Archive for January, 2014

Ignore an ADR proposal at your peril!

The old rule that ‘costs follow the event’ in civil litigation was long ago replaced by the court’s discretion to state whether costs are payable by one party to another.  Part 44 of the civil procedure rules sets out  general guidance as to how a judge might exercise his discretion and what factors he might take into consideration, including the conduct of the parties.

The courts’ rules also encourage the use of alternative dispute resolution (‘ADR’) rather than court litigation.  An unreasonable refusal to participate in ADR has been held by the Court of Appeal to be unreasonable conduct to which the court may properly respond by imposing costs sanctions (Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002).  However, the point that had to be decided by the Court of Appeal in PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288 is what should the court do re a party which, when invited by its opponent to take part in an ADR process, simply declined to respond in any way?  The judge at first instance decided that the defendant’s silence in the face of an offer from the claimant amounted to a refusal and secondly, that the refusal was (as in the Halsey case) unreasonable.  Both parties appealed to the Court of Appeal.

The Court of Appeal referred to the Jackson ADR Handbook published by Oxford University Press as endorsed by Lord Justice Jackson and the Civil Justice Council and held that “the time has now come for this court firmly to endorse the advice given in Chapter 11.56 of the ADR Handbook, that silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable, regardless whether an outright refusal, or a refusal to engage in the type of ADR requested, or to do so at the time requested, might have been justified by the identification of reasonable grounds”.  Lord Justice Briggs (with whom the other Lord Justices of Appeal agreed) continued “I put this forward as a general rather than invariable rule because it is possible that there may be rare cases where ADR is so obviously inappropriate that to characterise silence as unreasonable would be pure formalism.”  So, generally speaking, ignore a proposal of ADR at your peril.

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