In our previous blog, we discussed what an Early Neutral Evaluation (ENE) is and what role it plays in litigation. The costs of an ENE are by no means cheaper than other hearings and the natural question for the parties is:- who is going to bear the costs if the ENE fails? The court has the general discretion on that. The starting position is generally that the costs of a failed ENE remain costs in the case. Even if a default (of a party) is found to be the immediate cause of the failure, the Court may decline to make a costs order where attributing responsibility would require consideration of wider procedural issues or whether the ENE would otherwise have achieved a settlement or costs saving situation.
3173 Bidco Ltd and Another v Roberts and Another [2026] EWHC 2312 (Comm)
Background
The Claimants and the Defendants proceeded to an ENE after exchange of their witness statements. At the ENE, the Defendants advanced a new argument that was not pleaded in their Defence. The Court considered that the argument required amendment of their Defence and it was unrealistic to continue the ENE before the amendment and any response to it was known. The ENE was therefore adjourned.
The Claimants sought their ENE costs from the Defendants on the indemnity basis on the ground that the Defendants’ late argument caused the ENE to fail. The Defendants contended that the costs should remain costs in the case and also sought their costs of resisting the Claimants’ costs application.
Decision
The Court held that:-
- The starting position was that the costs of the ENE are in the case unless compelling factors justified a different costs order, which could discourage participation and invite disproportionate satellite disputes about why the process had failed;
- This case was complex; and
- It could not be safely concluded that in the absence of the Defendants’ default, the ENE would have succeeded or costs would have been saved.
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