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Corenso (UK) Limited vs Burnden Group Limited, 1 July 2003, Queens Bench Division, High Court, Judgment of His Honour Judge Reid QC
The court held that the parties had shown a genuine and constructive willingness to resolve the issue between them and neither of them deserved to be penalised for not having gone along with the particular form of ADR proposed by the other side. Corenso was therefore awarded its costs on the basis that it had succeeded in the action.
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This case is the latest in a series of cases in which an unsuccessful party has sought to resist a costs order against it on the strength of a refusal to attempt mediation by the successful party. Since the decision of the Court of Appeal in Dunnett vs Railtrack, the courts have given significant weight to the willingness or otherwise of parties to attempt alternative dispute resolution when assessing the conduct of the parties for the purposes of making a costs order under CPR 44.3. The overall circumstances of the case clearly favoured the claimant. The defendant had significantly increased its Part 36 offer very close to trial, despite a disclosure exercise that, if anything, strengthened its position. The court therefore took the view that the defendant could just as well have increased its offer sooner when the claimant would have been entitled to its costs up to the date of acceptance as of right under Part 36 and so the court should not make a different costs order. The court nevertheless acknowledged the force of recent authorities for costs penalties following a refusal to attempt ADR. The court squared this particular circle by characterising the negotiation engaged in by the parties at "without prejudice" meetings with lawyers present as a form of ADR. Such an approach is consonant with cases such as Cowl & Others vs Plymouth City Council (2001) in which Lord Woolf characterised the defendant council's ad hoc complaints procedure as a form of ADR, but is perhaps unnecessary given the power in CPR 44.3(5) to consider various factors in assessing the overall conduct of the parties. The conduct of the defendant in failing to make a realistic offer to settle until very late on was more significant than the conduct of the claimant in preferring without prejudice negotiations to a process of dispute resolution involving a third party.