A recent judgment emphasises the need for realistic consideration of ADR in litigation –

DSN v Blackpool Football Club Ltd –

https://www.bailii.org/ew/cases/EWHC/QB/2020/670.html

The case involved allegations of sexual abuse. The football club robustly defended the case. At the trial on 13th March 2020, the Claimant succeeded. The Defendants were vicariously liable and ordered to pay damages of just under £19,750.00. A Part 36 offer of £10,000 had been made on 2nd December 2019.

Griffiths J added 10% to the award plus enhanced interest as the Claimant had beaten his own Part 36 offer. The judge also awarded costs on the indemnity basis from the date of expiry of the Part 36 offer pursuant to CPR 36.14 (4) (b).

The claimants applied for an order that the Defendants pay the whole of their costs on the indemnity basis because they had unreasonable failed to engage in ADR.

A directions order of 30th October 2018 included the following –

“ALTERNATIVE DISPUTE RESOLUTION
At all stages the parties must consider settling this litigation by any means of Alternative Dispute Resolution (including Mediation); any party not engaging in any such means proposed by another must serve a witness statement giving reasons within 21 days of that proposal; such witness statement must not be shown to the trial judge until questions of costs arise.”

On 30th October 2019 the claimant’s solicitors wrote to invite settlement negotiations. The defendants refused. The solicitors filed a statement which stated –

“Having considered all of the available evidence, the defendant continues to believe that it has a strong defence to this claim and stands by the contents of its Defence dated 10 May 2018. In the circumstances I respectfully submit that no purpose would be served by any form of ADR.”

In other words, they refused to engage in any ADR because they felt that they had a strong defence. This argument was rejected. This was not an adequate reason for refusing to engage –

“No defence, however strong, by itself justifies a failure to engage in any kind of alternative dispute resolution. Experience has shown that disputes may often be resolved in a way satisfactory to all parties, including parties who find themselves able to resolve claims against them which they consider not to be well founded. Settlement allows solutions which are potentially limitless in their ingenuity and flexibility, and they do not necessarily require any admission of liability, or even a payment of money.”

The judge noted that, as it turned out, they did not have a strong defence – they lost.
He refused to order the defendants to pay the whole of the costs on the indemnity basis. He ordered to pay the costs on that basis from 1st December 2018 i.e. the day following one month after the 30th October directions order.

The message is clear. If there is a direction for the parties to consider ADR there must be a realistic consideration. It is not enough for either party to declare that they have such a strong case that they do not see the point.

The consequences of such refusals can be very expensive.