A preliminary evaluation by the courts before trial

Early Neutral Evaluation is a recognised method of Alternative Dispute Resolution. It is not often used as a technique in commercial litigation but occasionally, in the particular circumstances of a case, the parties to a dispute may get together to appoint a neutral Barrister to advise on some difficult point of law or employ an expert to consider particular issues to see if issues of liability, causation or quantum might be resolved to reduce the area of dispute between the parties.

The function of the courts has been traditionally to make at a public trial a decision binding on the parties with the help of experts and witness factual evidence. Before the Woolf Reforms at the end of the last century, it was the parties who were in control of the pace of the litigation. After the Woolf Reforms the courts took a controlling interest in the direction and pace of litigation by case management, pushing the parties to progress towards the courts by a planned timetable as soon as proceedings were issued.

Recently however they have increased the extent of their involvement by pressing parties to go to Mediation and commenting on the strength or weakness of cases going through the system to trial. They are prepared in certain circumstances to give a neutral evaluation but without making a formal determination after hearing all the evidence at trial.

Just before the end of 2017, in a case brought by a disappointed beneficiary against solicitors as to the circumstances under which a Will was drafted, I attended a Pre-Trial Settlement hearing before the court conducted by a District Judge. The purpose was to ensure the case was in proper order to proceed to determination by the Circuit Judge but also, for the first time, to give the District Judge (who would not be in charge of deciding the case at trial) the opportunity to consider the evidence, to discuss the settlement positions of the parties, to impress upon the parties the importance of mediation and of resolving the dispute themselves if they could do so and particularly to impress upon the parties the financial consequences of trial if they could not.

In our case, we had already made for the Claimant, several Part 36 offers to settle and had been to an unsuccessful mediation, but had been met with a complete refusal by the Defendant’s insurers to do anything more than to make nominal offers.

The District Judge asked both sides to explain their respective positions and then much to my surprise leaned over the desk to our opponents to say that he had considered the papers, had taken the view that our opponents would not succeed in their Defence and would lose the case, explaining briefly the reasons for that view. The District Judge invited the parties to go outside for further negotiation which the opponents then accepted. After some considerable negotiation on principal, interest and in particular the costs of the case, the matter was settled.

There are obvious lessons to be learned from the events above. It would seem now that the courts are exercising independent influence on parties to litigation to settle their differences in negotiation and by ADR. The difficulty in this case was that the influence was not brought to bear until the case was ready for trial and the parties had spent heavily on legal costs (under the court’s own directions for preparation) to get to that point. It will not be any surprise to know that the most difficult part of the settlement negotiation outside the court was the question of settling the costs incurred to date.

The lesson to be learned is that the courts place great and increasing importance on mediation and ADR in general and in particular expect the parties to take every reasonable step in resolving the dispute themselves without them having to make a decision. The sooner the parties can do this the more in legal costs will be saved.

At a recent talk which I attended by Lord Justice Briggs (now tasked with the Supreme Court with the next stage of reform in the Civil Courts) his idea was that in all civil cases up to £25,000 in dispute, there would be a separate layer of judicial administration to determine between litigants the real issues in the case as a first stage and then to see if the case could be determined by ADR before the parties would be allowed to proceed to determination by a Judge. It was made pretty clear that whilst the parties in such a case would have a right to determination by a Judge if they wished to do so, they would not actually be encouraged to take matters further than ADR in most circumstances. Although such a system was to be introduced for claims up to £25,000 at first, there did not seem to be any reasons put forward as to why this might not be extended further. At present such a system is just in the stage of consideration.

Nevertheless, the important consideration for all litigants in the present Civil Justice system is to be proactive in the use of ADR (particularly mediation) and to try to get to ADR as soon as the issues between the parties have been identified and evaluated to save the costs of continuing litigation and complying with the courts directions.