Calderbank Offer Strategy: Should You Accept or Reject?

Calderbank Offers as a Strategic Settlement Tool 

A Calderbank offer can be a powerful tool in settlement negotiations. It can encourage parties to negotiate candidly and make a genuine effort to reach a compromise without incurring the expenses associated with litigation. However, receiving one requires a careful commercial assessment. 

What is Included in a Calderbank Offer? 

The specific contents of a Calderbank offer will likely vary depending on the particular nature of the dispute and the parties involved. A Calderbank offer typically includes specific terms and proposals for settlement made by one party to the other during the course of litigation. This may include: 

• A specific monetary amount to be paid by one party to the other. 
• A list of actions to be taken. 
• Any other conditions that would resolve the dispute. 

The Calderbank offer should also specify the timeframe within which the party receiving the offer can respond. By having a time limit, the parties are encouraged to consider the settlement proposal promptly. 

Note: While legal costs are generally paid by the losing party in a court case, this burden can be reversed in the event of a rejected settlement offer. This makes the “save as to costs” provision vital for strategic protection. The court’s power to make such cost orders is found in section 98 of the Civil Procedure Act 2005 (NSW). 

3 Factors for Considering the Calderbank Offer 

You should reasonably consider all Calderbank offers you receive. When considering the offer, there are three important considerations to remember: 

Prospects of Success at a Final Hearing 

Whether or not you should accept a Calderbank offer will largely depend on what result you will likely receive if the dispute proceeds to court. Your lawyer can provide legal advice on your prospects of success at a final hearing. They can also help you decide whether to accept the offer or draft a reasonable counteroffer. 

The Value of Your Case 

Make sure you are realistic about the value of your claim and modest in your estimates. Consider how your claim value compares to the costs you will incur to carry the case forward, such as the cost of legal representation and the time you will have to spend attending court. Balance these considerations against the Calderbank offer you have received. Remember that it can often be 9-12 months before you find yourself at a hearing. The rules governing court procedure, including the timing of hearings, are set out in the Uniform Civil Procedure Rules 2005 (NSW). 

The Cost of ‘Winning’ 

Unfortunately, parties may find that despite succeeding in their case, the opposing party does not have the funds to pay. This is not exactly a favourable result. Consider whether the other party can pay if you ‘win’ or whether preparing for the hearing may chew up their funds. 

Key Settlement Statistics in Australia 

When should you not accept the Calderbank offer? 

Each party should seriously and genuinely consider any offer of settlement they receive. If a court feels your rejection is unreasonable, it may order you to pay the other party’s court costs. When determining whether rejection of a Calderbank offer was unreasonable, the courts may consider, amongst other factors: 

• the timing of when the offer was made (early or late in the proceedings); 
• how long the offer was open; 
• whether the offer is a reasonable compromise; 
• the prospects of success for the offeree; and 
• if the terms were expressed clearly and precisely. 

Recent NSW cases such as Teo & Anor v Twyford (No 2) [2023] NSWSC 1626  and Macaulay v Macaulay (No 2) [2025] NSWSC 421  demonstrate that the court will examine whether the rejection was unreasonable in all the circumstances. 

Note: that you do not have to accept a Calderbank offer. For instance, if the other party does not give you sufficient time to consider the offer, or it is too early to determine the full extent of each party’s position, acceptance may not be the right course of action. If you do not wish to accept the offer, consider making a reasonable counteroffer. 

Case Example: The Cost of Rejection 

Suppose your employee sues you for wrongful termination. You can offer them a reasonable out-of-court settlement, which they subsequently refuse. If they win the case in court and are awarded a similar remedy, you can raise the original offer as evidence that the former employee should bear the burden of paying their own and your legal costs. This principle was reinforced in Berhero Pty Ltd v Hinds (No 2) [2023] NSWSC 1214, where the court examined that it is not sufficient to simply compare dollars—it is also necessary to compare the substance of the offer with the ultimate result. 

Strategic Decision-Making in Litigation 

Receiving a Calderbank offer is a critical turning point in any legal matter. It forces a realistic appraisal of your case’s value versus the risks of continuing to trial. Deciding whether to accept, reject, or counter-offer requires a deep understanding of indemnity costs and court precedents to ensure you aren’t left with an unexpected bill at the end of the proceedings. 

Unsure whether to accept or reject a settlement proposal? Our legal team can help you evaluate your prospects and draft a response that protects your interests. Contact us today for a consultation.