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Are You Being Reasonable? – Calderbank Offers and Costs Protection in Litigation

Aquagenics Pty Limited (in liquidation) v Certain Underwriters at Lloyd’s Subscribing to Contract Number NCP106108663 (No 2) [2017] FCA 724

It is well established that failure of a party to accept a Calderbank offer may justify the Court exercising its discretion to award costs on an indemnity basis.
Generally a Court needs to determine, having regard to the circumstances, whether the party was acting unreasonably in rejecting the offer.

A recent case has shown that the Court will not award costs on an indemnity basis if at the time of the offer, the applicant had not pleaded certain entitlements to indemnity and the offer was a ‘minimal compromise’ measured against indemnity subsequently sought.

It is important that when parties make or receive a Calderbank offer, careful consideration is given to the offer and the pleaded case at the time the offer is made.

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