Not unreasonably, most clients who have never been involved in a serious dispute or court proceedings before expect the process to be fuelled with aggression and (metaphorically) a fight to the death. When clients make the decision to “go legal”, they tend to think that means that the best approach is to pay a litigation lawyer to unleash the forces of hell in the direction of their opponent.
They are surprised, therefore, when they discover that a much more benign principle underpins the decision-making process in relation to dispute resolution, namely “reasonableness”.
Time and again, including recently, I read reports of the courts’ decisions where the court is asked to assess, at the end of court proceedings, who is entitled to recover costs from whom and how much is recoverable. The overriding question all the time is, “What is reasonable?”
Were reasonable offers or attempts to settle the dispute made before and/or after proceedings were started?
Was it reasonable to seek a particular remedy or raise a particular issue?
Have the parties acted unreasonably during the proceedings (e.g. the work done and costs incurred are not in proportion to the issues in dispute)?
Where the court decides that a party has not acted reasonably in some way, it will usually penalise that party by depriving it of a proportion or all of its recoverable costs (if it is a receiving party) or ordering it to pay more (if it is a paying party).
As the court has a wide discretion to award benefits and/or sanctions where there has been unreasonable behaviour, one can never be sure exactly what consequences will flow from such errant behaviour. The imminent arrival (on 1 April 2013) of revised court rules will change the boundaries of what conduct is reasonably acceptable. What is clear is that the new rules will put greater emphasis on the need for parties to act reasonably, but it is difficult to predict in advance of implementation exactly how they will be interpreted.
For some time, the need to manage risk in relation to a dispute has not been confined to a consideration of the merits and cost/benefits of pursuing (or defending) a claim; the exposure for both parties to paying the other side’s costs or recovering a smaller portion of one’s own costs makes it very important to have a carefully planned strategy to avoid allegations of unreasonable conduct.
Clients already express their frustration that they feel the important issues in their case become secondary to the costs risks surrounding the conduct of litigation. If anything, that frustration will only increase when the new rules come into force at the beginning of April, as parties will be expected to be even more reasonable. Perhaps the key question for clients, when weighing up all of the above and factoring in management time in dealing with the court process, ought to be: “is there a reasonable business need for litigation or will an alternative route be more reasonable?
