Parties to a proceeding in the ACT now have another method to
protect themselves against costs.
The Court Procedures Amendment Rules 2014 (ACT)
(Amendment Rules) enabled a number of amendments
to be made to the Court Procedures Rules 2006 (ACT)
(CPR). These amendments include specific
provisions relating to Offers of Compromise which are now contained
in part 2.10 of the CPR, and commenced on 1 January 2015.
What are Offers of Compromise?
The primary purpose of an Offer of Compromise is to provide a
method through which a matter may be resolved without incurring the
costs of proceeding to hearing. It is an offer made by one party to
another, in a proceeding, pursuant to Regulation 1002 of the
The making of an Offer of Compromise provides cost protection to
the party making the offer in the event that the offer is not
accepted. The potential costs of failing to accept an Offer of
Compromise may encourage an uncooperative party to properly
negotiate the settlement of a matter.
Offers of Compromise are also a method which may be used by
parties to a proceeding to protect themselves against costs should
the offer be rejected. An Offer of Compromise may allow a party to
recover costs on a solicitor/client basis, otherwise known as an
'indemnity costs', for a period potentially extending the
length of the proceeding.
Offers of Compromise are widely used in a number of
jurisdictions, including the Federal Court of Australia.
How is an Offer of Compromise made?
An Offer of Compromise must:
be made in writing and must identify the claim to which it
specifically state that it is made in accordance with
Regulation 1002 of the CPR
identify the proposed orders for the disposal of the claim, or
part of the claim, including the amount of any monetary
state the period for which the offer is open.
Importantly, an Offer of Compromise must not include any amount
for costs, or state to be inclusive of costs.
Should an Offer of Compromise be accepted by a party to a
proceeding, Regulation 1009 of the CPR provides that the issuing
party is entitled to an order that the recipient of the offer pays
the costs of the claim, to be assessed on a party/party basis.
Plaintiffs and defendants who do not accept compromise offers
may face adverse costs orders. These are beyond the scope of this
article, but further information can be found in Regulations 1010,
1011, and 1012.
Relationship with Calderbank Offers
Offers of Compromise perform a similar function to that of a
Like Calderbank offers which may be made on a
'without prejudice' basis, Regulation 1006 provides that no
communication in relation to an Offer of Compromise may be
disclosed to the court at trial, or included in any pleading or
However, there are a number of notable differences between the
two types of offer, particularly in relation to personal injury
claims. A Calderbank offer will generally permit indemnity
costs to be awarded only from the date of the expiry of the offer,
in contrast with the indemnity costs order for the entirety of
proceedings available to a plaintiff through an Offer of
An Offer of Compromise therefore provides greater costs
protection to a plaintiff in personal injury matters in comparison
to a Calderbank offer. An Offer of Compromise should be
considered accordingly when received by a defendant or insurer in a
personal injury matter.
An Offer of Compromise made pursuant to Regulation 1002 of the
CPR also provides greater certainty with regard to the
effectiveness of the costs protection when compared with a
Calderbank offer. Regulation 1002 clearly specifies the
required components of an effective Offer of Compromise far more
concisely than the myriad of case law governing the operation of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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