Court of Appeal reinforces importance of careful drafting of offers to settle

The Court of Appeal has recently reinforced the importance of ensuring the careful drafting of offers to settle, particularly where litigants intend to rely on such offers for costs orders in Wiggins Island Coal Export Terminal Pty Ltd v Civil Mining & Construction Pty Ltd [2021] QCA 8.

Background

Civil Mining & Construction Pty Ltd (CMC) commenced proceedings against Wiggins Island Coal Export Terminal (WICET). WICET counterclaimed against CMC.

Before trial, WICET made an offer, which was:

1. expressed to be “all up” to settle “all claims in the proceeding” – i.e. one monetary figure was offered;
2. purportedly made under Chapter 9, Part 5 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) (more specifically, rule 353(1) of the UCPR);
3. accompanied by a letter, labelled as being “without prejudice, except as to costs”, which detailed reasons why the offer should be accepted by CMC; and
4. not accepted by CMC.

(Offer)

At trial, CMC obtained an order on its claim and WICET obtained a separate order on its counterclaim. As a result, WICET sought to rely on its Offer for a costs order.

Offers to Settle 

Rule 352 provides a party to a proceeding may serve an offer to settle 1 or more of the claims in the “proceeding” on the conditions specified in the offer.

To trigger rules 360 and 361 of the UCPR, the Court needs to be able to carry out a comparison of  the offer made against the order made.

Matters for the Court

 The Court considered whether the Offer to settle:

1. the “claim” and a “counterclaim” at a “net amount” was valid for the purposes of rule 353 of the UCPR;
2. triggered the costs consequences under rules 360 and 361 of the UCPR; and
3. if it did not trigger rules 360 and 361 of the UCPR (but was expressed to be “without prejudice except as to costs”) constituted a “Calderbank offer”, subsequently making it relevant to the exercise of the Court’s discretion as to costs.

Appeal

The Court, in upholding the trial judge’s decision, held that:

1. a party making an offer pursuant to rule 353(1) of the UCPR is not limited to seeking to settle just the claim – it can include a counterclaim;
2. an offer to settle can trigger both rules 360 and 361 of the UCPR, provided it distinguishes between the two, with separate amounts for each;
3. the distinction allows the Court to compare whether an order made is less or more favourable than an offer made;
4. given the below situation, the comparison required by rules 360 and 361 could not be carried out by the Court;
   • WICET’s offer for an “all up” amount, it did not distinguish between the claim and the counterclaim; and
   • separate orders were made (being an order on CMC’s claim and an order on WICET’s counterclaim), rather than 1 order for the proceeding as a whole.
5. the mere use of the words “without prejudice except as to costs” is insufficient to qualify an offer as being a Calderbank offer. Therefore rule 681 of the UCPR did not apply.

Key takeaways 

The decision reinforces the importance of clarity when making offers to settle proceedings, particularly where counterclaims are on foot. Relevantly, parties should ensure that:

1. offers pursuant to Chapter 9, Part 5 of the UCPR distinguish between the claim and counterclaim – meaning separate amounts for each is to be stipulated; and
2. Calderbank offers should strictly adhere to the formal requirements rather than a generic reliance on the offer being made “without prejudice”.

For more information as to what constitutes a valid Calderbank offer, or as to whether a Calderbank offer or offer under the UCPR should be made, keen an eye out for our upcoming update which will address these issues.

Alternatively, should you require assistance drafting an offer to settle (or assistance otherwise), do not hesitate to get in touch with one of our experienced lawyers.

Author: Natalie Cruickshanks (Lawyer)