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 produce that sanction. The court must assess the refusal as part of the parties’ overall conduct and the circumstances of the case. A specific order requiring reasons for refusing proposed ADR strengthens the obligation to engage and may make an unreasoned refusal unreasonable. Indemnity costs may be limited to costs incurred after the refusal. Enhanced interest under CPR Part 36 is discretionary. The phrase “not exceeding 10% above base rate” does not create a default entitlement to 10%, and the court must determine the appropriate rate having regard to all the circumstances and the other Part 36 consequences.

The claimant brought a personal injury claim arising from a 1990 rape committed by an elder of the defendants’ congregation. Judgment had already been entered for the claimant against the second defendants, with damages and agreed additional sums bringing the total judgment to £69,500.

The remaining issues concerned costs. The claimant sought indemnity costs for the whole claim, relying principally on the defendants’ failure to engage with a proposed joint settlement meeting despite a court direction requiring the parties to consider ADR and to provide reasons for refusing a proposal. The claimant also sought enhanced interest under CPR rule 36.17(4), including the maximum rate of 10% above base rate.

1. Indemnity costs. The discretion to order costs on the indemnity basis depends on the parties’ conduct and the circumstances of the case. Such an order requires conduct taking the case outside the norm: [2017] 1 WLR 2221, [21].
2. An unreasonable refusal to engage in ADR may justify indemnity costs even where the claimant recovers substantially less than originally claimed: [2014] EWHC 1774 (HHJ Waksman QC). Silence in response to an ADR invitation is generally unreasonable, although an unreasonable refusal does not automatically determine the costs order. It is one factor in the wider balancing exercise: [2013] EWCA Civ 1288; [2017] EWCA Civ 369.
3. The court direction imposed obligations to consider ADR at all stages and to provide a witness statement explaining any refusal to engage in ADR proposed by the other party. A joint settlement meeting was ADR. The defendants’ refusal to participate, without providing the required explanation, was unreasonable. Their stronger arguments on liability and the size of the claim did not justify refusing all discussion, particularly because quantum could have been discussed subject to liability.
4. Indemnity costs were therefore appropriate, but only for costs incurred after 25 February 2019, when the defendants refused the proposed joint settlement meeting. The defendants retained the opportunity to challenge the reasonableness and allocation of costs on detailed assessment, although the burden of proof would lie with them.
5. Enhanced interest. CPR rule 36.17(4) gives the court discretion to award interest at a rate not exceeding 10% above base rate. That wording does not make 10% the default rate. The rate must reflect all the circumstances and the other consequences of Part 36: [2017] 1 WLR 3465, [41]. The court awarded interest at 4% above base rate, taking account of the defendants’ ADR conduct, the additional amount already awarded and the absence of other particularly unreasonable conduct.