QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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JANE LAPORTE NICHOLAS CHRISTIAN |
Claimants |
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- and - |
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THE COMMISSIONER OF POLICE OF THE METROPOLIS |
Defendant |
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George Thomas and Cecily White (instructed by Metropolitan Police Service) for the Defendant
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Crown Copyright ©
The Hon Mr Justice Turner:
INTRODUCTION
THE LEGAL FRAMEWORK
(1) The court has discretion as to –
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs –
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.
(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
ALTERNATIVE DISPUTE RESOLUTION
"In deciding whether to deprive a successful party of some or all of his costs on the grounds that he has refused to agree to ADR, it must be borne in mind that such an order is an exception to the general rule that costs should follow the event. In our view, the burden is on the unsuccessful party to show why there should be a departure from the general rule. The fundamental principle is that such departure is not justified unless it is shown (the burden being on the unsuccessful party) that the successful party acted unreasonably in refusing to agree to ADR."
"The question whether a party has acted unreasonably in refusing ADR must be determined having regard to all the circumstances of the particular case. We accept the submission of the Law Society that factors which may be relevant to the question whether a party has unreasonably refused ADR will include (but are not limited to) the following: (a) the nature of the dispute; (b) the merits of the case; (c) the extent to which other settlement methods have been attempted; (d) whether the costs of the ADR would be disproportionately high; (e) whether any delay in setting up and attending the ADR would have been prejudicial; and (f) whether the ADR had a reasonable prospect of success. We shall consider these in turn. We wish to emphasise that in many cases no single factor will be decisive, and that these factors should not be regarded as an exhaustive check-list."
"The ADR Handbook , first published in 2013, after the period relevant to these proceedings, sets out at length in para 11.56 the steps which a party faced with a request to engage in ADR, but which believes that it has reasonable grounds for refusing to participate at that stage, should consider in order to avoid a costs sanction. The advice includes: (a) not ignoring an offer to engage in ADR; (b) responding promptly in writing, giving clear and full reasons why ADR is not appropriate at the stage, based if possible on the Halsey guidelines; (c) raising with the opposing party any shortage of information or evidence believed to be an obstacle to successful ADR, together with consideration of how that shortage might be overcome; (d) not closing off ADR of any kind, and for all time, in case some other method than that proposed, or ADR at some later date, might prove to be worth pursuing. That advice may fairly be summarised as calling for constructive engagement in ADR rather than flat rejection, or silence."
And at para 34:
"In my judgment, the time has now come for this court firmly to endorse the advice given in para 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. 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. There may also be cases where the failure to respond at all was a result of some mistake in the office, leading to a failure to appreciate that the invitation had been made, but in such cases the onus would lie squarely on the recipient of the invitation to make that explanation good."
"… a finding of unreasonable conduct constituted by a refusal to accept an invitation to participate in ADR or, which is more serious in my view, a refusal even to engage in discussion about ADR, produces no automatic results in terms of a costs penalty. It is simply an aspect of the parties' conduct which needs to be addressed in a wider balancing exercise. It is plain both from the Halsey case [2004] 1 WLR 3002 , itself and from Arden LJ's reference to the wide discretion arising from such conduct in SG v Hewitt [2013] 1 All ER 1118 , that the proper response in any particular case may range between the disallowing of the whole, or only a modest part of, the otherwise successful party's costs.
52 There appears no recognition in the Halsey case that the court might go further, and order the otherwise successful party to pay all or part of the unsuccessful party's costs. While in principle the court must have that power, it seems to me that a sanction that draconian should be reserved for only the most serious and flagrant failures to engage with ADR, for example where the court had taken it on itself to encourage the parties to do so, and its encouragement had been ignored. In the present case the court did not address the issue at all. I therefore have no hesitation in rejecting Mr Seitler's submission that the judge did not go far enough in penalising the defendant's refusal to engage with ADR."
