, the scales for party / party costs are defined in the following legal provisions:
Under what circumstances are compensation costs granted?
In Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, Justice Sheppard summarized the cost of compensation law. The principles that arise are:
- The usual rule is that an order to pay costs is made on a party and party basis.
- The circumstances of the case must be such that the court can deviate from the usual course.
- The Court of Justice has general and discretionary powers to reimburse the costs between the lawyer and the client “if the case law so requires”. There should be a peculiarity or unusual feature in the case to justify the Court to deviate from normal practice.
- Are there circumstances that exist or are absent in individual cases that justify a deviation from the usual rule?
- The categories in which the discretion can be exercised are not closed.
Sheppard J provided the following examples of cases where compensation costs were ordered:
- Make allegations of fraud, know they are wrong; and make irrelevant fraud allegations.
- Indication of particular misconduct that is causing the court and other parties to lose time.
- The proceedings were initiated or continued for any other reason or with willful disregard of known facts or clearly defined laws.
- Making allegations that should never have been made, or improperly extending a case through unfounded objections.
- A rash rejection of a compromise offer.
- The party committed a contempt for the court.
However, his honor warned:
“… the existence of certain facts and circumstances that may justify the issuing of an order to pay costs, for example on a compensation basis, does not mean that the judges are necessarily required to use their discretion to make such an order. The cost are always at the discretion of the trial judge … “
At Opal Legal, we regularly appear and advise on cost disputes arising from legal disputes and represent parties in cost estimates.
The content of this article is intended to provide general guidance on the subject. A professional should be obtained about your particular circumstances.
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