Recently I discussed the genesis of Calderbank offers, an offer of settlement expressed to be
“without prejudice save as to costs”
A Calderbank offer can be oral or in writing; an oral offer may be given less weight depending on the circumstances of the case. Importantly the court exercises its discretion regarding costs.
A Calderbank order may be made on an indemnity basis in favour of
a successful party contrary to the rule that costs are awarded on an ordinary basis ; or
a losing party contrary to the general rule that costs follow the event .
In Shephard v Galea and Byrne as Executors and Trustees of the Estate of the late Joseph Galea the appellant (Georgina) brought a derivative action against her siblings and executors (Carmen and Tony) of their father Joseph Galea’s estate.
Joseph transferred his property to Carmen and Tony before his death, leaving little in the estate. Georgina sought relief on behalf of the estate alleging that the transfer was the result of undue influence and unconscionable conduct by Carmen and Tony.
The court held Georgina’ failure to accept the 8 June 2018 Calderbank offer from Carmen and Tony to be unreasonable conduct and granted the orders sought for indemnity costs after 8 June 2018
The appeal against the primary decision and the cost’s decision were dismissed.
New South Wales
In Wallis v Rudek the parties disagreed on the precise terms of an arrangement where an adult daughter paid $827,498.27 to discharge the balance of her parents’ mortgage and her parents transferred ownership of the home to her.
The daughter and her immediate family moved into the home and the parents continued to reside on the ground floor; the daughter prepared a licence agreement for the parents to sign but they refused.
Difficulties emerged between the parents, their daughter and her family, leading to the daughter giving notice to her parents to vacate the ground floor of the house.
The parents resisted the notice claiming their daughter promised they could live, rent-free in the ground floor of the house until they died, and their daughter would live in the upstairs part of the house. In the alternative, the parents sought the difference between the amount paid by their daughter to discharge their mortgage and an asserted value of the home of $1,050,000.
The primary judge found that there wasn’t a commitment that the parents had an unqualified right to reside in the property for the rest of their lives ; ordering the daughter pay equitable compensation to her parents equal to the difference between what she had paid to discharge their mortgage and the uncontested value of the house accepted at trial.
On 20 February 2018, the daughter had offered “…to minimise any further animosity or hostility between the family” $200,000 to the parents if they were to vacate the property. The parents had rejected the offer.
On 17 April 2018 the daughter relying on Calderbank v Calderbank principles made a further offer “to resolve this matter now” stating if the offer was rejected and she was successful in any hearing, the offer would be used in support of an application for an order for costs on an indemnity basis.
The appeal was dismissed with costs.