Sanctions for Refusal of ADR Flashcards
The court can penalise a party who unreasonable refuses to:
- Comply with a court order to consider ADR
- Accept an offer to use ADR before/during/after proceedings
- Accept a reasonable offer to settle, including a Part 36 offer
- Make a reasonable offer to settle
What is the usual order for costs?
What must the costs be?
The usual order that the court can make is that the overall loser pays the overall winner’s costs, but the court can make a different order.
Costs must have been reasonable and proportionate
What will the court consider?
- The parties’ conduct
- Whether a party has partly succeeded
- Any admissible offer to settle
- Compliance with the PAPs
- Reasonability of raising/pursue/contest an issue
- Whether a successful claimant exaggerated his claim
What costs order may the court make?
- Proportion of costs
- Stated amount of another party’s costs
- Costs between certain dates
- Costs incurred before proceedings
- Costs relating to a particular step in proceedings
- Interest on costs
How do the courts check ADR compliance with the PAPs?
The court can ask the parties to explain their steps and evidence they considered ADR
What are the sanctions for non-compliance with PAPs?
- Staying the proceedings
- An order to pay costs
- Order on indemnity basis
- C being deprived of part of interest/damages
- D paying interest at a higher rate, not more than 10% more
Halsey – in deciding whether a refusal of ADR was reasonable, the court considers:
- The nature of the dispute
- The merits of the case
- The extent to which other settlement methods have been attempted
- Whether the ADR costs would be disproportionately high
- Whether any delay caused by the ADR would have been prejudicial
- Whether the ADR process had a reasonable prospect of success
Nature of the dispute
e.g. legal precedent necessary, court determination needed
Merits of the case
- whether the party refuses because he has a strong case or believes the other side has a weak case
- depends on whether the party’s assessment was reasonable
- the party should still bear in mind the positive effects of ADR
The extent to which other settlement methods have been attempted
- compliance with the PAPs
- should not ignore reasonable requests of ADR
- it’s reasonable to reject ADR when a cheaper version has been repeatedly offered
- failure to make any offer at all to settle
- failure to make a timely offer
- failure to admit liability that is later proved
What is the impact of a Part 36 offer on a refusal to use ADR?
- Part 36 offers are not a replacement for actual engagement in mediation
- If no early concessions are made, a Part 36 won’t protect against a costs order
- Costs still reflect the issues that a successful party lost at trial
What is the impact of refusal of a Calderbank offer?
- If a successful party acts unreasonably in refusing a Calderbank offer, and they don’t recover more at trial
- However, a party is not required to accept a Calderbank offer if it will deprive him of his costs (i.e. that each pay their own)
What is the impact of a Claimant failing to initiate ADR?
- The court distinguishes between a successful party rejecting an offer and a successful party failing to initiate ADR
- Halsey doesn’t apply where a successful party didn’t initiate ADR (so the other party couldn’t have refused)
Whether any delay caused by the ADR would have been prejudicial
If ADR is proposed late, resulting in a delay in trial, it can be refused
Whether the ADR process had a reasonable prospect of success
- Halsey – if ADR is refused on the basis that it would have no reasonable prospect of success, the burden is on the unsuccessful party seeking to avoid paying costs to show that the successful party unreasonable refused mediation and that there would have been success
- There must be an objective reason for believing this
- If full compensation (but no costs) could be recovered under an ADR scheme, the court will not allow a claim that is solely to recover those costs