In the recent case of DSN v Blackpool Football Club  EWHC 670 (QB) the High Court yet again emphasised that indemnity costs could follow as a result of not engaging in the ADR process.
I will not trouble you with the disturbing facts behind the case but Blackpool FC maintained they had a very strong case and would not entertain any negotiation or ADR. Their case was so strong that they lost that they failed to beat the Part 36 offer and costs were ordered against them. The Claimant sought indemnity costs because of the Defendant’s conduct and its failure to engage in settlement discussions.
The Master at the directions stage have made the usual provision that the parties had to consider settling the litigation through ADR but no attempts were made to settle the case
The Judge concluded:
“In summary, the Defendant in this case failed and refused to engage in any discussions whatsoever about the possibility of settlement”.
“The reasons given for refusing to engage in mediation were inadequate. They were, simply, and repeatedly, that the defendant “continues to believe that it has a strong defence””.
Mr Justice Griffiths went on to conclude:
“No defence, however strong, by itself justifies a failure to engage in any kind of alternative dispute resolution“.
The judge said that his experience was that disputes could be resolved in a way satisfactory to all the parties even if they did not consider the case to be well founded and that a settlement could allow for a solution which did not as not necessarily require any admission of liability or a payment of money. He was cognisant of the fact that the costs of an action were not always be limited to the financial costs but the trial would involve a significant expenditure of time and management time which could take a heavy toll on witnesses even for successful party.
There was a level of acceptable engagement in looking at the possibility of a settlement or mediation and Blackpool FC had not met that level.
The judge referred back to the case of OMV Petrom SA v Glencore International AG  EWCA Civ 879 and recited the paragraph from the judgement of Sir Geoffrey Vos C
“ The parties are obliged to make reasonable efforts to settle, and to respond properly to Part 36 offers made by the other side. The regime of sanctions and rewards has been introduced to incentivise parties to behave reasonably, and if they do not, the courts powers can be expected to be used to their disadvantage. The parties are obliged to conduct litigation collaboratively and to engage constructively in a settlement process”
As mediators, we would always say that there is a benefit in mediating any case. The worst case scenario will be the loss of the cost of the day but the issues are always narrowed.
For those of you interested in cost cases, it was also interesting to see that the judge was prepared to follow costs budgets and award an interim payment of £200,000 on account of costs.
Some might say that Blackpool FC conceded more than one own goal in their handling of the case!