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Can you be silent when invited to ADR?

It is well-established law that a party unreasonably refusing to engage in alternative dispute resolution (ADR) can be penalised in costs (Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576). Silence in response to an ADR invitation is generally considered unreasonable (PGF II SA v OMFS 1 Ltd [2013] EWHC Civ 1288), and this principle was reinforced recently by the Court of Appeal in Northamber Plc v Genee World Ltd and others [2024] EWCA Civ 428.

In Northamber Plc v Genee World Ltd the district judge ordered the parties to engage in ADR, requiring a witness statement if any party declined. The claimant showed willingness to mediate, but the defendants did not respond adequately or provide witness statements. Post-trial, the judge awarded the claimant 70% of its costs but did not penalise the defendants for ignoring the ADR order, citing a lack of evidence that the claimant followed up on their mediation invitation. The claimant appealed this decision, arguing it was an error in principle.

Arnold LJ, delivering the Court of Appeal judgment, agreed the judge erred. He noted the defendants' silence was unreasonable and breached the case management order. Ignoring such breaches undermines the encouragement to mediate. The ongoing litigation and substantial costs incurred highlighted the necessity of court discretion in addressing the defendants' conduct.

The litigation extended for eight months, including a nine-day trial, with avoidable costs. Arnold LJ stated that the responsibility to chase mediation replies did not lie solely with the claimant. Although not all refusals to mediate warrant a costs penalty, it is a significant factor. The court increased the claimant’s cost recovery to 75%, reinforcing the principle that silence in the face of ADR is unreasonable for cost considerations.

This decision upholds the principle of proportionality in the civil justice system. As Briggs LJ stated in PGF, limited state resources for civil litigation necessitate a focus on ensuring court time is used effectively, emphasizing the parties' responsibility to engage in ADR.

Posted on 07/03/2024 by Ortolan

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