Avoid Cost Penalties

Offers to engage in ADR should be made as soon as possible after the dispute arises, with a genuine desire to avoid litigation; at the very least, such offers should be made to protect oneself or one’s client, or to put pressure on opponents.

The Civil Procedure Rules require parties to engage in ADR. Indeed, Pre-action Protocols stipulate, “litigation should be a last resort.” Accordingly, parties to disputes ought to be recommending and utilising ADR before proceedings are issued.

If proceedings are issued, the Court is likely to require the parties to provide evidence that ADR has been considered, if not already tried. Refusal to consider and / or engage in ADR will be taken into account by the court when deciding who bears the costs of the proceedings.

There is an increasing body of case law confirming that costs penalties will be imposed for those parties who fail to do so.

In Garritt-Critchley v Ronnan [2014] EWHC 1774 the Defendant refused to engage with ADR and was penalised by an order that the Claimant’s costs be paid on an indemnity basis.

In Laporte & Christian v Commissioner of Police of the Metropolis [2015] EWHC 371 (QB), although the Defendant won outright, his refusal to engage in ADR led to an order that he be deprived of one third of his costs.

It is nearly 15 years since Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576 in which Lord Dyson reminded all members of the legal profession that it was their duty to consider ADR. As stated in that case: “acting in a client’s best interests includes an obligation to provide advice on resolving disputes by all appropriate means of ADR as well as litigation”.

It will be an exceptional case for ADR to be considered inappropriate: the vast majority of cases are suitable for ADR. In the event that an opponent offers ADR, you may be required to provide a witness statement setting out full reasons for refusing within 21 days. Ignoring offers of ADR is no longer an option, because it will almost certainly lead to costs penalties.