Civil litigation is a costly and technical process which requires careful compliance with the legislative and rules of the respective Court. In contrast it also is akin to a game of chess as each party to the proceedings does now know the others strategy. In Queensland, the predominant legislation which governs how litigation is to be conducted is contained in the Uniform Civil Procedure Rules 1999(Qld)(UCPR). There are of course various practice notes and rules prescribed by the respective Court and case law which needs to be complied with depending on the circumstances and the Court.
Offers to settle – chapter 9, Part 5 of the UCPR
Regulation (Reg) 361(1) describes the conditions that apply to ‘defendants’ that make an offer to settle the proceedings and the implications that apply if the offer is accepted or rejected. Reg 360 contains the rules which apply if the Plaintiff makes and offer to settle.
Defendant’s offer – Reg 361 applies if:
the defendant makes an offer (to settle) that is not accepted by the plaintiff and the plaintiff does not obtain an order that is more favourable to the plaintiff than the offer; and
the court is satisfied that the defendant was at all material times willing and able to carry out what was proposed in the offer.
The implications for legal costs because of Reg 361(1)
Reg 361(2) provides that unless a party (to the proceedings) can show that another costs order is appropriate in the circumstances, the Court must:
order the defendant to pay the plaintiff’s costs, calculated on the standard basis, up to and including the day of service of the offer; and
order the plaintiff to pay the defendant’s costs, calculated on the standard basis, after the day of service of the offer.
What this means practically is that a game of chess can take place in the making of an offer to settle according to the rules because of the legal costs consequences which arise. What each party has to consider at the time of making or considering the acceptance of an offer to settle is the likely amount of legal fees incurred at the point in time when the offer is made, the relative strength of their case in addition to their best and worst case outcomes at trial. It’s at this point that a functioning crystal ball would be very useful!
What if the offer to settle is served during the trial?
Reg 361(3) contains further rules that apply if an offer is made during the trial in relation to the matter.
What happens if the defendant makes multiple offers that satisfy Reg 361(1)? Reg 361(4) states that if the defendant makes multiple offers to settle then only the first such offer is taken to apply, so the quantum of this offer needs serious consideration.
What’s the difference between an offer according to the Rules and a Calderbank offer?
The English decision of Calderbank v Calderbank [1975] 3 All ER 333 (Calderbank) is the leading case on common law offers to settle and the legal cost consequences that flow from making an offer to settle. The ratio or key part of the Calderbank decision is, where a party has made an offer, which is rejected, the offer may be placed before the Court at the time of considering the question of legal costs.
If the Court considers that the other side unreasonably rejected the offer (generally on the basis that the offer was more favourable than the eventual judgment for the party who received the offer), then the costs awarded for the successful party will likely be reduced.
A calderbank offer or an offer according to the rules?
An offer according to the rules has more of a guillotine affect, the parties are either below or above the threshold with the resulting consequences. A calderbank offer is something that on the question of legal costs will be read by a Judge so that party making the offer can include some details of its reasons, which will have to be considered. Because of this, in deciding whether to make an offer according to the rules or a Calderbank offer the question is whether a party would like to put material before the Judge to consider on the question of costs or whether they prefer the certainty provided by the rules.
If your business is involved in a litigious matter and would like advice on the implications of making an offer according to the rules, contact us for a confidential and obligation-free discussion:
Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS. Legal Practice Director T: +61 7 3221 0013 (preferred) M: +61 419 726 535 E: mburrows@dundaslawyers.com.au
Disclaimer
This article contains general commentary only. You should not rely on the commentary as legal advice. Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.
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