BRIDGING THE GAP BETWEEN ALTERNATIVE DISPUTE RESOLUTION AND ROBUST ADVERSE COSTS ORDERS

Abstract

IntroductionOne of defining features of Woolf reforms was its attempt to shift focus in civil litigation away from 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 orthodox understanding of civil litigation process from one that did not require parties, in any formal sense, to engage in settlement negotiations, to one that embraced settlement as a fundamental and necessary aspect of civil justice system.To facilitate settlement, Lord Woolf gave alternative dispute resolution (ADR) an enhanced role within framework of Civil Procedure Rules (CPR). The CPR impose a positive duty upon 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 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 litigation process.3 However, Lord Woolf went further than this in his efforts to realize a change in litigation culture. He ensured that 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 making of adverse costs against a party which, although 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 party is that usual costs order,5 which requires unsuccessful party to pay costs of party, is set aside. Where this occurs, type of adverse costs order that courts tend to make is one that restricts party to or deprives it of recovering no more than some or all of its costs from unsuccessful party. The author refers to these types of costs as cost deprivation orders (CDOs).However, despite CPR conferring upon courts discretion to make a wide range of adverse costs orders, judges, most notably 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 that oblige party to reimburse some of unsuccessful party's costs which that party has incurred because of failure of party to engage in ADR. The author refers to these types of costs as paying orders (POs) because they oblige party to actually make a financial contribution towards costs of unsuccessful party.This article investigates and seeks to shed light upon an area which has not received attention in current literature: discrepancy which exists between judicia l endor sement of ADR and failure of c our ts to translate or reflect that endorsement through making robust costs in 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 senior judiciary that ADR, in particular mediation, is not mandatory within English civil justice system. In this regard author will seek to provide an a lter native perspect ive of Court of Appeal's decision in Halsey v Milton Keynes General NHS Trust6 by considering effect it has had on specific issue of types of adverse costs which courts make and impact decision has had upon subsequent judicial reluctance in making POs.It will be argued that courts should be more willing to make POs to fulfill two policy objectives. The first is to achieve fairness by reimbursing unsuccessful party for costs it has had to incur which could have been avoided but for party's failure to engage in ADR7 or, at very least, for failing to engage in ADR which would have had benefit of narrowing issues between parties and allowed parties to gain a better understanding of strengths and weaknesses of their arguments in event that parties have t o r evert t o court process. …