Failure To Engage In ADR And Indemnity Costs, Again


Another decision on indemnity costs arising from a failure to mediate.

On 20 April 2018, in the course of this personal injury claim, Deputy Master Brown gave the following direction:

‘At all stages the parties must consider settling this litigation by any means of Alternative Dispute Resolution (including Mediation); any party not engaging in such means proposed by another must serve a witness statement giving reasons within 21 days of that proposal; such witness statement must not be shown to the trial judge until questions of costs arise.’

It was said that despite this and a subsequent invitation by the claimant to engage in ADR the defendants “made no real attempt to settle the claim and did not even offer to settle quantum subject to liability”. Furthermore, in breach of the Deputy Master’s Order they failed to serve a witness statement explaining their reasons.

Mr Justice Chamberlain rejected the defendants’ argument that there had been nothing unreasonable about their conduct.

“The direction in this case imposed two obligations on the parties: first, an obligation to consider ADR ‘at all stages’; second, when refusing to engage in a form of ADR suggested by the other party, to serve a witness statement explaining the reasons within 21 days of the proposal. In this case, neither party appears to have suggested ADR for the best part of a year after the direction was made. The Defendants’ initial suggestion of a global settlement was rejected for the (good) reason that it would put the Claimant’s solicitors in an impossible position. After that, the Claimant suggested a joint settlement meeting, but the Defendants refused on 25 February 2019. At that stage, they were ‘not engaging in [a form of ADR] proposed by another’ and so should, under the terms of the direction, have served a witness statement explaining why. They did not do so. Indeed, there is still no witness statement explaining why they chose not to have a joint settlement meeting. This is, therefore, a case not just of silence in the face of an invitation to participate in ADR, but of breach of an obligation imposed by court order to explain a refusal so to participate. That conduct is, in my judgment, unreasonable.”

He consequently awarded indemnity costs from 25 February 2019, the date of the Defendants’ “unreasoned refusal to engage with the invitation” to attend a joint settlement meeting.

The Judge however rejected a claim for enhanced interest at 10% pursuant to CPR 34.17(4) from 30 July 2019, ie expiry of the Claimant’s Offer, which she had gone on to beat at trial.

“the agreed order already provides for an ‘additional amount’ of £6,950 pursuant to CPR r. 36.17(4)(d). As to the Defendants’ conduct, I have already drawn attention to their unreasoned refusal, from 25 February 2019, to engage in ADR. But aside from that, there is no aspect of the Defendants’ conduct which can be said to have been particularly unreasonable. The Defendants’ case was certainly not so weak that the decision to litigate it, as distinct from the failure to explain that decision, was itself unreasonable. There was no other reprehensible conduct of the kind criticised in the Petrom case. In the circumstances, and in the exercise of my discretion, I determine the enhanced rate of interest as 4% above base rate.”