Local Government Law - Costs Sanctions on Refusing ADR

Originally published June 2004

Alternative Dispute Resolution (ADR) is now well-established and positively encouraged in all suitable cases. On 23 March 2001 the former Lord Chancellor, Lord Irvine, pledged that Government Departments will go to court only as a last resort and that Government legal disputes will be settled by mediation or arbitration whenever possible.

Lord Woolf giving judgment in the Court of Appeal on 14 December 2001 in Cowl and others v. Plymouth City Council indicated the 'heavy obligation' of lawyers acting in a public law dispute where there is a suitable alternative dispute resolution mechanism 'to resort to litigation only if it is really unavoidable'. And the Department for Constitutional Affairs points out that:

'For some time it has been Government policy that disputes should be resolved at a proportionate level, and that the courts should be the dispute resolution method of last resort. Although ADR is independent of the court system, a judge can recommend that parties involved in litigation enter into it. The court may also impose cost sanctions if it decides that one or more of the parties has been unreasonable in refusing to attempt ADR.'

It was this latter issue (i.e. when should the court impose a costs sanction against a successful litigant on the ground that he has refused to take part in ADR) that was before the Court of Appeal on 11 May 2004 in Halsey v. Milton Keynes General NHS Trust and Steel v. Joy and Another [2004] EWCA (Civ) 576. Judgment was given by Dyson LJ. The Court noted (amongst other things) that Rule 1.4 (1) of the Civil Procedure Rules (CPR) requires the court to further the 'overriding objective' of enabling the court to deal with cases justly per Rule 1.1 by 'actively managing cases' which (by CPR 1.4(2)(e)) includes 'encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure'. The Court of Appeal noted that whilst ADR is defined in the Glossary to the CPR as the '[c]ollective description of methods of resolving disputes otherwise than through the normal trial process' nevertheless in practice 'references to ADR are usually understood as being references to some form of mediation by a third party'.

Whilst the Court of Appeal took the view that '[a]ll members of the legal profession who conduct litigation should now routinely consider with their clients whether their disputes are...