OTHER ISSUES
THE FACTUAL BACKGROUND
ADR
"a. We wish to cooperate with you on behalf of our clients in order to focus and/or narrow the issues to be tried in this claim in the absence of settlement. We are open to suggestions as to how this can best be achieved…
b. The Order dated 13 October 2013 required you to respond to the claimants on a different matter, namely our offer of mediation dated 26 September 2013…If you have instructions to make a meaningful offer our clients would be pleased to attend mediation in order to explore ADR…If you do not have instructions to make a meaningful offer we are concerned that a mediation where your client simply offers to 'drop hands' would not constitute a proportionate use of funds and our time might be better spent on preparing for trial. We are in your client's hands as to whether he is willing to enter into mediation with an open mind to achieving a meaningful settlement.
c. In view of the fact that the Court asked the parties to address ADR as long ago as November last year, we ask that this issue is resolved one way or another in the short term. We should therefore be grateful to hear from you on the basis of full instructions by 7 March 2014…"
"In view of the costs that will be incurred in preparing for a PTR and a three week jury trial, it is incumbent on both parties to make a serious attempt to achieve ADR without further delay…
In accordance with their duties under the CPR, our clients will approach this process in a frank and constructive manner. Their view remains that a payment of compensation will be necessary to compromise this claim; however they are of course willing to listen to what your client has to say in that regard and vice versa in the spirit of ADR."
"I will be sending a letter re ADR. For reasons which I will explain in the letter I no longer think an ADR meeting is an appropriate use of resources for either party given what was said by you and your Counsel at and just following the hearing on 23 May."
"I am surprised by your client's decision, at this stage, to refuse to engage in ADR and your reference to "what was said by [me] and [Counsel] at and just following the hearing on 23 May. There was nothing more said on my clients' behalf than what has already been said in correspondence and you will recall that it was on the basis of our previous exchange of correspondence that an ADR meeting had been agreed.
I would take this opportunity to remind you that the costs to be incurred in the three-week trial of this claim are likely to be very significant and therefore my clients are mindful of the need to ensure that any opportunity to resolve this claim without the need for trial is utilised. To that end, it had been hoped that your client would accept my clients' 26 September 2013 invitation to enter into ADR with an open mind, as my clients would intend to. It is regrettable that your client has refused to engage. I should be grateful if the content of this email could be brought to your client's attention and I look forward to hearing from you with confirmation that it has been, together with your client's reasons for refusing to engage in ADR…"
"To be clear, the Claimants' door remains open to ADR, as it has done so throughout these proceedings, in the remaining three weeks before trial."
The Pre-Action Protocol
Costs Schedules
THE HALSEY LIST
THE NATURE OF THE DISPUTE
"Even the most ardent supporters of ADR acknowledge that the subject-matter of some disputes renders them intrinsically unsuitable for ADR. The Commercial Court Working Party on ADR stated in 1999:
"The Working Party believes that there are many cases within the range of Commercial Court work which do not lend themselves to ADR procedures. The most obvious kind is where the parties wish the court to determine issues of law or construction which may be essential to the future trading relations of the parties, as under an on-going long term contract, or where the issues are generally important for those participating in a particular trade or market. There may also be issues which involve allegations of fraud or other commercially disreputable conduct against an individual or group which most probably could not be successfully mediated."
Other examples falling within this category are cases where a party wants the court to resolve a point of law which arises from time to time, and it is considered that a binding precedent would be useful; or cases where injunctive or other relief is essential to protect the position of a party. But in our view, most cases are not by their very nature unsuitable for ADR."
THE MERITS OF THE CASE
"18 The fact that a party reasonably believes that he has a strong case is relevant to the question whether he has acted reasonably in refusing ADR. If the position were otherwise, there would be considerable scope for a claimant to use the threat of costs sanctions to extract a settlement from the defendant even where the claim is without merit. Courts should be particularly astute to this danger. Large organisations, especially public bodies, are vulnerable to pressure from claimants who, having weak cases, invite mediation as a tactical ploy. They calculate that such a defendant may at least make a nuisance-value offer to buy off the cost of a mediation and the risk of being penalised in costs for refusing a mediation even if ultimately successful.
