Recent cases reiterate importance of engaging with a suggestion of ADR

The Court of Appeal judgment in Churchill v Merthyr Tydfil County Borough Council reframed the approach of the courts to ADR, giving clarity that a judge can forcibly decide to stay proceedings while ADR processes are pursued.

While it is perhaps still early to see the effect of applications being made to attempt to force a reluctant party into ADR there have been recent cases that continue to send the message that a suggestion to use ADR by an opponent are ignored at peril.

In a recent County Court case of Conway v Conway & Anor [2024] the Defendants had repeatedly dismissed offers to mediate before and during proceedings.

Despite the Defendants ultimate success in the claim the judge decided to reduce the costs that the defendants could recover by 25% because of the failure to engage or give good reason not to engage in ADR. The Claimant had contended the reduction should have been 100%. The judgment reinforces the point that a refusal to enter into ADR at all carries some risk, even if the case is ultimately successful.

In Northamber Plc v Genee World Ltd [2024] the District Judge made a case management order which ordered that the parties should engage in ADR, and if not, that the parties were required to provide a witness statement to be shown to the trial judge when dealing with the issue of costs.

The Claimant had been keen to participate in meditation though the Defendants solicitors had not responded or provided a statement as required under the Order. At first instance the judge initially did not penalise the Defendants in costs. The Claimant appealed.

In the Court of Appeal, Arnold LJ agreed with the Claimant that the trial judge ‘fell into error’ in failing to penalise the Defendants and acknowledged that this was in an ‘unreasonable’ refusal to participate in ADR.

The question was how this failure to engage in ADR should be quantified. Ultimately Arnold LJ increased the Claimant’s recovery costs by an extra 5% than that decided at trial, resulting in 75% overall. Although this figure is relatively small it again shows the courts are taking steps to enforce the culture of the use of ADR.

These cases underline the potential ramifications in failing to engage, and being seen to engage, with a suggestion of an ADR process.