Sir Robert Megarry VC said: ‘For reasons that will appear, I think that I should pause in my recital of the facts in order to say something about these two cases. For a long while it has been settled law that if letters written ‘without prejudice’ do not result in an agreement, they cannot be looked at by the court even on the question of costs, unless both parties consent: see, for example, Walker v. Wilsher (1889) 23 QBD 335; Stotesbury v. Turner (1943) KB 370. Thus if in ‘without prejudice’ correspondence a defendant offers less than the plaintiff is claiming but more than the plaintiff ultimately recovers at the trial, the defendant cannot use his offer in support of a contention that the plaintiff should receive no costs for the period subsequent to the offer. If the claim is purely a money claim, this causes no difficulty: the defendant may pay into court under RSC Ord. 22 the sum that he is offering, and although knowledge of this will be withheld from the court until both liability and quantum have been decided, the fact of payment in is admissible, and usually highly relevant, in deciding what order for costs should be made. If, however, the claim is not solely a money claim, but some other relief is sought, such as an injunction, there was formerly no comparable procedure. What was needed was some procedure whereby the defendant could make an offer to submit to an injunction, give an undertaking or afford other relief on the footing that the offer would be without prejudice until the case was decided but with prejudice when it came to costs.
It was a procedure of this type which was suggested by Cairns L.J. in Calderbank v. Calderbank (1975) 3 A.E.R. 333 at 342, (1976) Fam. 93 at 105-106 and was acted on in McDonnell v. McDonnell (1977) 1 A.E.R. 766 at 770, (1977) 1 W.L.R. 34 at 38. These were both matrimonial appeals from the Family Division, however, and there has been some uncertainty whether the procedure applies to other cases. Thus 17 Halsbury’s Laws (4th edn) para 213 cites Calderbank v. Calderbank for the proposition that ‘in matrimonial proceedings relating to finance’ a party may make this type of offer, and the 1983 cumulative supplement leaves it there. Nor do the cases appear to have been given the prominence which they deserve. Thus leading books which discuss offers made ‘without prejudice’ still leave unamended statements based on Walker v. Wilsher (1889) 23 QBD 335, without any mention of either Calderbank or McDonnell: see, for example, Phipson on Evidence (13th edn, 1982) p. 374; Cross on Evidence (5th edn, 1979) p. 301. Nor are the cases mentioned in The Supreme Court Practice 1982.’
‘In my view, the principle in question is one of perfectly general application which is in no way confined to matrimonial cases. Whether an offer is made ‘without prejudice’ or ‘without prejudice save as to costs’, the courts ought to enforce the terms on which the offer was made as tending to encourage compromise and shorten litigation; and the latter form of offer has the added advantage of preventing the offer from being inadmissible on costs, thereby assisting the court towards justice in making the order as to costs. I should say at once that no point on this arises for decision, as the parties have very sensibly acted on this footing. What I have been saying is as obiter as what Cairns L.J. said (and Scarman L.J. and Sir Gordon Willmer concurred with) in Calderbank v. Calderbank; but I hope that the attention of the profession (including authors and editors) will be more generally directed to what seems to me to be a valuable procedural process that is too little used.’
Sir Robert Megarry VC
 3 All ER 153
England and Wales
Cited – Cutts v Head and Another CA 7-Dec-1983
There had been a trial of 35 days regarding rights of way over land, which had proved fruitless, and where some orders had been made without jurisdiction. The result had been inconclusive. The costs order was now appealed, the plaintiff complaining . .
Lists of cited by and citing cases may be incomplete.
Costs, Litigation Practice
Updated: 23 March 2022; Ref: scu.254333