19 Some cases are clear-cut. A good example is where a party would have succeeded in an application for summary judgment pursuant to CPR r 24.2 , but for some reason he did not make such an application. Other cases are more borderline. In truly borderline cases, the fact that a party refused to agree to ADR because he thought that he would win should be given little or no weight by the court when considering whether the refusal to agree to ADR was reasonable. Borderline cases are likely to be suitable for ADR unless there are significant countervailing factors which tip the scales the other way. In Hurst v Leeming [2003] 1 Lloyd's Rep 379 , 381 Lightman J said: "The fact that a party believes that he has a watertight case again is no justification for refusing mediation. That is the frame of mind of so many litigants." In our judgment, this statement should be qualified. The fact that a party unreasonably believes that his case is watertight is no justification for refusing mediation. But the fact that a party reasonably believes that he has a watertight case may well be sufficient justification for a refusal to mediate."
HAVE OTHER SETTLEMENT METHODS BEEN ATTEMPTED?
"20 The fact that settlement offers have already been made, but rejected, is a relevant factor. It may show that one party is making efforts to settle, and that the other party has unrealistic views of the merits of the case. But it is also right to point out that mediation often succeeds where previous attempts to settle have failed. Although the fact that settlement offers have already been made is potentially relevant to the question whether a refusal to mediate is unreasonable, on analysis it is in truth no more than an aspect of factor (f)."
THE COST OF MEDIATION WOULD BE DISPROPORTIONATELY HIGH
"This is a factor of particular importance where, on a realistic assessment, the sums at stake in the litigation are comparatively small. A mediation can sometimes be at least as expensive as a day in court. The parties will often have legal representation before the mediator, and the mediator's fees will usually be borne equally by the parties regardless of the outcome (although the costs of a mediation may be the subject of a costs order by the court after a trial). Since the prospects of a successful mediation cannot be predicted with confidence… the possibility of the ultimately successful party being required to incur the costs of an abortive mediation is a relevant factor that may be taken into account in deciding whether the successful party acted unreasonably in refusing to agree to ADR ."
DELAY
"If mediation is suggested late in the day, acceptance of it may have the effect of delaying the trial of the action. This is a factor which it may be relevant to take into account in deciding whether a refusal to agree to ADR was unreasonable.
WHETHER THE MEDIATION HAD A REASONABLE PROSPECT OF SUCCESS
"23 In Hurst v Leeming [2003] 1 Lloyd's Rep 379 , Lightman J said that he considered that the "critical factor" in that case was whether "objectively viewed" a mediation had any real prospect of success. He continued, at p 381:
"If mediation can have no real prospect of success, a party may, with impunity, refuse to proceed to mediation on this ground. But refusal is a high risk course to take, for if the court finds that there was a real prospect, the party refusing to proceed to mediation may, as I have said, be severely penalized. Further, the hurdle in the way of a party refusing to proceed to mediation on this ground is high, for in making this objective assessment of the prospects of mediation, the starting point must surely be the fact that the mediation process itself can and often does bring about a more sensible and more conciliatory attitude on the part of the parties than might otherwise be expected to prevail before the mediation, and may produce a recognition of the strengths and weaknesses by each party of his own case and of that of his opponent, and a willingness to accept the give and take essential to a successful mediation. What appears to be incapable of mediation before the mediation process begins often proves capable of satisfactory resolution later."
24 Consistently with the view expressed in this passage, Lightman J said that on the facts of that case he was persuaded that "quite exceptionally" the successful party was justified in taking the view that mediation was not appropriate because it had no realistic prospects of success.
