3173 Bidco v Roberts: Costs of Failed ENE [2026]

Detailed Assessment — 2026-09-07

In 3173 Bidco Limited & Anor v Christopher James Roberts & Anor [2026] EWHC 2312 (Comm), the High Court considered who should bear the costs of a failed early neutral evaluation (ENE). HHJ Pearce ordered costs in the case despite finding that the defendants' failure to plead their case fully was the immediate cause of the ENE's failure. The judgment explains the caution required before imposing a separate costs liability for an unsuccessful ENE.

Overview

Date: 7 September 2026

Judge: His Honour Judge Pearce

Court: High Court, Circuit Commercial Court, Business and Property Courts in Manchester

Citation: [2026] EWHC 2312 (Comm)

Nature of Proceedings: Determination of the costs of an unsuccessful court-ordered early neutral evaluation

Key Issues:

The starting point for the costs of failed early neutral evaluation
Whether an unpleaded defence justified an adverse or indemnity costs order
The significance of causation, preparation and the timing of ENE
Costs of the subsequent application for costs

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The Facts

In 3173 Bidco Limited & Anor v Christopher James Roberts & Anor [2026] EWHC 2312 (Comm), the High Court considered who should bear the costs of a failed early neutral evaluation (ENE). HHJ Pearce ordered costs in the case despite finding that the defendants' failure to plead their case fully was the immediate cause of the ENE's failure. The judgment explains the caution required before imposing a separate costs liability for an unsuccessful ENE.

The underlying proceedings concerned restrictive covenants following the first defendant's departure from the claimants' pension trustee business. The claimants sought damages and other relief. The first defendant counterclaimed for sums said to be due under a settlement agreement. At the case management conference, HHJ Halliwell ordered ENE and gave directions towards trial under the Shorter Trials Scheme.

The ENE took place before HHJ Pearce on 21 April 2026, before witness statements had been exchanged. During it, the defendants advanced a new argument that their business served a different market and therefore did not compete with the claimants. That argument had not been pleaded. The judge considered that amendment was necessary and that a realistic evaluation could not proceed without knowing whether the new defence would be permitted or how the claimants would answer it: [8] to [11].

The ENE was adjourned. The claimants subsequently exercised the right the judge had given them to decline further ENE. They sought their costs on the indemnity basis; the defendants argued for costs in the case. The dispute was determined on written submissions.

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The Court's Reasoning

1. Earlier directions orders had not determined the ENE costs

The court first examined whether the costs question remained open. Earlier directions orders had provided for costs in the case, but HHJ Pearce construed those provisions as addressing the costs of preparing for the relevant hearings and orders. They did not determine the costs of the ENE itself: [13] to [15].

The judge therefore retained the general discretion under CPR Part 44. The practical distinction is between the costs of obtaining directions for ENE and the costs of conducting it. The wording and scope of the existing order must be examined before a further application is made.

2. Costs in the case is the presumptive starting point

At [22], HHJ Pearce identified a presumption in favour of costs in the case absent compelling alternative factors. His conclusion drew on the need to encourage participation in ADR, including the support for judicial ENE in Lomax v Lomax [2019] EWCA Civ 1467.

Routine adverse costs orders following unsuccessful ENE could discourage engagement. The judge also identified the difficulty of deciding why an evaluation failed, the risk of a disproportionate inquiry into the parties' conduct, and the different levels of preparation appropriate at different stages of litigation: [23] to [29].

Those considerations did not remove the court's power to make an adverse order. At [30], the judge expressly rejected an approach that would protect a party attending without any intention of engaging in resolution. The decision calls for caution in exercising the discretion; it does not confer immunity from costs consequences.

3. Causation matters, but it is not an absolute prerequisite

The distinction between identifying poor conduct and establishing its costs consequences was central. At [24], the judge recognised that conduct-based costs orders may have a penal purpose, so proof of a direct causal link is not invariably necessary. Nevertheless, the absence of a demonstrable connection between the conduct and the costs weakens a claim for payment.

On the facts, the defendants' unpleaded case had immediately caused the ENE to fail. However, the judge could not safely determine whether their omission was partly attributable to a disputed late amendment by the claimants. Both sides had also agreed to hold the ENE before witness statements, creating the very difficulty the claimants had anticipated: [31].

Nor could the judge conclude that different conduct would have produced a settlement or saved costs. Attendance had been ordered. An argument that the claimants would otherwise have stayed away did not answer their obligation to attend. The distinction between voluntary participation and compliance with an existing order mattered to the proposed counterfactual.

4. Indemnity costs were also refused

At [18], the court referred to Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hamer Aspden & Johnston [2002] EWCA Civ 879 and Esure Services Ltd v Quarcoo [2009] EWCA Civ 595 when setting out the indemnity costs test. Moral blame was not essential, but the conduct or circumstances had to fall outside the normal or ordinary and reasonable conduct of proceedings.

The court declined to make a separate costs order against the defendants. At [32], it added that its reasons applied with equal or greater force to the claim for indemnity costs. The result was:

> I order that the costs of the failed ENE be costs in the case.

That was the order at [35]. The judgment did not assess a sum payable for the ENE.

5. Resisting the application did not earn the defendants their costs

The defendants separately sought the costs of preparing submissions opposing the claimants' application. That application also failed: [33] to [35].

The judge considered it inappropriate to award those costs to the defendants when their conduct had been the immediate cause of the ENE's failure. The claimants' unsuccessful application was not itself outside the norm. Success in resisting a separate ENE costs order therefore did not translate into an entitlement to the costs of that resistance.

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Practical Implications

The following are practical conclusions from the decision, rather than additional rules laid down by the court.

For Costs Lawyers

1. Read the existing order closely. Establish whether its costs provision covers only a directions hearing or extends to the ENE itself. An express provision governing the ENE may materially affect the available argument.

2. Identify why a separate order is justified. A failed ENE and criticism of the opponent are starting facts. Address the competing causes, the costs said to result and the reasons for departing from costs in the case.

3. Assess the costs of the application itself. Consider whether the likely recovery warrants further written submissions and factual disputes. Neither side in Bidco secured the separate costs order it sought.

For Litigation Practitioners

1. Align the ENE with the issues to be evaluated. Examine whether necessary amendments and evidence will be available in time. Where the proposed date presents a difficulty, raise it before the evaluation.

2. Address costs when agreeing directions. Clear wording about the costs of the ENE reduces scope for a later dispute over what an earlier order covered.

3. Keep the decision within its scope. Bidco concerns the costs of failed ENE. It should not be presented as establishing a universal costs rule for mediation, or as excusing refusal to comply with an ADR order.

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The useful point for practice is the distinction between causing an ENE to stop and justifying a separate costs liability for it. HHJ Pearce recognised the defendants' procedural failure while declining to turn a contested account of why the process failed into an adverse costs order.

For practitioners considering a similar application, the strength of the evidence and the scope of existing orders deserve attention before further costs are incurred. This Mackenzie Costs analysis focuses on those practical limits to the exercise of the court's discretion.

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Citation: 3173 Bidco Limited & Anor v Christopher James Roberts & Anor [2026] EWHC 2312 (Comm)

Full judgment available at: The National Archives

Related Specialist Support

Costs Budgeting and Detailed Assessment: Precedent H, dispute documents, negotiations and assessment strategy.
Costs Lawyer Support: Direct help with costs procedure, strategy, drafting and advocacy.
Bills of Costs: Clear, defensible traditional and electronic bills prepared for recovery.