Duhaime's Law Dictionary

Calderbank Letter Definition:

A species of settlement offer delivered in the form of a letter and which can be used in the event that it is rejected and subsequent to trial or hearing of the litigation which results in terms similar to the rejected offer, costs are spoken to.

So-called after the English judicial decision in which the principle was developed.

In Brydges, Justice Harvey wrote, at 34:

"A Calderbank letter is an offer to settle made without prejudice, except as to costs."

In Ferris, Justice Drost added:

"[A] Calderbank letter should have an effect upon the question of costs similar to that of an offer to settle, that is, to allow the court in appropriate cases to punish a party for failing to accept a reasonable offer of settlement, thus forcing an unnecessary trial."

In Martel, the Court gave this summary of the history of the original 1975 case in which the principle of Calderbank letters was derived:

"It was in a legislative vacuum that the English Court of Appeal made its ruling in Calderbank. Mrs. Calderbank was seeking a declaration under the Married Women’s Property Act, 1882, not recovery of debt or damages. Before trial, she swore an affidavit declaring herself willing to accept a certain result in the litigation going on between herself and Mr. Calderbank. Mr. Calderbank did not agree and the case went to trial. The judgment was less favourable to him than what Mrs. Calderbank had been willing to give him. It was held that Mrs. Calderbank was entitled to her costs, as from the date on which she made her willingness to settle known. The Court also suggested that a letter like the one used in this case by the plaintiff should sound in costs. What has become known as a Calderbank letter developed into a recognized procedure to set up an award of costs based on a willingness to settle."

Many jurisdictions have since codified the impact the rejection of a formal offer to settle can have on costs if the result after trial is similar to the offer. In order to encourage the settlemennt of litigation, some jurisdictions even provide for a doubling of costs where a formal offer to settle has been made and when rejected, the result at trial is in most points similar to the rejected proposed terms of settlement.

A Calderbank letter must remain secret and outside the knowledge of the court until the judgment has been rendered at which point, when costs are spoken to, it may be revealed to the court and submissions made as to the applicability of cost penalties associated with the alleged similarity of the judgment to the offer to settle.

A sample Calderbank letter, circa 1994:

"We are instructed to make a final offer of settlement in the sum of $158,000.00 inclusive of General and Special damages, Court Order Interest ... plus taxable party/ party costs and disbursements. This will be a full and final settlement with respect to our client's claims arising out of the above motor-vehicle accident. This offer is made on a without prejudice basis, save as to costs. If the offer is not accepted, then we specifically reserve the right to bring this letter and the offer contained in it to the attention of the Court with respect to the issue of costs. If that occurs, we will be relying upon the derivative authorities pursuant to Calderbank v. Calderbank. The figure offered is inclusive of all the Plaintiff's claims for damages..."


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