25 In our view, the question whether the mediation had a reasonable prospect of success will often be relevant to the reasonableness of A's refusal to accept B's invitation to agree to it. But it is not necessarily determinative of the fundamental question, which is whether the successful party acted unreasonably in refusing to agree to mediation. This can be illustrated by a consideration of two cases. In a situation where B has adopted a position of intransigence, A may reasonably take the view that a mediation has no reasonable prospect of success because B is most unlikely to accept a reasonable compromise. That would be a proper basis for concluding that a mediation would have no reasonable prospect of success, and that for this reason A's refusal to mediate was reasonable.
26 On the other hand, if A has been unreasonably obdurate, the court might well decide, on that account, that a mediation would have had no reasonable prospect of success. But obviously this would not be a proper reason for concluding that A's refusal to mediate was reasonable. A successful party cannot rely on his own unreasonableness in such circumstances. We do not, therefore, accept that, as suggested by Lightman J, it is appropriate for the court to confine itself to a consideration of whether, viewed objectively, a mediation would have had a reasonable prospect of success. That is an unduly narrow approach: it focuses on the nature of the dispute, and leaves out of account the parties' willingness to compromise and the reasonableness of their attitudes.
27 Nor should it be overlooked that the potential success of a mediation may not only depend on the willingness of the parties to compromise. Some disputes are inherently more intractable than others. Some mediators are more skilled than others. It may therefore sometimes be difficult for the court to decide whether the mediation would have had a reasonable prospect of success.
28 The burden should not be on the refusing party to satisfy the court that mediation had no reasonable prospect of success. As we have already stated, the fundamental question is whether it has been shown by the unsuccessful party that the successful party unreasonably refused to agree to mediation. The question whether there was a reasonable prospect that a mediation would have been successful is but one of a number of potentially relevant factors which may need to be considered in determining the answer to that fundamental question. Since the burden of proving an unreasonable refusal is on the unsuccessful party, we see no reason why the burden of proof should lie on the successful party to show that mediation did not have any reasonable prospect of success. In most cases it would not be possible for the successful party to prove that a mediation had no reasonable prospect of success. In our judgment, it would not be right to stigmatise as unreasonable a refusal by the successful party to agree to a mediation unless he showed that a mediation had no reasonable prospect of success. That would be to tip the scales too heavily against the right of a successful party to refuse a mediation and insist on an adjudication of the dispute by the court. It seems to us that a fairer balance is struck if the burden is placed on the unsuccessful party to show that there was a reasonable prospect that mediation would have been successful. This is not an unduly onerous burden to discharge: he does not have to prove that a mediation would in fact have succeeded. It is significantly easier for the unsuccessful party to prove that there was a reasonable prospect that a mediation would have succeeded than for the successful party to prove the contrary.
29 So far we have been considering the question whether a successful party's refusal of ADR was unreasonable without regard to the impact of any encouragement that the court may have given in the particular case. Where a successful party refuses to agree to ADR despite the court's encouragement, that is a factor which the court will take into account when deciding whether his refusal was unreasonable. The court's encouragement may take different forms. The stronger the encouragement, the easier it will be for the unsuccessful party to discharge the burden of showing that the successful party's refusal was unreasonable.
30 An ADR order made in the Admiralty and Commercial Court in the form set out in Appendix 7 to the Guide is the strongest form of encouragement. It requires the parties to exchange lists of neutral individuals who are available to conduct " ADR procedures", to endeavour in good faith to agree a neutral individual or panel and to take "such serious steps as they may be advised to resolve their disputes by ADR procedures before the neutral individual or panel so chosen". The order also provides that if the case is not settled, "the parties shall inform the court … what steps towards ADR have been taken and (without prejudice to matters of privilege) why such steps have failed". It is to be noted, however, that this form of order stops short of actually compelling the parties to undertake an ADR .
31 Nevertheless, a party who, despite such an order, simply refuses to embark on the ADR process at all would run the risk that for that reason alone his refusal to agree to ADR would be held to have been unreasonable, and that he should therefore be penalised in costs. It is to be assumed that the court would not make such an order unless it was of the opinion that the dispute was suitable for ADR .
