Calderbank Offers and Costs Strategy in Victorian Estate Litigation

The Calderbank Concept

A Calderbank offer takes its name from the English family law decision in Calderbank v Calderbank [1976] Fam 93. The essential idea is a settlement offer made openly enough that the Court can consider it on the question of costs, but privately enough that the trial judge is not influenced by it on the substantive issues. The convention is to mark the offer 'without prejudice save as to costs' — the offer cannot be produced during the substantive trial but can be produced on the argument about costs after judgment.

Why Calderbank Offers Matter in Estate Litigation

Costs risk in Victorian estate litigation is now asymmetric. Following Underwood v Gaudron and later Victorian authority the Court no longer treats the estate as a fund from which every party's costs are paid. In a family provision claim, for example:

• a successful applicant will normally recover costs from the estate on a party-party basis;
• an executor defending in good faith is almost always indemnified from the estate;
• an unsuccessful applicant is now at real risk of a personal costs order — most powerfully where the applicant unreasonably refused a Calderbank offer; and
• where the offeree does better than the offer, the costs order runs against the offeror, so the offeror also takes real risk in making the offer.

Calderbank Offers vs Offers of Compromise

Chapter I Rule 26 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) provides a formal offer-of- compromise regime. A formal offer, if not accepted and the offeror beats it at trial, produces a largely-fixed costs consequence — typically indemnity costs from the day after service. Formal offers are precise and prescriptive in form.

A Calderbank offer, by contrast, does not have a fixed costs consequence. The Court exercises a discretion informed by whether the refusal was reasonable. Calderbank offers are more flexible in form, can be more tailored to complex estate assets and multi-party disputes, and can be drafted with expiry, cascading options or bundled non- monetary terms in a way formal offers cannot. Skilled estate-litigation counsel will often use both — a formal offer and a Calderbank offer at different stages of the case.

What Makes a Calderbank Offer Effective

The Court's discretion turns on a suite of factors. A Calderbank offer is far more likely to produce indemnity costs where it:

• is in writing and marked 'without prejudice save as to costs';
• is expressly described as a Calderbank offer and refers to Calderbank v Calderbank;
• contains a genuine element of compromise — a real discount for litigation risk, not a demand for full surrender;
• is made at a stage where the offeree can fairly assess it — that is, after enough disclosure and evidence exchange to make an informed decision;
• gives the offeree a reasonable period to consider it (typically 21–28 days, depending on the stage and complexity);
• is clear and unambiguous as to quantum, costs, interest and any non-monetary terms;
• is ultimately beaten (or matched) by the offeror at trial.

The 'Genuine Compromise' Requirement

The Court routinely refuses indemnity costs where the offer amounts to a demand for 100 per cent of what the offeror sought. There must be a defensible discount for uncertainty, litigation risk and the value of certainty and speed. In estate litigation the compromise is often quantified against a considered range of likely trial outcomes and a reasonable estimate of costs to trial. A token compromise — for example, five per cent off a claimed quantum — is often held not to satisfy the genuine-compromise requirement.

Reasonableness of Refusal

The offeree's refusal must have been unreasonable in the circumstances. The Court weighs the strength of the offeree's case, the material available to the offeree at the time of the offer, the terms and duration of the offer, the offeree's ability to seek legal advice within the offer period, and the timing of the offer in the life of the proceeding. A well-supported offer, at an appropriate stage of the case, given a reasonable response period, is difficult to characterise as reasonably refused.

Timing: Pre-Mediation, Mediation, Post-Mediation

Because mediation is essentially compulsory in Victorian estate litigation, the tactical rhythm of Calderbank offers usually follows the mediation timetable:

• a pre-mediation Calderbank offer expiring shortly before the mediation date focuses minds, preserves costs consequences if mediation fails and often triggers earlier settlement;
• a post-mediation Calderbank offer reset — sometimes at a different figure informed by what happened at the mediation — recalibrates the costs exposure as trial approaches;
• a pre-trial Calderbank offer shortly after evidence exchange but well before trial can lock in indemnity-costs protection when the merits have crystallised.

Common Drafting Failures

The Court regularly declines to give indemnity-costs effect to a Calderbank offer because of drafting failures. Common failures include:

• not labelling the offer 'without prejudice save as to costs';
• failing to identify the offer as a Calderbank offer or to reference the authority;
• no expiry date, or an expiry date so short the offeree could not properly consider it;
• hidden conditions (for example, requiring the offeree to release unrelated claims or accept adverse admissions);
• bundling capital, interest and costs together in a way that prevents a comparison with the trial outcome;
• failing to specify the position on costs (both the offeror's own costs and any offer to pay the offeree's costs);
• making the offer before adequate disclosure so the offeree could not fairly assess it;
• serving the offer on the wrong legal representative or the party in person where they are represented.

Civil Procedure Act Overarching Obligations

The Civil Procedure Act 2010 (Vic) imposes overarching obligations on all parties and their lawyers, including to act honestly, to co-operate in the conduct of the case, to narrow the issues in dispute, to use reasonable endeavours to resolve the dispute (including by mediation) and to act only on a proper basis. Refusing a reasonable Calderbank offer without good reason is capable of amounting to a contravention of one or more of these obligations and can trigger independent costs consequences under Part 2.4 of the Act. That is a further reason why the reasonableness of the refusal, and not merely the mechanics of the offer, matters.

Interaction With Mediation

Calderbank offers and mediation are complementary, not alternatives. A Calderbank offer that expires shortly before a mediation focuses the offeree's mind and structures the mediation itself. A well-run mediation frequently produces resolution; where it does not, a follow-on Calderbank offer resets the costs framework for the balance of the proceeding. See our companion article on mediation in Victorian estate litigation.

Executors: Using Calderbank Offers Defensively

For executors, the Calderbank offer is the primary mechanism to convert a weak family provision claim into a recoverable costs outcome. A structured executor strategy typically involves an early request for the applicant's needs evidence, a considered Calderbank offer once the evidence has been received, a pre-mediation offer expiring immediately before mediation, and a follow-on offer as trial approaches. Each stage documents the executor's willingness to resolve and hardens the costs position against an unreasonable applicant.

Applicants: Using Calderbank Offers Offensively

For applicants, a Calderbank offer beaten at trial can attract indemnity costs against the executor. In practice this is used most powerfully by strong applicants seeking to lock in a floor — the offer sets a defensible minimum, and the applicant secures indemnity-costs protection from the date the offer expired if the trial produces at least that much.

Capacity, Undue Influence and Executor-Conduct Disputes

The Calderbank framework applies across all estate litigation categories. In testamentary-capacity disputes, undue influence and suspicious circumstances cases and beneficiary challenges to executor decisions, Calderbank offers work in the same way: a genuine compromise, a reasonable response period and clear drafting expose the offeree to indemnity-costs risk if they refuse.

Costs Strategy Alongside a Family Provision Claim

For the underlying legal framework of a family provision claim, see our companion guide on how to make a family provision (TFM) claim in Victoria and on costs in contested will proceedings in Victoria.

How Parke Lawyers Uses Calderbank Offers

Our estate litigation team builds costs strategy into every proceeding from the outset. We draft Calderbank offers for both applicants and executors, sequence them with mediation and the Chapter I Rule 26 offer-of-compromise regime, and coordinate the costs strategy with the substantive evidence bundle. Well-crafted costs discipline typically produces materially better outcomes than the trial-focused approach many parties instinctively adopt.

Frequently Asked Questions