Academic journal article Contemporary Readings in Law and Social Justice

Bridging the Gap between Alternative Dispute Resolution and Robust Adverse Costs Orders

Academic journal article Contemporary Readings in Law and Social Justice

Bridging the Gap between Alternative Dispute Resolution and Robust Adverse Costs Orders

Article excerpt


One of the defining features of the Woolf reforms was its attempt to shift the focus in civil litigation away from the traditional adversarial culture of re- solving disputes to one which was centered on a philosophy of party cooperation and, more significantly, on settlement. As Lord Woolf made clear in his 1996 Final Report, "the philosophy of litigation should be primarily to encourage early settlement of disputes."1 This philosophy transformed the orthodox understanding of the civil litigation process from one that did not require the parties, in any formal sense, to engage in settlement negotiations, to one that embraced settlement as a fundamental and necessary aspect of the civil justice system.

To facilitate settlement, Lord Woolf gave alternative dispute resolution (ADR) an enhanced role within the framework of the Civil Procedure Rules (CPR). The CPR impose a positive duty upon the court to encourage parties to enga ge in ADR pr ocess es as part of its case ma nagement powers, and thereby act as a means to further the overriding objective of dealing with cases justly and at proportionate cost.2 The CPR also oblige parties to consider and engage in ADR processes both before and during the litigation process.3 However, Lord Woolf went further than this in his efforts to realize a change in litigation culture. He ensured that the courts were equipped with appropriate powers to penalize parties which failed to cons ider ADR or unreasonably refused to engage with it.4 These powers include the making of adverse costs orders against a party which, although successful in their claim or defense, is found to ha ve unr easonably r efused to engage in ADR (the "successful party"). The consequence of such an order being made against a successful party is that the usual costs order,5 which requires the unsuccessful party to pay the costs of the successful party, is set aside. Where this occurs, the type of adverse costs order that the courts tend to make is one that restricts the successful party to or deprives it of recovering no more than some or all of its costs from the unsuccessful party. The author refers to these types of costs orders as "cost deprivation orders" (CDOs).

However, despite the CPR conferring upon the courts the discretion to make a wide range of adverse costs orders, judges, most notably the senior judiciary, have been reluctant to fully utilize those powers. The courts appear to be mor e comfortable in making CDOs rather than ma king orders that oblige the successful party to reimburse some of the unsuccessful party's costs which that party has incurred because of the failure of the successful party to engage in ADR. The author refers to these types of costs orders as "paying orders" (POs) because they oblige the successful party to actually make a financial contribution towards the costs of the unsuccessful party.

This article investigates and seeks to shed light upon an area which has not received attention in the current literature: the discrepancy which exists between judicia l endor sement of ADR and the failure of the c our ts to translate or reflect that endorsement through making robust costs orders in the for m of POs. It will be argued t hat this discrepancy has occurred as a consequence of t he orthodox yet contradictor y understanding a mong the senior judiciary that ADR, in particular mediation, is not mandatory within the English civil justice system. In this regard the author will seek to provide an a lter native perspect ive of the Court of Appeal's decision in Halsey v Milton Keynes General NHS Trust6 by considering the effect it has had on the specific issue of the types of adverse costs orders which the courts make and the impact the decision has had upon subsequent judicial reluctance in making POs.

It will be argued that the courts should be more willing to make POs to fulfill two policy objectives. The first is to achieve fairness by reimbursing the unsuccessful party for costs it has had to incur which could have been avoided but for the successful party's failure to engage in ADR7 or, at the very least, for failing to engage in ADR which would have had the benefit of narrowing the issues between the parties and allowed the parties to gain a better understanding of the strengths and weaknesses of their arguments in the event that the parties have t o r evert t o the court process. …

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