CALDERBANK OFFER - SOME POINTERS
This blog focuses on the Court of Appeal’s consideration of a Calderbank offer (made prior to the appeal being heard) on the eventual costs orders.
Facts. The “Navigator Aries” [2023] SGCA 26 is an appeal decision arising from, in gist, a collision between the appellant’s vessel and the respondent’s vessel (at [5]).
Both parties commenced their respective admiralty actions in the High Court for the apportionment of liability for the collision and the actions were consolidated (at [6]).
A timeline of the salient events is summarised below:
The respondent served an offer to settle on the appellant, proposing to apportion liability at 60:40 in the respondent’s favour, and for the costs of the trial to follow a similar apportionment (at [7]).
The High Court judge (the “Judge”) delivered an oral judgment and apportioned liability at 70:30 in the respondent’s favour, and thereafter made costs orders based on an apportionment similar to the apportionment of liability (at [8] – [9]).
In his costs orders, the Judge gave effect to O 22A r 9(3) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC (2014 Rev Ed)”), concerning an offer to settle made by a defendant (at [9] – [10]).
The appellant filed its appeal (“CA 45” or “the appeal”) against the whole of the Judge’s decision, including his decision on costs (at [12]).
The appellant served a Calderbank offer (i.e., a letter without prejudice save as to costs) on the respondent, proposing to settle the issue of liability through a 50:50 apportionment, and to settle the costs of the trial and the appeal (at [13]).
The respondent withdrew its offer to settle (at [16]).
When CA 45 was heard, the appellant’s Calderbank offer had not been accepted, and shortly thereafter, it was revoked (at [17]).
CA 45 was decided and liability was apportioned at 50:50 (at [18]). Therefore, the appellant obtained a judgment that was not less favourable than its Calderbank offer.
We reproduce the helpful table set out by the Court of Appeal at [19] showing the figures for the apportionment of liability proposed or decided (as applicable) in the proceedings below.
Costs of the appeal. In determining the costs of the appeal, the Court of Appeal held that the appellant is entitled to costs, which should be fixed and not assessed (at [34]) (contrary to the appellant’s primary position per [24]).
However, the Court of Appeal agreed with the appellant that it is relevant to consider the respondent’s failure to accept the appellant’s Calderbank offer “even though the judgment is not more favourable to the appellant than its offer, only as favourable” when it comes to the issue of quantum of costs (at [35]; emphasis in original ).
The Court of Appeal held that it would be wrong to assume that a Calderbank offer should only be taken into consideration if the judgment obtained is more favourable for the offeror (or less favourable for the offeree) than the offer made (at [38] – [39]). This is because (at [39]):
“39 … If a judgment is as favourable for the offeror as the offer, then the offeree has not obtained anything by coming to court that it could not have obtained, without incurring further costs, through accepting the offer (to use the language adopted in Zhang Jinwei at [41], citing Butcher v Wolfe and Wolfe [1999] 1 FLR 334 at 346). Yet this same outcome has been obtained at the expense of judicial time and cost. As a matter of principle, a court ought to be able to give due consideration to such Calderbank offers.”
The Court of Appeal also drew attention to the offer to settle regime under O 22A r 9 of the ROC (2014 Rev Ed), which centred on whether the judgment is “not less favourable” or “not more favourable” than the offer made (at [40]).
Moderate weight. As for the weight to be ascribed to the appellant’s Calderbank offer, the Court of Appeal stated that (at [42] – [43]):
“42 … it is settled law that the court is not bound to award costs in any particular manner in the face of such an offer, and may treat the offer as one factor to be considered in exercising its wide discretion as to costs: Ong & Ong at [35]; SBS Transit at [24]. Some factors relevant to determining the offer’s weight may include: (a) the offer’s terms; (b) the reasonableness of the offeree’s refusal to accept the offer; (c) the timing of the making of the offer; and (d) the nature and timeliness of the offeree’s reaction to the offer: Ong & Ong at [36]–[37]; Zhang Jinwei at [24]–[27].
43 For the following reasons, we attach moderate weight to the respondent’s failure to accept the Calderbank offer in this case.”
In doing so, the Court of Appeal highlighted that it was “significant” that the respondent did not provide any reason for not responding to the offer (at [44]).
The Court of Appeal stated that “[i]f the respondent had genuine difficulties with the offer’s terms or window for acceptance, one would have expected evidence of the respondent having raised those concerns with the appellant contemporaneously.” (at [47])
In doing so, the Court of Appeal referred to other cases where the courts had stated that it was for the offeree to seek clarification if there was lack of clarity as to the terms, not to raise such reasons belatedly.
However, the fact that the appellant only obtained a judgment as favourable as its offer was relevant in the assessment of how reasonable the terms of the offer were. See [48] – [49]:
“48 For these reasons, the Calderbank offer should be given due weight. However, this must be balanced against two countervailing considerations. First, we appreciate that predicting how a court might apportion liability for a collision is not a straightforward exercise even for the most seasoned of litigators. Apportionment is fundamentally based on a “broad, commonsensical and qualitative assessment” of the circumstances: Judgment at [55]. Furthermore, the court is not confronted with a binary choice, but may entertain a range of possible percentages, and this inherently complicates the prediction exercise. A second, related consideration is that the appellant did not obtain a considerably more favourable judgment, only one as favourable as its offer. This colours the assessment, at least in this case, of how reasonable the offer’s terms were.
49 Therefore, considered holistically, the Calderbank offer ought to be given moderate weight.”
For completeness, the Calderbank offer was not the only consideration. In fact, the Court of Appeal noted that the nature of CA 45 was “a more significant factor” as it was “an evidentially voluminous and technically demanding case” (at [50]).
Significance. This case is an important reminder on how an offer to settle or a Calderbank offer can impact on the eventual costs orders.
What is important to note is that a Calderbank offer can be taken into account even if the terms of the eventual judgment are only “as good as” the Calderbank offer.
While there is no longer a specific provision on “offer to settle” (as existed under O 22A of the ROC (2014 Rev Ed)) under the Rules of Court 2021, the concept of an offer to settle remains relevant and has been encompassed in the parties’ duties to consider amicable resolution of disputes under Order 5 of the Rules of Court 2021. In particular, O 5 r 1(4) provides that a party “must not reject an offer of amicable resolution unless the party has reasonable grounds to do so”, and O 5 r 2(3) provides that the “terms of an offer that has been made and not accepted must not be relied upon or made known to the Court until after the Court has determined the merits of the action or appeal and is dealing with the issue of costs”.
Given this, it is unlikely that a very different result would have been reached had this decision been made under the Rules of Court 2021.
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