Court orders parties to engage in ADR over costs

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Ridgway: A new standard for costs disputes

A ruling that a former Conservative MP and a national newspaper must engage in alternative dispute resolution (ADR) before their argument over costs can be heard is a landmark that could herald the start of a new era, the Association of Costs Lawyers (ACL) has said.

In her last decision before retiring from the bench, King’s Bench Master Victoria McCloud said that if either Charlie Elphicke or Times Newspapers failed to engage in ADR, they would have to justify that to the court, and could face a sanction if their explanation is found wanting.

Mr Elphicke sued Times Media Ltd for libel over three articles published in The Sunday Times in 2018 that said he was under investigation for allegations of sexual assault. He was jailed for two years in September 2020 after he was convicted of sexually assaulting two women.

He discontinued the libel claim but sought to argue against the usual order that the person discontinuing a case should have to pay the other side’s costs.

Master McCloud decided that two breaches of the CPR justified a 20% reduction in Times Media’s costs, which will now go to detailed assessment.

She noted how recent judgments – particularly the Court of Appeal’s ruling in Churchill last year – and changes to the CPR that came into force earlier this month promoted the court’s powers and duties to consider directing ADR.

She said: “Here there remains the prospect of long, expensive detailed assessment proceedings with counsel and Costs Lawyers occupying perhaps several days, at a cost comparable with that of many trials.”

In such cases, “it would be remiss of a judge” not to order ADR before the proceedings were begun.

Master McCloud continued: “I fully expect such an order to (need to) become the norm when a judge directs detailed assessment unless costs are agreed.

“So often in the years when I sat as a deputy costs judge… I saw that bills of costs were listed for lengthy hearings yet once costs lawyers (and sometimes counsel) attended the hearing and discussed matters, or once I had ruled on points of principle in the bill very shortly, the matter was resolved pragmatically.”

It was, she added, “essential” that courts “do what they can” to relieve pressure on the congested court system by encouraging settlements earlier than the door of the courts, which can leave courtrooms standing empty.

“I do not doubt that consequences can and will result generally if parties in such cases come before the taxing master (costs judge) and have failed to do the court the courtesy of proper engagement in pre-assessment ADR,” she concluded.

In making her order for mandatory pre-detailed assessment ADR, Master McCloud directed that “good reason will need to be shown if the form of that dispute resolution is at any less engaged a level than mediation via costs lawyers given that the bill here more than justifies costs lawyer input”.

ACL chair Jack Ridgway said: “Dr Victoria McCloud has long been at the forefront of the push to consider ADR and her farewell ruling could well set a new standard for costs disputes.

“They are often amenable to mediation and other forms of ADR but, as has been the case across all kinds of disputes, there has hitherto been reticence to try it. The courts may soon give parties no choice.

“I also welcome her recognition that the involvement of Costs Lawyers, with our experience and skills, is crucial to making ADR work.”