In many instances, the litigation process of bringing a matter to its finality has become a tedious and lengthy one, lasting for anything from three to four years, if not longer.
And the cost implications of such a prolonged process has become exorbitant not only for the unsuccessful party who will ultimately pay the party and party costs (in personal injury claims usually being the Defendant) but also for the successful party, in respect of the attorney and client costs, which are deducted from the settlement amount (usually to the Plaintiff).
Rule 34 of the High Court Rules which deals with offers of settlement states the following:
(1) In any action in which a sum of money is claimed, either alone or with any other relief, the defendant may at any time unconditionally or without prejudice make a written offer to settle the plaintiff’s claim. Such offer shall be signed either by the defendant himself or by his attorney if the latter has been authorised thereto in writing.
(10) No offer or tender in terms of this rule made without prejudice shall be disclosed to the court at any time before judgment has been given. No reference to such offer or tender shall appear on any file in the office of the registrar containing the papers in the said case.
(11) The fact that an offer or tender referred to in this rule has been made may be brought to the notice of the court after judgment has been given as being relevant to the question of costs.
Rule 34 of the High Rules of Court as it currently stands is specifically designed as a tool that the Defendant may use to place the Plaintiff at risk for paying costs. If the Defendant makes an offer and a lower amount is awarded at trial, the Defendant may then seek a cost order against the Plaintiff.
Although no express mention is made of the Plaintiff being able to make a without prejudice offer, it also does not expressly or by necessary implication mention that if a Plaintiff makes a tender, that same cannot be relied upon when considering the issue of costs.
In the United Kingdom and Australia, it has become common practice for a Plaintiff to make an offer to the Defendant, thereby putting the Defendant at risk of paying “indemnity costs”. In personal injury litigation in South Africa it has become more common that, once the Plaintiff is in possession of all its medico-legal reports and once the claim has been completely quantified, the Plaintiff then addresses a “without prejudice” settlement proposal to the Defendant, in an attempt to reach an early settlement of the matter which results in costs being minimised.
vc_empty_spacevc_custom_heading text”A Calderbank offer is an offer to settle a dispute, putting the other side on notice that, if the dispute goes before any court and the outcome is less favourable to the other side compared to the Calderbank Offer being made, then the side making the offer is entitled to more of their costs being recovered.
This is because, if the other side had accepted the offer, then they would have been better off and neither side would have had to spend money taking the matter to court.” font_container”tag:p|text_align:center|color:%237fa6ad”vc_empty_spacevc_column_text
Most of these offers made by the Plaintiff often either go unnoticed or a significant period of time passes before any response is received from the Defendant, if at all. The case of Calderbank v Calderbank 1975 3 ALL ER 333 (CA) being cited in the judgement of D and Another v MEC for Health and Social Development, Western Cape Provincial Government (2747/10) 2017 ZAWCHC 17; 2017(5) SA 134 (WCC) could bring about new developments in South African law where the Plaintiff’s offer of settlement amount was less than the amount granted by a judge once judgment is handed down.
The Calderbank case was an important English Court of Appeal decision – a divorce case where the husband (Defendant) was said to have caused an unreasonable delay in the legal proceedings and he was then ordered to pay his wife’s (Plaintiff) legal costs as a result thereof.
The Calderbank case was then challenged in the United Kingdom, but eventually became practice that “Calderbank Offers” can be made. The practice was subsequently written into the United Kingdom and Australia’s Rules of Court.
The highlighted principle of the Calderbank case is that the Plaintiff can place the Defendant on risk by making an offer of settlement. If such an offer is ignored by the Defendant and the Plaintiff is awarded more when the matter proceeds to trial and judgment is handed down, the Plaintiff could disclose to the Judge that a “Calderbank offer” was made. If the offer met the requirements of a “Calderbank offer”, and if ordered by the Judge, the Defendant may be held liable to pay the Plaintiff’s attorney and own client costs over and above the party and party costs for which the Defendant will already be liable for.
In the Case of D and Another V MEC for Health and Social Development, Western Cape Provincial Government, Judge Trollip stated the following “I have thus come to the conclusion that in principle “Calderbank offers” are admissible in relation to costs and can be disclosed to the court for that purpose after judgment has been given.”
Judge Trollip went on further to mention that in considering whether a punitive cost order must be made against the Defendant the court must consider among other factors, whether the Defendant behaved unreasonably, and thus put the Plaintiff to unnecessary expense by not accepting the offer or making a reasonable counter-offer.
Although the Plaintiff in the case of D and Another V MEC for Health and Social Development, Western Cape Provincial Government was not successful in being granted a punitive cost order against the Defendant, it was a breakthrough of the “Calderbank offers “being fused into South African Law. A defendant should therefore be more cautious when considering offers made by a Plaintiff, so as to ensure that the Defendant is not at risk of paying indemnity or attorney and own client costs (over and above the party and party costs), where the Defendant forces the Plaintiff into protracted or unnecessary litigation, and a judge ultimately awards the Plaintiff the same or more in compensation than what the Plaintiff previously offered to accept as a settlement.
“Calderbank offers” will therefore be a useful tool that Plaintiffs can utilise in litigation to ensure that Defendants seriously consider offers made by Plaintiffs and will result in earlier settlements and costs limitations.
by Shaina Kim Steyn | Associate