3173 Bidco Limited & Anor v Christopher James Roberts & Anor

Where a court-ordered judicial Early Neutral Evaluation (ENE) fails, the starting point should ordinarily be that its costs are costs in the case. A different order requires compelling, case-sensitive reasons. The discretion under Civil Procedure Rules 1998, Part 44, does not require a direct causal link between criticised conduct and wasted costs, but the absence of a demonstrable link weakens an adverse-costs application. Indemnity costs require conduct or circumstances outside ordinary and reasonable conduct; moral blame or lack of probity is unnecessary. The court should remain cautious because detailed satellite litigation about why an ENE failed may discourage parties from using ADR.

3173 Bidco Limited & Anor v Christopher James Roberts & Anor concerned the costs of a failed judicial Early Neutral Evaluation in commercial proceedings about alleged breaches of post-termination covenants. The defendants counterclaimed for sums said to be due under a settlement agreement.

The ENE was ordered at case management and took place before witness statements were exchanged. It was adjourned after the defendants advanced an unpleaded argument that they were not competing with the claimants, and it was not resumed. Following the substantive judgment under [2026] EWHC 2300, the parties disputed whether the defendants should pay the ENE costs on an indemnity basis, whether the costs should be costs in the case, and who should pay the costs of that dispute.

1. Disposition. The court ordered that the costs of the failed ENE be costs in the case. It dismissed the defendants’ application for the costs of and occasioned by the claimants’ costs application.
2. Power and discretion. The earlier directions that costs be in the case related to costs incurred in preparing for the relevant hearings and did not prevent a separate order concerning the ENE. Under Civil Procedure Rules 1998, Part 44, the court had a general discretion over the ENE costs. Rule 44.2 required consideration of all the circumstances, including conduct, partial success, settlement offers and ADR conduct.
3. Failed ENE. The court should ordinarily start from a presumption that the costs of a failed ENE will be costs in the case, absent compelling alternative factors. This reflected the strong judicial support for ADR illustrated by Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 at [8] and the treatment of judicial ENE as an ADR tool in Lomax v Lomax [2019] EWCA Civ 1467 at [29]. The presumption was not absolute, since adverse costs orders remained available for improper or purposeless participation.
4. Indemnity costs. The applicable threshold was that stated in Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hamer Aspden & Johnston [2002] EWCA Civ 879 and explained in Esure Services Ltd v Quarcoo [2009] EWCA Civ 595 at [25]. Conduct or circumstances had to take the case outside ordinary and reasonable conduct, but lack of probity or moral condemnation was unnecessary.
5. Application. Although the defendants’ failure to plead their case fully was the immediate cause of the adjournment, the possible effect of the claimants’ late amendment, the parties’ agreement to proceed before witness statements, and the uncertain substantive outcome meant that the court could not safely conclude that different conduct would have saved costs or produced settlement. A detailed investigation risked disproportionate satellite litigation and discouraging participation in ENE.
6. Costs of the costs application. The claimants’ unsuccessful application was not itself outside the norm. In the circumstances, it would have been perverse to require them to pay the defendants’ costs of resisting it.

No appellate history is stated. The substantive claim had already been tried and determined by HHJ Halliwell under [2026] EWHC 2300; this judgment determined the reserved costs issues arising from the ENE.