The Dekagram: 9th September 2024

The team has returned from holiday, relaxed, refreshed and ready to go; we hope our readers are feeling similarly rejuvenated. In our absence, the courts have been busily handing down judgments left, right and centre.

Challenging Jurisdiction

In Graham v Fidelidade [2024] EWHC 2010 (KB) the Defendant’s jurisdictional challenge failed for practical reasons; the Claimant’s state of health was such that the courts of England and Wales were the more appropriate forum, particularly in the light of the fact that the Defendant was a global insurer with international interests. Interestingly, and perhaps surprisingly, the judge also held that there was a risk that the Claimant would not obtain substantial justice in the courts of Portugal, because he required costly prosthetics, and could not obtain an interim payment within the Portuguese system. Readers may feel that this latter finding runs somewhat counter to previous authority, which has tended to date to emphasise the need for courts to respect the procedural rules of other jurisdictions in the interests of international comity.

Seeking Injunctive Relief

Meanwhile, in Mex Group Worldwide v Ford [2024] EWCA Civ 959 the Court of Appeal held that a worldwide freezing injunction made pursuant to s.25 of the Civil Jurisdiction and Judgments Act 1982 in aid of substantive proceedings in Scotland was properly set aside where although there was sufficient evidence that the respondents would dissipate their assets to avoid satisfying any judgment made against them, it was inexpedient to grant injunctive relief because of the lack of any jurisdiction apart from s.25. There had to be a connecting link with the territorial jurisdiction of the English court before such an injunction could be granted, notwithstanding that the substantive proceedings were on foot in another part of the UK, and in this case there was no such link.

Costs of Costs Management

And in Worcester v Hopley [2024] EWHC 2181 (KB) Master Thornett considered what costs order to make after a costs management conference at which the claimant’s budget was reduced by 53.35%, 3.58% above the sum previously offered by the defendant. The defendant sought:

(i) no order for costs in respect of the costs management hearing;

(ii) the Claimant to pay the costs of the hearing to determine the costs of the costs management hearing; and

(iii) an order that should the Claimant recover costs upon success, there should be a 50% reduction of such assessed costs of and occasioned by costs management.

The claimant sought an order for costs in case, in the usual way.

In the words of Master Thornett:

“The Claimant is correct in principle that it would not be appropriate for the court regularly to depart from an “in the case” costs order following “ordinary” costs management just because a party has seen their budget reduced. I agree that even though the court may, and often does, express critical views during the course of costs management, that should not necessarily lead to a costs penalty.”

On the other hand:

“Especially when, as here, the court had listed a separate hearing for the exclusive purpose of costs management, with an expectation that the intervening period provided should prompt the parties to reconsider their respective positions. The  notion that because costs management is necessarily interwoven with the process of case management then both should be treated as within an enveloped whole, during which process the court should always adopt a holistic “in the case” approach, substantially overlooks the wide discretion the court has on costs and the factors listed in r.44.2 to be taken into account when deciding costs.

In short, a party that resolutely proceeds to a separately listed costs management hearing with an overly ambitious budget should not readily assume that the court will be willing to see both its time and resources and those of opposing parties’ engaged without any potential consequence in costs.”

Having considered proportionality, Master Thornett concluded:

“The overall impression and conclusion I reached was that the Claimant’s Precedent H was unreasonable and unrealistic in terms of proportionality. It led to a polarised approach between the parties on budgeting that had prevented settlement and so necessitated a separate hearing proceeding that either might have been vacated or, even if not, should have followed a more conventional process of modest arithmetical adjustment and modification, rather than fundamental deconstruction of the Claimant’s proposals and as led to sizeable reductions.”

Bearing this in mind, he made the following order:

(i) no order for the costs of the costs management hearing, as sought by the defendant;

(ii) the claimant to pay the defendant’s costs of the hearing to consider the costs management hearing; and

(iii) an order that should the Claimant recover costs upon success, there should be a 15% reduction of such assessed costs of and occasioned by costs management.

This outcome demonstrates that, in sufficiently unusual cases, the costs of costs managing itself may be determined as being out of the ordinary, and therefore an order other than one for costs in case made. A salutary tale indeed.

Towards Compulsory ADR?

As well as this clutch of cases, the Civil Procedure Rules Committee has proposed an amendment to the Civil Procedure Rules in response to the decision of the Court of Appeal in Churchill v Merthyr Tydfil CMC [2024] 3 All ER 771 that the courts do have the power to order parties to undertake alternative dispute resolution. The new rule, which (pursuant to the Civil Procedure (Amendment No.3) Rules 2024 SI 2024 No. 839) comes into force on 1^st October, amends the overriding objective to enshrine the encouragement and facilitation of the use of alternative dispute resolution in the overriding objective.

CPR 3.1(2)(o) and (p) will expand the court’s case management powers to:

“(o) order the parties to participate in ADR;

(p) take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an Early Neutral Evaluation with the aim of helping the parties settle the case.”

CPR 28 (which deals with matters to be dealt with by directions in fast track and intermediate track cases) now includes consideration of “whether to order or encourage the parties to participate in ADR”.

CPR 29 (which deals with case management in multitrack cases) now mandates:

“(1A) When giving directions, the court must consider whether to order or encourage the parties to participate in ADR.”

Note the word ‘must’ – parties will need to be ready to deal with their position on ADR at every directions hearing in a claim. Failure to do so may lead to hearings being adjourned and adverse costs orders being made.

CPR 44 has also been amended so that the conduct of parties in undertaking litigation will now include:

“whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution proposed by another party.”

In summary, then, the court is now empowered to order parties to undertake ADR and to penalise them in costs should they fail to do so. Parties should be prepared to explain their position on ADR to judges at case management; no longer will it do simply to state that ‘we are confident we’ll win’ and refuse to attend mediation or settlement meetings. It will be interesting to observe the interplay between these new rules and the consequences of the QOWCS regime; a defendant might well find it cheaper to settle a claim it considers to be unmeritorious than to face the adverse costs consequences of refusing to contemplate doing so.

About the Author

Called to the Bar in 1997, Sarah Prager KC has been listed in the legal directories as a Band 1 practitioner in travel law for many years, and, more recently, listed in aviation as well. Together with her colleagues at Deka Chambers, Matthew Chapman KC, Jack Harding, Dominique Smith, Tom Yarrow and Henk Soede, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.