Calderbank offer and costs
2011 case note - taxpayer's application for increased costs based on its Calderbank offer failed because its rejection was justified – High Court Rules.
A taxpayer's application for increased costs based on its Calderbank offer failed because its rejection was justified.
Impact of decision
It reaffirms the principle that a successful Calderbank offer does not in itself give rise to increased costs but is dependent on rule 14.6, namely whether there is reasonable justification in rejecting the offer.
Following from the judgment of Justice Brewer J in Junior Farms Ltd v Commissioner of Inland Revenue on 22 July 2011, Junior Farms Ltd ("Junior Farms") applied to recall the judgment to address the issue on costs.
The Commissioner did not object to the recall but opposed Junior Farms's application to increase costs.
At the time of the Calderbank offer, the Commissioner's position had been confirmed in a comprehensive assessment through an adjudication process. It was therefore reasonable justification for the Commissioner to reject the offer based at 5% of the income tax claimed.
The Judge confirmed the costs awarded on a 2B basis.
High Court Rules