“It is no doubt convenient, in Admiralty actions as in arbitrations, that a party should be able to encourage the other party to settle by making an open offer. It is no doubt right that, normally, where such an offer has been made and maintained, but not accepted by the other party, and the party who has made the offer obtains a result in the litigation not less favourable to him than the terms of the offer, the Judge should have a discretion to make a special order as to costs in his favour. The normal exercise of the discretion would be to give the offeror his costs from the date of the offer. But it seems to me that, normally at least, the discretion would not properly be exercised in favour of the offeror unless he had maintained the offer up to the commencement of the trial of the action. I do not see why it should be thought that the offeror should acquire some kind of moral or discretionary right to the whole of the costs thereafter incurred merely because he has, for a period of time ending before the start of the hearing, held out an offer which has not been accepted during that period. If he is to get the benefit of a subsequent order as to costs, it ought normally to be on the basis that his offer has been a continuing offer up to the start of the trial. It may be that there are exceptional cases. But I do not think that the mere fact of no response being made for six weeks is such as to bring this case within the range of such possibly exceptional cases. It would, in my view, be unfortunate if the law were otherwise, and if there were any general principle that an open offer, made and then withdrawn, gives a right, or a claim which would normally be allowed as a matter of discretion, to a special order as to costs. For that would mean that a party who had once made an open offer, and thereafter wrongly thought it was over-generous, could protect himself against the consequences of his supposed over-generosity by withdrawing the offer, and yet would still be entitled to get the benefit of it, by a special order as to costs, when it had turned out that the original offer had not been over-generous. That would not be justice or good sense.”
“What then is the effect of a Calderbank offer which subsequently is withdrawn? On the facts of this case—it is not necessary to go further than the facts of this case—it seems to me that, although the offer was no longer available for acceptance, unless the matter had been renegotiated between the parties, the effect of the offer letter remained. Once the letter had been sent, and it was a letter which the learned Judge decided should have been accepted, the District Judge could have taken account of the Calderbank offer. It seems to me that, if the offer in that letter should have been accepted, then Mrs Rosen Peacocke is right in her argument that any subsequent proceedings flowed from the refusal of the offer. There would have been no hearing before Judge Jack in October 1995 had that offer been accepted. For my part, I think it was a misinterpretation of a Calderbank letter of this kind, to treat it as though it was no longer operative. It was not operative in the sense it was open for acceptance, but the effect of it remained.”
“…..the principle error in my judgment, was not to distinguish between the question whether the Calderbank letter was still on the negotiating table and the question whether its terms materially related to the result of the appeal. That it had lapsed, whether by rejection, non-acceptance within a reasonable time, or its withdrawal, matters not. It remained material as a fact in the history of litigation. Had it been accepted within a reasonable time after it was made, and the learned Judge correctly found that it should have been because the Plaintiff eventually did less well than they had been offered, then there would have been no need for the appeal at all. An appeal became necessary because, without it, the wrong order would have stood uncorrected.”
“41. ……..If a claimant should have accepted an offer within 21 days, then, on the face of it, the consequence should be that he is entitled to his costs up to the date when the offer should ordinarily have been accepted, and the defendant is entitled to his costs thereafter. Usually the mere fact that an offer is withdrawn after the date when it should have been accepted should not lead to a different result……….. 43. There may be circumstances where the court holds that the claimant acted reasonably in not accepting the offer within the 21 day period and where the offer was withdrawn before the time when the claimant should have accepted it. In that situation, the withdrawal of the offer may have a very real effect on the order that should be made in respect of costs. But that is very different from the present case.”
“If a party chose to pursue a claim once an offer had been made, he effectively took his chance of recovering more and, if he failed, should be a risk as to costs. Once a proper and reasonable offer was made, the dice were thrown and, for better or worse, the parties should live by the result. The policy of the law was to encourage settlements. ”