Offers of compromise

Question 1

Settlement negotiations are generally …

Answer 1

privileged.

Question 2

Who can make an offer of compromise?

Answer 2

Any party may make an offer of compromise (r26.02),

Question 3

What form should offers of compromise comply with?

Answer 3

Offer of compromise must be
o in writing, and
o contain a statement to the effect that it is served in accordance with O26.
o Must also state whether inclusive or exclusive of costs (r26.02)

Question 4

When can offers of compromise be made?

Answer 4

• May be made at any time before verdict or judgment, and can make any number of offers of compromise (r26.03)
• Must leave open for at least 14 days, but otherwise can set time limit for response (r26.03)

Question 5

How can offers of compromise be accepted?

Answer 5

• Must accept before first of verdict or expiration of time specified.
• Must be paid within 28 days after acceptance of offer (r26.03.01)
• May withdraw acceptance if sum of money is not paid within the time limit provided for by the offer (r26.07)

Question 6

What are the consequences of failing to complying with an offer of compromise?

Answer 6

• If party defaults in complying with their obligations under the offer, the non-defaulting party to the accepted offer may apply to the Court for an order –
  o Giving effect to the accepted offer;
  o Staying or dismissing proceeding if the plaintiff is in default;
  o Striking out defendant’s defence if defendant is in default; or
  o That a claim, not the subject of the offer, shall proceed (r26.07

Question 7

Costs consequences for failure - Plf offer and D refuses (r26.08(2))

Answer 7

If plf offer rejected and plf gets a better claim on judgment, then:
* If bodily injury – indemnity from moment they begin until end of trial;
* If not bodily injury, then gets ordinarily applicable basis up until 11am day after offer was served, and then indemnity thereafter.

Question 8

Costs consequences for failure - Def offers and plf refuses (r26.08(3)) and P gets judgment no less favourable than the D offer

Answer 8

• D pays P costs on ordinarily applicable basis until 11am on second business day after offer was served, then P pays D’s costs on ordinarily applicable basis after that

Question 9

Costs consequences for failure - Def offers and claim is dismissed/def wins (r26.08(4))

Answer 9

• D gets costs on ordinarily applicable basis up until 11am on second business day after offer was made, and then indemnity basis after that.

Question 10

Can the court be informed of the items of the offer of compromise?

Answer 10

Court can be advised on the fact that the offer was made, and the date of service, but cannot be informed of its terms (r26.08(6))

Question 11

Pre-litigation offers

Answer 11

• If party makes offer before proceedings have commenced, and offer was rejected and gets no less favourable than terms of offeror, then the Court can take those matters into account in determining what order for costs to make in respect of the costs of the proceeding (r26.08.1(1))

Question 12

Contributor parties

Answer 12

• If two/more parties (‘contributor parties) held liable to contribute towards an amount of debt/damage, any of the contributor parties may make offer to another contributor party to contribute to the amount of the debt or damages (r26.10(1))
• If order made and not accepted, and first contributor party obtains a judgment against the other contributor party more favourable than terms of the offer, then first contributor party is entitled to costs paid by party who did not accept on an ordinarily applicable basis up until 11 am on second business day after offer was served, and after than on an indemnity basis.