Case: Calderbank v Calderbank [1976] Fam 93
Outcome: cited
BHPB relies on what it describes as a Calderbank letter (after Calderbank v Calderbank [1976] Fam 93) , which it served on Cosco's lawyers before the trial. The relevant parts of the Calderbank letter read: "[I]n a genuine attempt to resolve its dispute with both Cosco and [Seawise, the second respondent], our client would be prepared to accept the total of US$725,000 plus interest and costs as follows: (a) as to Cosco: US$550,000 (plus interest and costs to be agreed or otherwise taxed); (b) as to [Seawise]: US$175,000 (plus interest, and costs to be agreed or otherwise taxed). Clearly this figure represents a considerable reduction of our client's principal claim, and we would encourage your client to take advantage of this opportunity to resolve the claim promptly and in its entirety. Further, should Cosco and [Seawise], as between themselves, consider that a different division of the total amount of US$725,000 plus interest and costs occur, we would invite you to deal with that as you may see fit, provided the total of our client's offer is met." For good reason BHPB was seeking to compromise its claims against both respondents. For that it wanted a total of US$725,000 plus interest plus costs. Accordingly, BHPB made an offer that could only be accepted by both respondents unless one agreed to pay the full claim with interest and costs, and the other respondent agreed to waive any claim for costs. According to the Calderbank principle, indemnity costs will not be ordered if a party acted reasonably in rejecting the Calderbank offer. Cosco's rejection of BHPB's Calderbank offer was reasonable. A party will be acting reasonably in rejecting a Calderbank offer if the offer is unclear or imprecise. In this case, BHPB's offer was imprecise in some respects. The offer did not specify a rate of interest, in circumstances where the applicable rate was open to argument. More importantly, it is unclear whether the offer was being made to Cosco alone, or Cosco and Seawise jointly. The offer appears to have been addressed to Cosco alone, but refers to both Cosco and Seawise making payments. If the offer was made to both Cosco and Seawise jointly, then this raises a further problem the offer was incapable of acceptance by Cosco alone. BHPB is not entitled to charge one offeree with indemnity costs for not having accepted an offer that was incapable of acceptance by that offeree alone. BHPB also seeks indemnity costs by reason of the abandonment by both respondents on the first and second days of the trial of several contentions raised in their respective defences on which BHPB had gone to the trouble of obtaining expert evidence from two lawyers. The particular contentions were that BHPB had failed to exercise rights of lien and possession with the consequence that it was the author of its own loss. These allegations made it necessary for BHPB to call expert evidence on English law (the law of the charterparty) and Thai law (the place where the Global Hawk was to discharge its cargo). The abandonment of part of the defence is not, without more, the occasion to award indemnity costs in respect of those costs which, in the event, have been unnecessarily incurred. Indemnity costs might be justified if the abandoned contentions were hopeless. That, however, is not what is argued here. What happened in this case was that BHPB filed the relevant expert reports around a month or so prior to the trial commencing. When BHPB's case in respect of the abandoned contentions was fully laid out, the respondents realised they could not meet it. So, by abandoning aspects of their respective defences, the respondents saved BHPB incurring unnecessary trial costs as well as saving court time. They should not be punished for that. Accordingly, up to the point where BHPB filed the expert reports, indemnity costs are clearly not warranted. Whether indemnity costs should be paid in respect of costs incurred after the filing of expert reports is more difficult. The respondents took more than a month after receiving the expert reports to indicate they were abandoning the contentions. During that period, BHPB may have incurred further costs regarding the abandoned contentions (although these costs may have been ameliorated by the fact that the experts were to give oral testimony via videolink). On balance, I consider that the respondents' delay in indicating their intentions to BHPB was not so great as to warrant the award of costs on an indemnity basis.