ADR in Costs Disputes- The New Normal
Following the final ruling of Master McCloud it has become clear that there will be no day in court for detailed assessments without the parties first having engaged in Alternative Dispute Resolution (ADR).
Master McCloud ordered that ADR takes place in Elphicke v Times Media Ltd (2024) EWHC 2595 (KB), when deciding what proportion of the Newspaper’s costs Mr Elphicke should pay, following the discontinuance of his defamation action under CPR 38. Having ruled that the Newspaper’s costs should be discounted by 80% to reflect the failure by the newspaper to preserve evidence, the Master went on to direct that before those costs could be assessed, the parties MUST (emphasis added) engage in ADR at a level not less than mediation, a resolution process which requires the input of costs lawyers.
This is an important development in costs law and gives effect to the mood and guidance of the Court of Appeal in Churchill v Merthyr Tydfil Borough Council (2024) Costs LR 249, that before parties will be permitted to draw upon the court’ s valuable resources at detailed assessment, they will be required to engage in ADR and face the wrath of the costs judge if they unreasonably fail to do so.
Given the success rate for settlements at costs mediation and the length of time that detailed assessments can take ( up to 100 days – see Vik and Sebastian Holdings v Deutsche Bank ) , it is little wonder and to be commended that the Master, of her own motion, has furthered the Court of Appeal’s drive for more mediation in this way. The costs peril will now lie on those who fail to recognise the direction of judicial travel , as the judgment in Elphicke demonstrates.
To read the judgement please click here.
Kain Knight offer costs mediation as part of their service, so for more information please get in touch.
Author Colin Campbell.
