A few years ago when people divorced they were encouraged to make offers to settle that were “Without Prejudice Save As To Costs”. These were known as Calderbank offers, after the name of the divorce case in which they were first made. The idea was you made these without prejudice offers that the judge would see at your appointment to try and settle the case – and they would try to use them to help people settle. There’d also be open offers that the judge would see. These would usually be very positional, by which I mean they’d be at the extreme end of what was likely to be the outcome, so were pretty useless – and we still have them.
People are afraid to tell the judge what they’d really pay to settle in case s/he plays split the difference and they end up with an unfair settlement. So there’d be this hidden second tier of offers called the Calderbanks. These were always without prejudice, which meant the judge at trial didn’t get to see them and they couldn’t prejudice his or her decision-making. These Calderbank offers were a very serious matter. People had to put their money where their mouth was. If you put in a good Calderbank offer, then the other side was at risk of having to pay your costs from one month after the Calderbank offer was made. You’d usually get your costs if your Calderbank offer was better than the trail judge’s award – so if you beat the judgment, you got your costs. This really focused minds. Your lawyers would tell you if they thought you might end up having to pay the other side’s costs. It made people think and make sensible offers. It made a lot of cases settle earlier than they do now.
These days there are no costs consequences to taking up an unreasonable position, as each side pays their own costs. Now people can just mouth any old rubbish, be as unreasonable as they like, yet still each side must normally pay their own costs. The total costs are paid from the assets before they’re split, so effectively you pay half of the total costs each – or half of each other’s costs. This can be a bit unfair if one party has very expensive lawyers or is unrepresented, but it’s just how it works. There is no incentive to be reasonable.
In non family civil cases, people still have the equivalent of the Calderbank offer system. It does help prevent unreasonable negotiating positions. I think we should bring it back and didn’t agree with its removal in the first place, as it allows people to hold out for unfair negotiating positions with impunity. It forces the reasonable person to go to trial or settle for less than they should get, with no costs consequences. Mad!