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Costs A recent case highlighted how Calderbank offers can be used in lease renewal disputes. Faiza Sorongi and Nicholas Smith consider the issues
Litigating lease renewal disputes can be costly since both sides can incur legal and surveyors' costs, often over a significant period of time. One tactical way to limit or seek protection from costs is to make a Calderbank offer to the other side.
A "Calderbank offer", derived from the Court of Appeal divorce case Calderbank v Calderbank £19753 3 WLR 586, is a letter expressed to be an offer made "without prejudice save as to costs". The effect is that the court or arbitrator will be unable to refer to the offer except when it is considering the issue of costs at the end of the proceedings.
In considering how a Calderbank letter will influence the decision on an award of costs, the basic test is whether the claimant achieved more by rejecting the offer and continuing with the proceedings than he would have achieved if the offer were accepted. If the claimant in the end has not achieved more than he would have achieved by accepting the offer, it is reasonable that the claimant should be ordered to pay the respondent's costs after that date. If the claimant has achieved more by continuing, the respondent should pay the costs throughout.
Centreland Management LLPx HSBC Bank Pension Trust (UK) Ltd (2013), unreported, raised a number of interesting questions regarding Calderbank offers in the context of rentonly 1954 Act disputes and Vos J has provided useful guidance as to what an arbitrator should take into account when considering whether a Calderbank offer is...