Without Prejudice Save as to Costs and Calderbank Offers

Part of: Financial Settlement after Divorce

Without prejudice save as to costs means the offer in front of you is meant to stay out of the case, except at the very end, when the court decides who pays the legal bills. That is the theory. In a financial case on divorce or dissolution, the second half of it usually fails, because only an open offer to settle can be put before the judge at any stage (Family Procedure Rules 2010, r.28.3(8)). So a letter with those words at the top may commit you to far less, and protect the sender far less, than either of you assumes. Our financial settlement after divorce specialists assist and advise at every stage. This page covers the law of England and Wales only.

Reviewed by: Garry Steedman, Family Law Consultant (Divorce, Children & TOLATA), Kabir Family Law

What does without prejudice save as to costs mean?

It means the sender wants the offer treated as a private attempt to settle, so the judge deciding the money cannot read it. The “save as to costs” words then carve out one exception: the sender wants to be free to show that same offer to the judge afterwards, when the court turns to who pays the legal bills. Some letters shorten it to “without prejudice save to costs”, and a few say “WPSATC”. The words mean the same thing.

Here is why people bother. An offer of settlement without prejudice is a way of testing a compromise without weakening your position. You can put forward less than you say you are entitled to, and nobody can later tell the judge that you did. So the without prejudice save as to costs meaning that matters to you is a practical one: who is allowed to read this letter, and when? Send an offer without prejudice, and nobody who decides your case may read it.

The “save as to costs” part adds teeth. The idea is simple. If the other person turns down a fair offer, runs the case to a final hearing and then does no better, the sender can produce the letter. They can then ask the court to make that person pay for the extra months of argument. That is the whole point of the technique, and it still works in many civil disputes. However, it is exactly the part that the family rules switch off in most divorce money cases.

What is a Calderbank offer?

A Calderbank offer carries the words “without prejudice save as to costs”. The Ministry of Justice uses exactly that definition, describing such offers as known as Calderbank offers. So if a letter, an email or a schedule of proposals carries that line, you are looking at a Calderbank offer, whether or not anyone uses the word.

That matters for a practical reason. Family lawyers still use the name daily, and a reader who searches for one phrase and finds the other can easily think there are two separate things to worry about. There are not. There is one technique with two names, and one rule that decides whether it bites in your case.

Which label is on your letter: open, without prejudice, or save as to costs?

Before you reply to anything, work out which of the three you have received. The wording at the top of the page decides who can read it, and when.

One more point is easy to miss. If a without prejudice offer is accepted, the agreement it creates is open, because the two of you then need a court to approve the terms. A judge can make a financial order in the terms agreed, on the basis of the information filed with the application (Matrimonial Causes Act 1973, s.33A). Our guide to the financial consent order explains that step. Our guide to a sealed consent order then covers what happens next.

Why can a judge not see your without prejudice save as to costs offer?

Because a single sentence in the family rules shuts the door. In financial remedy proceedings, “no offer to settle which is not an open offer to settle is admissible at any stage of the proceedings, except as provided by rule 9.17” (r.28.3(8)). Rule 9.17 is the financial dispute resolution appointment, and nothing else gets in.

The Practice Direction leaves no room for argument either. It says the court “will not be able to take into account any offers to settle expressed to be ‘without prejudice’ or ‘without prejudice save as to costs’ in deciding what, if any, costs orders to make” (PD28A, para 4.3). The Family Justice Council puts the same point in one line for judges: the rule “means that on the question of costs the court is no longer able to take into account … Calderbank offers” (FDR best practice guidance, para 47).

There is one place where the judge does read it. Every offer, including one made wholly or partly without prejudice, must be filed at least seven days before the settlement hearing (r.9.17(3) and (4)). That judge then has no further involvement in the case, and, at your request, the papers go back to you at the end rather than staying on the file. So one judge reads the offer once, and that judge will never decide your case.

The background rule still applies underneath all of this. Costs in the family court are in the discretion of the court (Senior Courts Act 1981, s.51), but in financial remedy cases the starting point is that the court will not order one of you to pay the other’s costs (r.28.3(5)). It moves off that point only because of conduct (r.28.3(6)).

When does an offer made without prejudice save as to costs still count?

Rule 28.3 does not cover every family money application, and where it does not apply the ordinary civil costs rules come back. The Practice Direction lists what falls outside it (PD28A, para 4.2). That list includes applications under Schedule 1 to the Children Act 1989. It also includes applications under section 27 or section 35 of the Matrimonial Causes Act 1973, and under Part 1 of the Domestic Proceedings and Magistrates’ Courts Act 1978. Most interim financial applications sit outside it too.

In those cases, “the exercise of the court’s discretion as to costs is governed by the relevant provisions of the CPR and in particular rule 44.2” (PD28A, para 4.7). A well-judged offer can therefore still shift who pays. Our guide to Schedule 1 of the Children Act 1989 explains that route for unmarried parents.

