In a recent High Court case handled by the Keoghs Complex Injury team, the Court dismissed an application by the claimant to force the defendant into Early Neutral Evaluation under its case management powers pursuant to CPR rule 3.1(2)(m).[1]
Early Neutral Evaluation (ENE) is a form of dispute resolution which involves an independent person with relevant expertise expressing an opinion on a dispute, or an element of it. Although that opinion does not bind either party, it may assist them to settle the whole or part of the case[2].
The claimant was injured in a motorcycle accident in June 2018, suffering bilateral fractures to his wrists and legs and pleading a claim of £3.7m+. However the defendant contends that the claim is fundamentally dishonest because the claimant alleges that the residual effects of his injuries are far more disabling than surveillance evidence demonstrates.
Proceedings were issued in July 2019 with a trial date set for February 2024. At a costs budgeting hearing in March 2023, the claimant sought to compel the defendant into an early neutral evaluation process.
The claimant relied on Lomax v Lomax [2019] EWCA Civ 1467 as authority for the proposition that rule 3.1(2)(m) did not require the parties to consent to ENE and that the court ought to order both parties to participate.
The claimant contended that the defendant’s stance of not making any offers or engaging in ADR ought to be overcome by an order compelling them to engage.
The defendant resisted the application on the following grounds:
(i) The ENE was not “early”. It was being sought nearly five years post-accident and nearly four years post-issue of proceedings. There was little, if any, costs saving to be made.
(ii) In cases of fundamental dishonesty, an evaluation of the honesty of a party is best understood through a trial process and, in particular, the cross-examination of the party against whom the allegation is levelled. This was not something which would be available to a judge within the ENE process.
(iii) Neither party would be bound by the Court's ENE conclusion(s). It was difficult to understand the benefit of a potentially adverse evaluation of one party’s case which they would not be bound by in the actual proceedings.
(iv) The limited nature of the claimant’s orthopaedic injuries meant the claim was not a difficult one to value. This was not a catastrophic injury claim where there might be medical unknowns or future quantum elements which would affect the financial value. The ENE process is far better suited to these types of claims.
The judge dismissed the claimant’s application on the basis that, in the context of the present case and given the allegations of fundamental dishonesty, it would not be appropriate to compel the defendants to engage in ADR if they had deliberately chosen not to. The judge described the claimant’s application as “leftfield” and did not come close to a proper exercise of his case management powers.
In a case concerning fundamental dishonesty either party’s approach to ADR will depend on the facts and the merits of their respective cases. An allegation of fundamental dishonesty is not a bar to an insurer engaging in the ADR process but obviously insurers will want to carefully weigh up the pros and cons of doing so. The costs associated with ADR processes such as mediation or ENE are sometimes not inconsiderable and may be a disincentive to engagement.
The process of ENE is unlikely to be suited to fundamental dishonesty cases, especially factually complex ones or claims with an intimated significant value, because:
(i) Allegations of fundamental dishonesty normally surface during the currency of the litigation, often later in the proceedings when the claimant has committed to a definite position, at a point when significant time and costs have already been expended.
(ii) The process of evaluating fraud is best left to a trial judge who has the benefit of hearing the claimant give evidence under cross-examination.
(iii) An ENE determination is not binding on the parties. It is difficult to see therefore how either party can buy in to the process on the issue of fundamental dishonesty because one party is always going to be disappointed and unlikely to agree with the outcome of ENE. This in turn is not going to resolve the actual dispute in the litigation itself.
This pragmatic decision from the court is to be welcomed. It is rarely useful in contentious personal injury litigation concerning serious allegations of dishonesty to seek to force one party into a dispute resolution process against their will.
Should insurers face further reliance on the case of Lomax in the future, it is worth being aware of the fact that Lomax was an inheritance dispute issued in the Family Division. The Court of Appeal were attracted to ENE by the established success of the financial dispute resolution (FDR) process in the Family Division. Lomax was not a personal injury case, nor did it concern an allegation of fundamental dishonesty. We are not aware of any case where an ENE has been compulsorily ordered against a defendant who alleges fundamental dishonesty.
This case was handled by Keoghs Partner, Mike Pope, assisted by solicitor Kirsty Wareing, with Matthew Snarr from Nine St John Street Chambers as counsel.
[1] For further details see White Book 2022, Volume 1 at pages 105 and 113.
[2] Taken directly from the editors' guidance notes in the White Book 2022, Volume 1 at 113.
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