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Calderbank Offers and Costs Strategy in Victorian Estate Litigation
A Victorian guide to Calderbank offers, formal offers of compromise under Order 26 of the Supreme Court (General Civil Procedure) Rules 2025 and the exercise of the costs discretion in family provision, capacity and executor disputes. General information only — not legal advice.
Key points
- A Calderbank offer is a written 'without prejudice save as to costs' settlement offer that a party may seek to rely on at the costs stage; costs consequences remain discretionary and are assessed against the circumstances known when the offer was open.
- A formal offer of compromise is made under Order 26 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic); its consequences and exceptions are set by the current rule text, not by the revoked 2015 Rules.
- The Court typically considers whether rejection of a Calderbank offer was unreasonable in the circumstances — including the offer's clarity, whether it involved a genuine compromise, the time allowed, the information available and the stage of proceedings.
- Costs in Victorian estate litigation are discretionary; there is no automatic rule that estate litigation costs are paid from the estate or that executors are indemnified from the estate in every case.
- Overarching obligations under the Civil Procedure Act 2010 (Vic) apply according to their text; rejecting an offer does not by itself breach those obligations.
- Under Order 63 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic), inter-party costs may be taxed on the standard basis, on the indemnity basis or on such other basis as the Court directs (r 63.28); the usual basis is the standard basis (r 63.31). Solicitor/client costs (a client's costs payable to their own solicitor) are distinct from the basis of an inter-party order, and executor indemnity from the estate depends on costs being properly incurred and remains subject to the Court's assessment and orders.
Costs in Victorian estate litigation are governed by the Supreme Court's discretion, the current Rules and the Civil Procedure Act 2010 (Vic). Two mechanisms are commonly used in settlement strategy: a Calderbank offer, made under general principles, and a formal offer of compromise, made under Order 26 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic). Each has a different legal character and each interacts with the costs discretion in a different way.
Calderbank offers
A Calderbank offer takes its name from Calderbank v Calderbank [1976] Fam 93. It is a written settlement communication, ordinarily marked "without prejudice save as to costs", that a party proposes may be shown to the Court on costs after judgment. It is not made under any rule of Court and does not carry rule-based costs consequences. If the offeree does not accept it, and the offeror ultimately does at least as well, the Court may take the offer into account when exercising the general costs discretion, including the possibility of indemnity costs from the expiry of the offer. That possibility is not automatic.
In assessing the offer, the Court ordinarily considers whether refusal of the offer was unreasonable in the circumstances known to the offeree while the offer was open. Relevant matters can include clarity of the offer, whether it involved a genuine element of compromise, the time allowed, the information available at that time, terms and any conditions, the stage of the proceeding, the merits, and the conduct of the parties. No fixed period applies. The overall assessment is fact-sensitive.
Formal offers of compromise under Order 26
An offer of compromise made under Order 26 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic) is a rule-based mechanism. Where the criteria and exceptions in the current text of Order 26 are satisfied, the Rules attach specified costs consequences depending on whether the offer was accepted, refused or bettered at trial. Parties considering the mechanism should work from the actual current text of the Rules rather than commentary based on earlier versions. The revoked Supreme Court (General Civil Procedure) Rules 2015 (Vic) are no longer the applicable Rules.
Privilege and permitted reliance
The "without prejudice save as to costs" designation is a common signal that the communication may be shown to the Court on the question of costs after judgment. Whether any particular communication can be relied on in that way depends on its character and general privilege principles. Not every document labelled without prejudice will have the effect the party assumes. Careful drafting, and specialist advice, help avoid disputes over admissibility at the costs stage.
Exercise of the costs discretion
Costs are discretionary. In estate litigation the Court's approach depends on the type of claim, the merits, the conduct of the parties, the settlement history and (where relevant) the nature of the executor's role. An executor's indemnity from estate assets depends on the costs being properly incurred in the administration or defence of the estate, and may be affected by the executor's conduct and by any order of the Court. Costs may be apportioned or reserved, and there is no rule that estate-litigation costs are paid out of the estate as a matter of course.
Overarching obligations under the Civil Procedure Act
The Civil Procedure Act 2010 (Vic) imposes overarching obligations on all participants in Victorian civil litigation, including duties to act honestly, to co-operate in the conduct of the proceeding, to narrow issues and to use reasonable endeavours to resolve the dispute. Costs consequences may follow a breach under Part 2.4. Whether particular settlement conduct — such as rejecting an offer — engages the obligations depends on the facts. Refusing an offer is not, of itself, necessarily a breach.
Multiple, revised and counter-offers
Parties may make more than one offer. Whether a later offer supersedes an earlier one, whether a counter-offer terminates a prior offer, and what costs consequences follow, depend on the wording of the offers and on the general contractual and procedural principles the Court applies. A schedule of offers should be drafted with those questions in mind.
Bases of taxation and the Costs Court
Under Order 63 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic), costs in a proceeding may be taxed on the standard basis, on the indemnity basis, or on such other basis as the Court directs (r 63.28). The usual basis is the standard basis unless the Rules or an order of the Court or the Costs Court provides otherwise (r 63.31). Solicitor/client costs is a separate concept: it concerns the costs payable by a client to their own solicitor, and is not a third basis on which inter-party costs are taxed. Executors may separately claim indemnity from the estate for costs properly incurred in the administration or defence of the estate. Assessment, if not agreed, is undertaken in the Costs Court under its published guidance. No costs order guarantees full recovery of expenditure.
