Latest High Court decision: Hood v Down Under Enterprises International Pty Limited & Hood v New Directions Australia Pty Limited [2023] HCA 12
Calderbank offers
This latest High Court decision reaffirms Brand Partners ethos for “dispute resolution” – make offers early and go hard – as this is a basic risk management strategy. You are effectively taking out an insurance policy and for want of a better cliché – hedging your bets. This latest decision explores the effectiveness of making offers to settle (also known in the legal trade as Calderbank offers). So, what did the High Court say?
LEGAL PRACTITIONERS MAKE SURE you SEND them BEFORE VERDICT OR JUDGMENT IS GIVEN.
The decision of the High Court of Australia reaffirmed the principle set out in Stewart v Atco Controls Pty Ltd (In Liq) [No 2] (2014) 252 CLR 331 that failure to accept an offer of compromise will not be unreasonable where the offer is not open for acceptance when the appeal is instituted or before significant costs had been incurred. The case reiterates that an offer of compromise must be made before verdict or judgment is given regarding the relevant claim.
On the facts, the respondents had the benefit of an order for party-to-party costs calculated pursuant to the High Court scale of costs. The parties were unable to agree over the amount of the costs. To try and resolve the quantifications of the outstanding costs the respondents sent an offer of a reduced amount in accordance with the principles set out in Calderbank v Calderbank [1976] Fam 93 to the applicant. The applicant did not respond to this offer.
As a result, the respondents made an application to the High Court to amend the costs orders so that the applicant be required to pay those costs, and the costs of the applications, on an indemnity basis. The respondents’ position was that the applicant, having acted so unreasonably by refusing to engage with the respondents’ Calderbank letter, justified their application that costs now be paid on an indemnity basis.
The High Court predictably rejected the respondents’ argument that the applicant’s failure to respond to the Calderbank letter was so unreasonable and therefore justified an order for costs to be paid on an indemnity basis. The Court didn’t consider the applicant ignoring the Calderbank letter to be so unreasonable as the respondents’ offer was plainly not open for acceptance by the applicant when the applications for special leave to appeal were instituted or on foot. The Court relied on the case of Stewart v Atco Controls Pty Ltd (In Liq) [No 2] (2014) 252 CLR 331 where it was held that the respondents’ failure to accept an offer made by the appellant was not unreasonable as the offer was not open for acceptance at the time of the appeal or before significant costs had been incurred.
This decision by the High Court reaffirms how important it is to make genuine offers and to consider carefully when those offers are made in a proceeding. Had the respondents made an offer at the beginning of or during the High Court appeal proceeding and the applicant not engaged with the offer, then the respondents may have been entitled to claim costs on an indemnity basis.
You can read the full judgment here.
Calderbank offers
This latest High Court decision reaffirms Brand Partners ethos for “dispute resolution” – make offers early and go hard – as this is a basic risk management strategy. You are effectively taking out an insurance policy and for want of a better cliché – hedging your bets. This latest decision explores the effectiveness of making offers to settle (also known in the legal trade as Calderbank offers). So, what did the High Court say?