How to make a Calderbank offer that may shift costs risk

Why the offer matters

When a dispute is close to court, a written compromise offer can do more than invite settlement. In most Federal Court matters, the unsuccessful party is ordered to pay part of the successful party’s legal costs, and those costs can run into many thousands of dollars. That makes the shape and timing of the offer commercially important. ([fedcourt.gov.au](https://www.fedcourt.gov.au/going-to-court/i-am-a-party/court-processes/legal-costs))

A Calderbank offer is the common label for an offer made without prejudice save as to costs. Victorian appellate material also notes that a court may take such an offer into account when assessing unreasonable conduct on costs, but it is still a discretion-based question, not an automatic penalty for the other side. ([supremecourt.vic.gov.au](https://www.supremecourt.vic.gov.au/sites/default/files/assets/2017/09/64/a67dc729f/coa_reviewofthelegalyear.pdf))

Make it a real compromise

That is why the offer has to be a real compromise. If you simply repeat your full claim and call it a settlement proposal, you weaken the point. A sensible offer gives the other side a clear off-ramp, such as accepting less money, a staged payment, or a different allocation of disputed items. ([supremecourt.vic.gov.au](https://www.supremecourt.vic.gov.au/sites/default/files/assets/2017/09/64/a67dc729f/coa_reviewofthelegalyear.pdf))

Put the proposal in writing and make the consequences plain. State that it is made without prejudice save as to costs, give the amount or terms you will accept, and say you will rely on the offer when costs are decided if the matter keeps going. Keep the language calm and factual. ([supremecourt.vic.gov.au](https://www.supremecourt.vic.gov.au/sites/default/files/assets/2017/09/64/a67dc729f/coa_reviewofthelegalyear.pdf))

Source: Official guidance

Set the timing and the record

Give a realistic time for acceptance. A token deadline can look tactical rather than genuine, especially if the dispute is large or the other side needs instructions from a director, insurer or lawyer. You want enough time for a sensible reply, not enough time for delay to become the point. ([supremecourt.vic.gov.au](https://www.supremecourt.vic.gov.au/sites/default/files/assets/2017/09/64/a67dc729f/coa_reviewofthelegalyear.pdf))

Keep proof of sending and a clean copy of the final draft. Save the email, attachment, delivery receipt, SMS thread or letter log. If the dispute later turns to costs, you will want to show exactly what was offered, when it was sent, and that the other side had a fair chance to consider it. ([fedcourt.gov.au](https://www.fedcourt.gov.au/going-to-court/i-am-a-party/court-processes/legal-costs))

Match it to your evidence

The best offers are tied to your evidence, not just your patience. If you have invoices, approved variations, site notes and email chains, the offer can show you have narrowed the dispute and acted reasonably. If you do not have the file in order, spend time fixing that before you make the offer. ([fedcourt.gov.au](https://www.fedcourt.gov.au/going-to-court/i-am-a-party/court-processes/legal-costs))

Judges still look at the whole picture. A late offer, a weak offer, or an offer that ignores your own problems can carry little weight. The court may still make only a partial costs order, or no costs order at all, depending on the case and the governing rules in play. ([fedcourt.gov.au](https://www.fedcourt.gov.au/going-to-court/i-am-a-party/court-processes/legal-costs))

Send it, then move

So the practical move is simple: draft the offer, mark it properly, set a sensible response date, and send it with proof. That gives you a clear settlement position if the matter later goes before a judge and costs are argued.

If you want help pressure-testing the offer before it goes out, call CRP today. We help construction businesses and other commercial parties work through dispute resolution with independent qualified professionals, so you can make the next step with a cleaner record and fewer surprises before court pressure rises too late.