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What is an Offer of settlement in personal injury claims

For those who have not been through a personal injury claim before, you may not be aware of what an "Offer of Settlement" is or what settlement negotiations are and what they mean to a claim.

What is an offer of settlement and settlement negotiations during a personal injury claim?

Basically, settlement negotiations are where the parties try to reach a resolution of the claim between themselves by exchanging offers of settlement back and forth, until they reach a satisfactory settlement. Negotiations are undertaken between the parties legal representatives, upon the instructions of their respective clients. Basically it is a process that most people would know as "haggling".

Personal Injury claims in Queensland and New South Wales, as well as in many other Australian States, are regulated by State legislation. The purpose of the legislative schemes is to try to encourage and facilitate the resolving of claims between parties without the need for litigation, or the matter proceeding to a trial.

Why do parties prefer to settle claims?

The reason for this is because of the high costs involved in running claims to trial, which usually result in legal costs eating into the in-hand compensation or damages of the injured person.

Settlement negotiations within the pre-trial period, can result in settlement of claims, avoiding both the stress of a trial and the high legal costs associated with them.

When are offers of settlement made during a claim for accident and injury compensation ?

The pre-litigation and pre-trial processes involved in running personal injury claims involve a number of formal opportunities for parties to enter into settlement negotiations for the purpose of reaching a settlement of the claim. These include:

  • A compulsory conference, which usually occurs within approximately 9 to 12 months of the claim commencing. This is held prior to legal proceedings being instituted.  It is called a compulsory conference because under the legislation governing personal injury claims, the parties must hold and participate in the conference prior to commencing legal proceedings. 
     
  • At the conclusion of a compulsory conference, the parties are usually required to exchange final offers. Those offers must be genuine offers that the parties are willing to settle the case for, and once exchanged, must remain open for 14 days and can only be rescinded with the order of a Court.

  • A Mediation between the parties. A mediation involves a settlement conference between the parties that is presided over by a Mediator, who is usually a very experienced Senior Barrister, specialising in personal injury law. The Mediator uses his expert knowledge of personal injury claims to try to bring the parties together, by advising the parties as to how he assesses the claim prospects and the value of the claim. Mediations are usually held after proceedings have been commenced in the Court and prior to the matter being set down for a trial date.  However, the compulsory conference can also be held by way of Mediation if the parties consider it would assist a settlement being reached. This is usually the case where there are a number of Respondents or Defendants involved in the claim who are arguing amongst themselves as to what each of their contributions should be to the claim.
     
  • Formal offers of settlement during legal proceedings. During the litigation process, formal offers can be exchanged between the parties. These offers, once made, must remain open for 14 days and cannot be rescinded without an Order of a Court.

However, settlement negotiations and offers of settlement can occur at any time once a claim has been commenced and can continue between the parties right up until trial, and even during a trial. 

Offers of Settlement during a claim can have cost consequences 

Offers of settlement can have cost consequences. In particular, the final offers at the end of the compulsory conference referred to above, will have an impact on the costs to be awarded should the matter proceed to a trial. This is particularly the case in personal injury claims made by workers against their employers. In all other personal injury claims, formal offers of settlement, and what we call, "Calderbank Offers", also have cost consequences. The idea behind costs being influenced by offers made during a case is that if party makes a reasonable offer to settle the claim, and it is not accepted, and that offer is beaten at Court, then the party who was not reasonable in accepting that offer should take on the extra costs involved in the matter proceeding to trial.

Release and Discharge documents following settlement of a claim

Once a settlement is reached between the parties, then the claim is resolved and neither party can come back later and seek to proceed with the case.  Upon settlement, the Plaintiff is usually required to sign a Release and Discharge document which sets out the terms of settlement agreed between the parties and once this is signed by the parties, this constitutes a contract between the parties.

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