A Calderbank offer is made by one party putting the other side on notice that if the dispute goes before a court, and the outcome is less favourable to the other, the court, in exercising its discretion as to costs, can order a party who rejected the offer to pay the successful party’s costs up to the time the offer was made, on an ordinary basis, and from the date of the offer to the end of the litigation on an indemnity basis.
Calderbank v Calderbank
Jacqueline and John Calderbank were married to each other for 17 years; they were living in a home financed by Jacqueline. In January 1973 Jacqueline left home and commenced divorce proceedings seeking a declaration that the family home, was her property. John sought a financial provision or a property adjustment order with the court awarding John £10,000 plus court costs.
Jacqueline had purchased the matrimonial home around 1970 using proceeds from her parent’s estates; however, the home was put into John’s name for financial reasons. In June 1970 Jacqueline had purchased a house that was made available for the occupation of John’s mother.
On appeal, the Court upheld the £10,000 damages but reversed the burden of paying legal costs from Jacqueline onto John. The Court held that the legal proceedings had been unnecessary as prior to the matter going to trial, Jacqueline had offered John the house that was rented to his mother as settlement.
Ross v Gordon
In August 2018, Olga Hart was advised by her solicitor that a “no-contest clause” in her Will would be unenforceable. However under ACT law if a deceased estate had no net value there would be no funds available. Following legal advice Olga created the Olga Hart Trust (“the Trust”) and wrote cheques (the Cheques) totalling $1.2M in favour of the Trust to “exhaust” her estate; cl10 of the Trust deed provided that upon Olga’s death her daughter Donna Gordon succeeded her as trustee.
On 5 September 2018, Olga Hart prepared her final will (the Will) naming Donna as the sole executor and making a provision that her former de facto partner James Ross receive a cash sum of $200,000.00 but no property from the estate(the Estate). James was not made aware of the existence of this will until after Olga’s death.
Following Olga’s death in September 2018 Donna became the trustee of the Trust. James filed a caveat on 18 October 2018 against the probate of Olga’s estate. On 25 October, James was informed that the Estate had insufficient assets to pay the Cheques issued by Olga to the Trust, therefore any gifts and bequests in the Will would not be satisfied. However, if James agreed to abandon any rights against the Estate by 14 November 2018 he would be paid the bequest in the Will.
James failed in proceedings seeking declaratory relief, an order for family provision, damages for the tort of devastavit, relief in equity against Donna in her capacity as trustee of the Trust, and, as Executor of the estate. Donna was granted probate on 25 March 2019. In late April 2019, the Cheques were presented and dishonoured by a financial institution.
The purpose of a costs order is to reach a fair and just result. In this case, James had received legal advice after he was served a Calderbank letter of offer in September 2019 that indemnity costs would be sought.
Ultimately Donna sought and the Court accepted, that justice required the unsuccessful party pay the costs of the successful party on the usual basis.