BXB v Watch Tower and Bible Tract Society of Pennsylvannia & Ors

An unreasonable refusal to engage in alternative dispute resolution may justify indemnity costs, but it does not automatically attract that sanction. The court must assess the refusal within the wider circumstances of the case. A specific order requiring parties to explain any refusal strengthens the conclusion that non-compliance is unreasonable. Where a claimant beats a Part 36 offer, enhanced interest under CPR r. 36.17(4) remains discretionary. A rate of 10% above base rate is not the default. The court must consider all the circumstances and the other consequences already arising under Part 36.

The claimant succeeded in her personal injury claim arising from a rape and obtained judgment for £69,500 against the trustees of the relevant congregation. The court had already extended time, found vicarious liability and awarded general damages. The remaining issues concerned costs and enhanced interest.

The claimant sought indemnity costs for the whole proceedings, relying particularly on the defendants’ failure to engage with a proposed joint settlement meeting despite a case-management direction concerning alternative dispute resolution. She also sought enhanced interest under CPR r. 36.17(4) after beating her Part 36 offer. The issues were whether indemnity costs should be ordered and, if so, for what period, and what enhanced interest rate was appropriate.

1. The court ordered that the claimant’s costs be assessed on the indemnity basis, but only for costs incurred after 25 February 2019. An indemnity order requires conduct taking the case outside the norm. An unreasonable refusal to engage in ADR may justify such an order even where the claimant recovers substantially less than originally claimed.

2. Silence or refusal to engage in ADR may be unreasonable, particularly where the parties are required to explain their refusal. The case-management direction required the parties to consider ADR at all stages and required a witness statement explaining any refusal to engage in a form of ADR proposed by the other party. The defendants’ unreasoned refusal to attend a joint settlement meeting breached that obligation and was unreasonable.

3. The refusal did not automatically determine the costs order. It remained one factor in the wider circumstances. The defendants had stronger arguments on limitation and vicarious liability because the claimant was an adult and knew the perpetrator, and the damages claimed had been substantially reduced. Those matters did not excuse a failure to discuss settlement, including settlement of quantum subject to liability. Any dispute about apportionment or reasonableness of costs could still be addressed on detailed assessment, although the burden would fall on the paying party on the indemnity basis.

4. Because the claimant had beaten her Part 36 offer, CPR r. 36.17(4) applied. The enhanced interest rate was discretionary and could be any appropriate rate up to 10% above base rate. The provision did not establish 10% as the default. The court had to consider all the circumstances and the effect of the other Part 36 consequences.

5. The agreed order already included the additional amount under CPR r. 36.17(4)(d). The defendants’ ADR conduct justified some enhancement, but their decision to litigate was not itself unreasonable and there was no other comparable reprehensible conduct. Enhanced interest was therefore fixed at 4% above base rate.

First-instance decision. The judgment records no earlier appellate decision. No decision on permission to appeal was included because no application was made.