Calderbank Offers: Obtaining a Better Result at Trial Is Not Enough for Indemnity Costs
In the recent Supreme Court of Western Australia decision of Jako Industries Pty Ltd v Perkins (WA) Pty Ltd [2026] WASC 158, the Court refused a successful Defendant’s application for indemnity costs, despite the Defendant having made two Calderbank offers which, viewed with the benefit of hindsight, the plaintiff would clearly have been better off accepting.
The decision is a useful refresher on the principles governing Calderbank offers, and a timely reminder that a Calderbank offer does not guarantee indemnity costs merely because the offeree ultimately fares worse than the offer. The offeror must persuade the court that the rejection was unreasonable at the time it was made, and the court will weigh all of the relevant facts and circumstances in making that assessment.
The proceedings arose out of an expert determination requiring Perkins to pay Jako $208,054 plus interest. Jako challenged the determination and commenced a claim against Perkins for approximately $989,158 plus interest.
The Calderbank offers
On 8 November 2024, after pleadings had closed, Perkins made its first Calderbank offer of $250,000 inclusive of interest plus GST, with each party to bear its own costs, in final settlement of the proceedings. At that date, Jako’s entitlement under the expert determination (including accrued interest) stood at $232,165.46.
By letter dated 10 December 2024, Jako rejected the offer and counteroffered to accept the determination sum, plus interest, plus a further $525,000.
On 15 April 2025, Perkins made a second Calderbank offer on the same terms as before, but this time also offering to forego its entitlement to costs in separate but related pre-action discovery proceedings. By then, Jako’s entitlement under the determination had risen to $237,717.07. Jako rejected this offer as well.
The matter proceeded to trial and, on 30 April 2026, judgment was delivered for Perkins. Perkins sought its costs from the date of the first offer on an indemnity basis.
Why indemnity costs were refused
The offers ticked many of the familiar boxes. They were made after pleadings had closed, allowed reasonable time for consideration, were clearly expressed, exceeded the amount payable under the determination, and foreshadowed an indemnity costs application. The Court also considered that Jako’s case was not strong. The application nonetheless failed for two reasons.
First, the offers involved little genuine compromise. Because each required the parties to bear their own costs, the first offered less than $18,000 above Jako’s existing entitlement under the determination, in exchange for abandoning a claim pleaded at nearly $1 million. The second offer was only marginally more favourable.
Secondly, while Jako’s case was weak, it remained reasonably arguable. The central question of when an expert who determines matters of credibility, or relies on other expert evidence, ceases to be an expert determiner and becomes an arbitrator was novel, and neither party could point to authority supporting its position.
Perkins recovered its costs on the ordinary basis only and, having failed on the indemnity application, was ordered to pay Jako’s costs of that application, to be taxed if not agreed.
Key takeaways
- A better result at trial is not enough. Beating your own Calderbank offer does not, of itself, warrant indemnity costs. The question is whether the rejection was unreasonable at the time it was made, not with the benefit of hindsight.
- The onus is on the offeror to establish that the rejection was unreasonable.
- The offers must represent a compromise. An offer that largely replicates the offeree’s existing entitlement involves little real compromise and will carry little weight.
- The usual factors remain important considerations, including the stage of the proceedings, the time allowed to consider the offer, the extent of the compromise, the offeree’s prospects at the date of the offer, the clarity of the terms, and whether an indemnity costs application was foreshadowed.
- A weak case may still be reasonably arguable, particularly where the central point is novel and untested by authority.
- The question is whether a reasonable party in Jako’s position, considering the evidence to be adduced and properly advised about the law, should have assessed its prospects of obtaining a greater sum to be so low that it was unreasonable to reject the offer.
By Malvinpal Khaira, Principal Solicitor
