A request that cannot be ignored.
The case of Northamber PLC v Genee World Ltd & Anor [2024] EWHC 428 is a timely reminder that ADR cannot be ignored.
The Claimant had appealed a Judgement of the Court on Six grounds. Here we concern ourselves only with the fifth of those grounds of appeal as it relates to costs arising from to a failure to engage with proposals to mediate.
The fact that you cannot ignore a proposal for ADR is now a long standing position. Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, concluded 20years ago that a refusal to mediate could be considered unreasonable conduct and this position was enforced in 2013 in PGF 11 SA v OMFS 1 Ltd [2013] EWCA Civ 1288, where the court again concluded that it was unreasonable to refuse to engage in ADR.
So, this is perhaps nothing more than a timely reminder.
In this particular instance the Court had made a Directions Order, which included the now standard provisions that the parties must consider ADR as a way of settling the litigation. Perhaps more unusually in this instance those directions went on to say that.
‘’any party not engaging in any such means proposed by another party, must serve a witness statement giving their reasons with 21 days’’
On 16 February 2022, the Claimant wrote to both Defendants proposing mediation. One Defendant finally responded in April 2022 advising they were taking instructions but made no further response and the other Defendant did not response to the request at all. Neither party filed a statement in compliance with the Directions Order.
At Trial, the Defendant’s failure to engage was raised, but the Court concluded that as the Claimant had never chased up the matter with the Defendant, it could not be concluded that there was any real intention to mediate and that the offer was made simply with the intention of being able to refer to it on assessment of costs.
The Claimant appealed on the grounds that the Trial Judge had failed to take sufficient account of the Defendant’s failure to engage with ADR and to comply with the Directions Order.
The Court of Appeal duly found in the Claimant’s favour in that the Trial Judge had fallen into error and that the Defendants were silent in the face of an offer to mediate. That this in itself was unreasonable and this was then compounded by the fact that the Defendant had then breached an order of the Court requiring them file a witness statement setting out their reason if they did not wish to mediate.
If breaches of such orders were ignored by courts when deciding costs, parties will have no incentive to comply with them. Such orders are made in order to robustly encourage parties to engage in ADR.
The Defendant had previously been ordered to pay 70% of the Claimant’s costs and this was increased to 75% to account for the Defendant’s failure to engage with regards to ADR.
Summary:
We are all now used to seeing the standard wording in Directions Orders that the parties must consider settling litigation by means of ADR. That direction is there for a reason and regardless of your personal views on the prospect of success of any ADR you ignore a proposal to engage in ADR at your own risk.
Secondly, this case is also reminder to make sure you are aware of all the directions in any Order from the Court and that they are complied with.
How can PIC help?
Any form of ADR can often be assisted by having a comprehensive schedule of your costs and the pros and cons of settlement on hand to assist negotiations.
Knowing your costs position will assist with negotiations for interim payments and should any costs inclusive offers be made.
PIC is always on hand to assist with the preparation of such schedule and providing advice on your costs position.
James Peters, Costs Lawyer
20.06.2024