The recent case of Laporte v The Commissioner for the Police of the Metropolis [2015] EWHC 371 (QB), which came before Turner J (pictured), reinforced the pro-ADR stance of courts and the obligation on parties to seriously consider and engage with ADR processes. Although the case also dealt with indemnity costs, this article specifically focuses upon ADR.

The rules

Civil Procedure Rule 44 sets out the general rules on costs. CPR 44.2(1) provides that decisions relating to costs are in the discretion of the court. CPR 44.2(2) establishes the general rule that costs will follow the event (the usual costs order). CPR 44.2(4) identifies the circumstances to which the court is to have regard when exercising

its discretion in making decisions about costs:

‘(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –

(a) the conduct of all the parties;

(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and

(c) any admissible offer to settle made by a party which is drawn to the court’s attention and which is not an offer to which costs consequences under part 36 apply.’

The burden is on the losing party to persuade the court that an order other than the usual costs order should be made.

Laporte

The claimants were unsuccessful in their claim against the defendant for damages for assault and battery, false imprisonment and malicious prosecution, and a violation of their rights under articles 10 and 11 of the European Convention on Human Rights.

On the issue of costs, the claimants asserted that there should be no order for costs because the defendant had refused to engage in ADR. In response, the defendant sought an award of costs against the claimants and contended that they should be assessed on an indemnity basis.

The claimants had, at various points in the litigation process, made offers to the defendant to engage in ADR. However, although the defendant had initially indicated that they were willing to engage in ADR with a view to narrowing the issues, the defendant eventually rejected the claimants’ offer of ADR on the grounds that it was not, in the defendant’s opinion, an appropriate use of resources for either party. The claimants left the door open for ADR but never received a response from the defendant. Eventually, the claimants made a part 36 offer to which the defendant failed to respond.

Turner J first referred to the Court of Appeal’s decisions in Halsey v Milton Keynes General NHS Trust [2014] 1 WLR 3002, in which the court set out the factors which must be considered when assessing whether a refusal to engage in ADR was unreasonable. In Halsey, Lord Dyson held at paragraph 16: ‘The question whether a party has acted unreasonably in refusing ADR must be determined having regard to all the circumstances of the particular case. We accept the submission of the Law Society that factors which may be relevant to the question whether a party has unreasonably refused ADR will include (but are not limited to) the following:

‘(a) the nature of the dispute; (b) the merits of the case; (c) the extent to which other settlement methods have been attempted; (d) whether the costs of the ADR would be disproportionately high; (e) whether any delay in setting up and attending the ADR would have been prejudicial; and (f) whether the ADR had a reasonable prospect of success. We shall consider these in turn. We wish to emphasise that in many cases no single factor will be decisive, and that these factors should not be regarded as an exhaustive checklist.’

Turner J then made reference to PGF II SA v OMFS Co 1 Ltd [2014] 1 WLR 1386 in which Briggs LJ held that silence in the face of an invitation to participate in ADR is, as a general rule, unreasonable.

Turner J then proceeded to apply the Halsey factors to the circumstances of the case:

  • The nature of the dispute – Turner J rejected the defendant’s arguments that the case was unsuitable for ADR on the grounds that the claimants were seeking to litigate a point of legal principle concerning the scope of police powers. The claimants could have succeeded in obtaining some level of damages even if they had lost on the law and even if, in addition, the actions of the police had been vindicated.
  • The merits of the case – the fact that the defendant has accepted that it was prepared to mediate to narrow the issues indicated that the defendant conceded that the merits of the defence were not perceived to be so strong in themselves to have justified a refusal to engage in ADR.
  • Have other settlement methods been attempted? – it was clear from the facts that the defendant had made no settlement offers before ADR was suggested.
  • The cost of mediation would be disproportionately high – the defendant conceded that the costs of mediation would not have been disproportionately high but contended that an offer to settle would have had to include a large costs liability to the claimants. However, Turner J did not consider that this point was material to the issue which the Court of Appeal was addressing under this heading. It was, however, potentially relevant in determining whether mediation had a reasonable prospect of success.
  • Delay – there was no reason why mediation in this case would have had the effect of delaying the trial of the action. The first offer of ADR was made long before the date upon which the hearing was likely to take place.
  • Whether the mediation had a reasonable prospect of success – the central point relied upon by the defendant was that it had come to the view that the claimants would only accept a financial offer and that the defendant was unlikely to make one and so ADR was not appropriate. Turner J found that, on the evidence before him, he was satisfied that ADR had a reasonable prospect of success. Turner J rejected the defendant’s argument and held:

‘i) At no time had the defendant excluded the possibility of making a money offer;

ii) At no time had the claimants insisted that the making of a money offer would be a formal precondition of engaging in ADR;

iii) It is always likely that those representing any given party to a dispute will seek to lower the expectations of the other side in preparation for ADR. Simply because one side makes a prediction of what it might take to reach a settlement does not entitle the other side to treat such a prediction, without more, as a formal pre-condition. Tactical positioning should not too readily be labelled as intransigence.’

Finding in favour of the claimants, Turner J awarded the defendant two-thirds of its costs against the claimants to be assessed on the standard basis.

Laporte is yet another significant authority which continues to reinforce the important role of ADR within the civil justice system. The case also underlines judicial expectations that litigating parties will make some effort to try to reach a settlement. It is not enough to simply agree to ADR. The parties must demonstrate that they have taken positive steps in engaging with ADR, whether that be negotiation, mediation, conciliation or some other form of ADR process.

Masood Ahmed, University of Leicester

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