The same is true outside family proceedings altogether. A dispute between an unmarried couple about a jointly owned home is a civil claim, so Part 36 of the Civil Procedure Rules applies instead. Miss a Part 36 offer and the court “must, unless it considers it unjust to do so”, order you to pay the other side’s costs from the date that offer expired (CPR r.36.17(3)). If that is your situation, read our guide to a TOLATA property claim first, because the costs risk there is a different animal.

What changed in 2019, and why open offers now drive costs orders

On 27 May 2019 the rules changed. An update added one sentence to Practice Direction 28A. The court, it says, “will take a broad view of conduct for the purposes of this rule and will generally conclude that to refuse openly to negotiate reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs” (PD28A, para 4.4). GOV.UK put the purpose plainly: a failure to negotiate openly and responsibly “will likely lead to an order for costs” (Family Procedure Rules practice directions, May 2019 update).

Read those two rules together and the strategy falls out on its own. Private letters no longer protect you at the end. Open proposals do, and the court sets deadlines for them.

From a without prejudice offer to an open proposal: what it costs to get this wrong

Every financial case follows broadly the same sequence. The deadlines below come straight from the rules, and missing one is the most avoidable mistake on this page.

1. Negotiate in private first. Letters and meetings marked without prejudice let you both move without committing. Nothing said there reaches the judge who decides your case.
2. File every offer before the settlement hearing. All offers and responses, including without prejudice ones, go in at least 7 days beforehand (r.9.17(3)).
3. Use the hearing properly. Both of you must use your best endeavours to reach agreement (r.9.17(6)). The judiciary’s own guidance warns that “a refusal to negotiate may result in an order for costs”.
4. Go open within 21 days if it does not settle. Each of you must then file and serve an open proposal for settlement, by the date the court directs or within 21 days of the hearing (r.9.27A). Where there is no settlement hearing at all, the deadline is 42 days before the final hearing.
5. State your case in numbers before trial. Not less than 14 days before the final hearing the applicant files an open statement of the orders sought, with the amounts. The respondent then has 7 days to answer (r.9.28).
6. Flag a costs claim in the open. Anyone who intends to ask for costs should ordinarily say so in open correspondence or a skeleton argument before the hearing (PD28A, para 4.5).

Notice what that sequence does to the old tactic. The document that decides costs is the one you were required to file openly, not the clever letter you sent in private six months earlier.

Before you reply to a without prejudice save as to costs offer: are you on track?

Pick the words that appear at the top of the letter, then tick what is already true. The list shows you what the label does and does not do, and where the gaps are before you answer.

What goes wrong with without prejudice offers, and what it costs you

Most of the damage happens in the first fortnight after an offer lands, before anyone has taken advice. These are the patterns we see.

• Trusting the label to do the work. A heading on a page is not a force field. In a financial remedy case the rule, not the wording, decides what the court can read.
• Treating the settlement hearing as a formality. The judiciary’s guidance says a refusal to negotiate may result in an order for costs, and the rules require your best endeavours.
• Missing the open proposal deadline. It is 21 days after the settlement hearing, and the court weighs any open offer to settle when it decides costs (r.28.3(7)(b)).
• Answering too fast. A quick email can read as acceptance, or as a refusal to engage. Both are hard to undo.
• Judging the offer on feel. The court looks at all the circumstances and puts the welfare of any child under 18 first (Matrimonial Causes Act 1973, s.25). A number that feels insulting can still be close to the mark, and a generous-sounding one can leave you unable to rehouse.
• Forgetting the running total. Costs mount while letters go back and forth. Our guide to family law costs and to the Form H costs estimate shows how the court keeps track.
• Assuming nobody ever pays. They usually do not. However, unreasonable conduct changes that, and the change can be expensive.

How do our specialists assist and advise on a settlement offer?

Our specialists assist and advise from the moment an offer arrives. They explain what the wording at the top of it actually achieves in your type of application, and what it does not. A specialist also talks you through how the figure sits against the section 25 factors, so you can weigh it rather than react to it. Then comes the timetable: when your open proposal is due, and what the settlement hearing is for. Our guide to Form G explains how that hearing can be brought forward. If the case is heading for a final hearing, we help you prepare for each stage.

A free initial consultation is a conversation with a specialist, who gives you initial advice on your circumstances. It does not include drafting or reviewing documents. Before the call, note the date the offer arrived, any deadline in it, and the rough value of the house, the pensions and the savings.

Frequently asked questions

General information about the law in England and Wales, not advice on your circumstances.

Expert Tip

People put a great deal of faith in the words at the top of a letter, and far too little in the dates further down. In a financial case the court weighs what you said openly, on time, in the document the rules required. So when an offer arrives, ask two questions before you ask anything else: what is my deadline, and what will my own open proposal say? Answer those, and the label on the other side’s letter matters much less than you feared.

Iblal Iqbal, Partner & Family Law Strategist