32 A less strong form of encouragement is mentioned in the other court guides to which we have referred at para 6 above. A particularly valuable example is the standard form of order now widely used in clinical negligence cases, and which was devised by Master Ungley. The material parts of this order provide:
"The parties shall … consider whether the case is capable of resolution by ADR . If any party considers that the case is unsuitable for resolution by ADR , that party shall be prepared to justify that decision at the conclusion of the trial, should the trial judge consider that such means of resolution were appropriate, when he is considering the appropriate costs order to make. The party considering the case unsuitable for ADR shall, not less than 28 days before the commencement of the trial, file with the court a witness statement without prejudice save as to costs, giving the reasons upon which they rely for saying that the case was unsuitable."
33 This form of order has the merit that (a) it recognises the importance of encouraging the parties to consider whether the case is suitable for ADR , and (b) it is calculated to bring home to them that, if they refuse even to consider that question, they may be at risk on costs even if they are ultimately held by the court to be the successful party. We can see no reason why such an order should not also routinely be made at least in general personal injury litigation, and perhaps in other litigation too. A party who refuses even to consider whether a case is suitable for ADR is always at risk of an adverse finding at the costs stage of litigation, and particularly so where the court has made an order requiring the parties to consider ADR."
i) At no time had the defendant excluded the possibility of making a money offer;ii) At no time had the claimants insisted that the making of a money offer would be a formal precondition of engaging in ADR;
iii) It is always likely that those representing any given party to a dispute will seek to lower the expectations of the other side in preparation for ADR. Simply because one side makes a prediction of what it might take to reach a settlement does not entitle the other side to treat such a prediction, without more, as a formal pre-condition. Tactical positioning should not too readily be labelled as intransigence.
iv) I do not agree that Ms Fowler was entitled to take the view that Mr Dutta's approach to ADR was purely tactical. It had been on the claimants' agenda from the outset and was pursued with appropriate vigour throughout.
v) It is difficult to escape the conclusion that Ms Fowler was repeatedly on the procedural back foot in the months leading up to the hearing as a result of which the pursuance of ADR was deprioritised to help her to meet the demands of preparing the case for trial.
FURTHER MATTERS
CONCLUSION ON ADR
PRE-ACTION PROTOCOL
COSTS SCHEDULES
INDEMNITY COSTS
"a) It is a consequence of the Judge's finding that the Claimants' arrests and subsequent prosecutions were in large part a consequence of their own actions on 24th February 2011;
b) Notwithstanding that the arrests were in large part a consequence of the Claimants' own actions, they elected to bring civil proceedings. This was not a case where the necessity to secure an effective remedy left the Claimants with no option but to issue proceedings (such as, for example, in some housing cases or a personal injury involving substantial care needs);
c) The Claimants sought to challenge every aspect of the policing operation. They have lost on every issue raised;
d) On any objective viewing of the video footage, the overall policing decision to remove protestors from the third floor corridor and stairwell (whether on the grounds of a breach of the peace, removing trespassers or preventing disorder at a public meeting) was patently reasonable. It has been demonstrated to be lawful. There never were any reasonable grounds for including this in the claim;
e) The Court has found that both Claimants:
i) were acting in a disruptive manner which was directly threatening the viability of the Council meeting, and were participating in a breach of the peace (para 92);
ii) struggled not to see things through the distorting lens of their own firm convictions (para 94 and 114);
iii) gave evidence that was more of an ex post facto rationalisation of their conduct than an accurate recollection (para 96 and 114).
It is therefore open to the Court to determine that, in bringing and/or conducting these proceedings, the Claimants have not acted reasonably.
f) It was the Claimants who, while ostensibly seeking mediation, sought to place preconditions on the mediation that rendered it futile. The reality is that the only mediation that was ever going to be acceptable to the Claimants was one that resulted in them being paid damages and costs."
CONCLUSIONS