Judicial early neutral evaluation during coronavirus, friend or foe?

Mon, 01 Jun 2020

Courts across the jurisdiction have struggled for years to run small claim and fast track lists efficiently in order to reduce the backlog.  Coronavirus lockdown has brought this to a head, as cases are adjourned and the huge backlog is set to rise.  Waiting several months, if not years, to have a case of modest value heard is contrary to the interests of justice.  Memories fade, individuals cannot enforce their rights until the issue is litigated, the deserving go uncompensated, and the pressure to under-settle increases. 

The question for the courts is how best to deal with the backlog during coronavirus closure of the courts, to reduce the impact on the courts and their litigants.  The answer, for some courts, is that litigants are forced into alternative dispute resolution. 

The court has wide-ranging powers of case management, set out in Part 3 of the Civil Procedure Rules (“CPR”).  The important rule for this purpose is r.3.1(2)(m), which provides that the court can make any order for the purpose of managing the case and furthering the overriding objective, including hearing an Early Neutral Evaluation (“ENE”), with the aim of helping parties to settle.

How does it work?

In judicial ENE, a judge will usually see all the relevant papers and hear brief submissions from the parties.  The judge then expresses a preliminary, non-binding view on the merits of the case, including an analysis of the legal issues and the facts.  This view can then be used as a backdrop to settlement negotiations between the parties. 

Can parties be forced into ENE?

Similar mechanisms to ENE have been integral to resolving family proceedings for some time (known as FDR).  The civil equivalent was introduced to the CPR in October 2015.  Many court guides suggest that ENE depends upon the consent of the parties, but that is not the case.  The court is able to order ENE as part of its jurisdiction if it considers that it is acting in accordance with the overriding objective (Lomax v Lomax [2019] EWCA Civ 1467).      

This conclusion is, for some, shocking.  In ordinary circumstances, it may deprive parties of an earlier hearing date in order to have an ENE hearing instead.  During coronavirus, though, there may be some benefit to having a hearing where otherwise the matter would be adjourned for many months.  It is also important to remember that although the process may be foisted upon the parties by the court, the result is not binding and the parties may choose to have a trial.    

What are some of the advantages and disadvantages of judicial ENE?

The parties will not heard in the same way as they would be at trial.  Crucially, it is not usual practice to hear live evidence in an ENE, meaning that the judge forms a view based on papers and/or brief submissions.  The judge gives an indication in the absence of much of the evidence that the witnesses may give and may be led to the wrong conclusion due to a lack of information. 

During coronavirus, there is anecdotal evidence that courts have been ordering ENE of their own motion as standard for many cases.   This ignores that many cases are not suitable for ENE, for example, where the matter turns on witness credibility.  Being forced to participate in ENE in these circumstances will only increase the time and cost burden on parties, particularly in fixed costs litigation where the true costs of ENE may never be recovered from the other side. 

Court ENE is also rather different to ENE arrangements entered into by parties for their own purposes.  One of the main benefits to parties for entering ENE of their own accord outside the court system, is that huge amounts of time and cost can be saved.  In court ENE, however, many of the costs on each side will have already been incurred as the hearing will necessarily rely upon a fair amount of documentation and formalities such as submissions from counsel. 

The formality of court ENE, on the other hand, may make parties more likely to accept the view of the judge and settle on that basis.  Litigants may feel that they have ‘had their day in court’, even if the judge’s view is against them.  This may make parties more inclined to settle based on the view expressed by the judge at ENE hearing, meaning that they would not proceed to trial.  Parties may save significant time by doing this due to the increasing court backlog. 

What about costs?

If a party refuses to settle in terms similar to the judge’s opinion at ENE, then receives a similar or worse outcome at trial, it is likely that this would be a strong indicator about which party should bear the main burden of costs.  It would be prudent for any party who has not been able to convince others to settle at an ENE to put forward a competitive Part 36 or Calderbank offer, in the hope that they will be rewarded for their reasonableness in future.   

Related articles

The article below attempts to explain the background, simplify some of the new proposals and look at how accommodation claims may look in the near future...

Date: Fri, 03 Jul 2020
If a father is suspected of suffering from Huntingdon's disease, should his daughter be told even if her father has not consented?...

Date: Mon, 29 Jun 2020
Toby Chaplin (by his mother and litigation friend, Diane Chaplin) v Ben Pistol, Allianz Insurance Plc...

Date: Mon, 22 Jun 2020