Drafting matters
Questions on costs at the end of a proceeding are often practical drafting questions: whether the offer is clearly identified, whether there is a genuine element of compromise, whether there is a defined expiry, whether any conditions are transparent, whether quantum is broken down sufficiently, and whether the offer was made when the offeree could fairly assess it. Careful drafting cannot guarantee a particular costs outcome, but it removes obstacles to reliance on the offer if the matter has to be argued.
Getting help
Our estate litigation team advises executors, beneficiaries and applicants on settlement strategy, Calderbank offers, formal offers of compromise and costs applications in Victorian family provision, testamentary capacity, undue influence and executor-conduct disputes.
Frequently Asked Questions
What is a Calderbank offer?
A Calderbank offer is a written settlement communication expressed as 'without prejudice save as to costs', taking its name from Calderbank v Calderbank [1976] Fam 93. It is not made under any rule of Court. If the offeree does not accept it and the offeror does at least as well at trial, the offeror may ask the Court to take the offer into account when exercising its discretion on costs — including the possibility of indemnity costs from the expiry of the offer. The costs consequences are always discretionary and turn on all the circumstances.
How does a Calderbank offer differ from a formal offer of compromise?
A formal offer of compromise is made under Order 26 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic), which is the current version of the Rules. Where the criteria and exceptions in Order 26 are satisfied, the Rules attach specified costs consequences. A Calderbank offer is not made under the Rules and does not attract those rule-based consequences; instead, the Court exercises a general costs discretion informed by the reasonableness of any refusal. The two mechanisms may be used separately or together, subject to the current text of the Rules and the facts.
What does the Court consider when a party relies on a Calderbank offer on costs?
The Court ordinarily assesses whether refusal of the offer was unreasonable in the circumstances known to the offeree when the offer was open, having regard to matters such as the clarity of the offer, whether it involved a genuine element of compromise, the time allowed for consideration, the information available at the time, the terms and any conditions, the stage of the proceeding, the prospects and the parties' conduct. No single factor is decisive and no fixed period applies.
Is 'without prejudice save as to costs' enough to preserve reliance on the offer?
The label is a common signal that the communication may be relied on at the costs stage, but its effect depends on the character of the communication and general principles of privilege. Careful drafting and specialist advice help avoid disputes about whether the offer can properly be shown to the Court on costs.
Do the costs of estate litigation come out of the estate as a matter of course?
Costs are always discretionary. An executor's indemnity from estate assets depends on the costs being properly incurred in the administration or defence of the estate and may be affected by the executor's conduct and by any order of the Court. Applicants and other parties do not have any automatic entitlement to have their costs paid from the estate; costs may follow the event, be apportioned or be otherwise ordered. Rejection of a reasonable offer can be a significant factor.
Do the Civil Procedure Act overarching obligations affect settlement conduct?
The Civil Procedure Act 2010 (Vic) imposes overarching obligations, including obligations to act honestly, to co-operate in the conduct of the proceeding, to narrow issues and to use reasonable endeavours to resolve the dispute. Breach of an overarching obligation may attract costs consequences under Part 2.4. Whether particular settlement conduct engages the obligations is fact-specific; rejecting an offer is not, of itself, necessarily a breach.
How much of a compromise is required?
For a Calderbank offer to weigh meaningfully in the costs discretion, the Court generally looks for a genuine element of compromise rather than a demand for total capitulation. What amounts to a genuine compromise depends on the merits, the value in dispute, litigation risk and the stage of the proceeding.
Can multiple or revised Calderbank offers be made?
Yes. Whether a later offer supersedes an earlier one, whether a counter-offer terminates a prior offer, and what costs consequences follow, depend on the wording of the offers and the general contractual and procedural principles the Court applies. Each instrument should be drafted with those questions in mind rather than treated as a formality.
On what basis may inter-party costs be taxed under the Rules?
Under Order 63 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic), costs in a proceeding may be taxed on the standard basis, on the indemnity basis, or on such other basis as the Court directs (r 63.28). The usual basis is the standard basis unless the Rules or an order of the Court or the Costs Court provides otherwise (r 63.31). 'Solicitor/client costs' is a separate concept concerning the costs payable by a client to their own solicitor; it is not a third basis on which inter-party costs are taxed. Executors may separately claim indemnity from the estate for costs properly incurred, and amounts are assessed, if not agreed, in the Costs Court under its published guidance.
What Calderbank drafting issues are commonly raised on costs?
Issues raised at the costs stage include: ambiguity about the identity of the offer as a Calderbank offer; short or unclear time periods; hidden or onerous conditions; bundled quantum without adequate breakdown; disclosure imbalances at the time of the offer; and service on the wrong representative. Careful drafting reduces the risk that the intended costs benefit is lost when the matter reaches the Court's discretion.
How can we get advice on a specific offer or strategy?
Parke Lawyers acts for executors, beneficiaries and applicants in Victorian estate litigation and advises on settlement strategy, Calderbank offers, offers of compromise under Order 26 and costs applications. Advice on any specific matter should be obtained by contacting the firm.
Contested Wills & TFM Claims
Settlement and costs strategy in Victorian estate litigation.
Parke Lawyers advises executors, beneficiaries and applicants on Calderbank offers, formal offers of compromise under Order 26 and costs applications in Victorian estate disputes.
This article is general information only and does not constitute legal advice. Please obtain advice tailored to your circumstances.