The courts have wide powers under CPR Part 44 to consider the willingness of the parties to engage in Alternative Dispute Resolution ("ADR") when awarding costs. In the case of Laporte and another v The Commissioner of Police of the Metropolis(2015) Turner J provided a detailed explanation of the approach which will be taken in assessing whether a refusal to engage in mediation should lead to a reduction in the costs award.
CPR 44.2 establishes the general rule that costs follow the event, with the court having discretion to amend the award with reference to the conduct of all the parties, including looking at the willingness to engage in ADR. In Laporte, the Police won the case on every substantive issue. The Claimants however requested that the standard approach of costs following the event, as per CPR 44.2, should not be followed, because the Defendant had been so unwilling to engage in ADR.
The Claimants first formally suggested mediation on 26 September 2013; it took the Defendant until 4 June 2014 to confirm that they were not willing to pursue mediation. Throughout this time, the Claimants made repeated efforts to engage with the Defendant on settlement. Negotiations were sufficiently well advanced for the Claimants to have suggested a date for the mediation – only for the Defendant to subsequently respond that it did not feel mediation would be fruitful.
Turner J considered the previous leading authority in this area, Halsey v Milton Keynes General NHS Trust (2004), which set out six questions to be considered when making an order for costs:
- the nature of the dispute;
- the merits of the case;
- whether other settlement methods have been attempted;
- the cost of mediation would be disproportionately high;
- delay to the trial; and
- whether the mediation had a reasonable prospect of success.
Following this approach, Turner J said that the most important question was whether there was a reasonable prospect of the mediation being successful. In justifying its failure to mediate, the Defendant referred to the Claimants' assertions that they would require a financial offer to settle. The Judge noted, however, that the Claimants had not formally required a financial offer to engage in the process, and the Defendant had not expressly excluded the possibility of making such an offer. This was not, therefore, adequate justification. The reality was that the Defendant had been "repeatedly on the procedural back foot" in relation to trial preparation, and this was the reason it had failed to engage in ADR.
Given its failure, and applying Halsey, the Defendant was awarded only two thirds of its costs. However, the failure to properly engage in ADR in this instance was not deemed sufficient cause to prevent recovery of any costs.
This case is a good reminder to parties to remain mindful of the risk that refusing to properly engage in ADR can damage their ability to recover costs even if they succeed at trial. Turner J emphasised, however, that this is a fact-specific issue.