3173 Bidco v Roberts: High Court keeps failed ENE costs in the case

The Circuit Commercial Court in Manchester has ruled that the costs of a failed early neutral evaluation (ENE) between 3173 Bidco Limited and Christopher James Roberts should remain costs in the case, rejecting the claimants' bid for an indemnity costs order against the defendants.

Handing down judgement on 7 September 2026 in 3173 Bidco Limited & Anor v Roberts & Anor [2026] EWHC 2312 (Comm), His Honour Judge Pearce considered how the court should approach costs disputes arising from an unsuccessful ADR process ordered mid-litigation.

The first defendant had worked for the claimants, providers of professional trustee services to pension schemes, under a service agreement dated May 2023, before his employment ended pursuant to a settlement agreement in December 2024. He subsequently incorporated CJR Pensions Limited as a vehicle to provide services to the pensions industry.

3173 Bidco and Dalriada Trustees argued that Roberts breached restrictive covenants in his service agreement through his work at CJR Pensions, with the breach said to have been procured by the company itself. They sought damages, injunctive relief and restitution of sums paid under the settlement agreement, while Roberts counterclaimed for sums he said were owed to him.

At a case management conference in November 2025, HHJ Halliwell transferred the claim to the Shorter Trials Scheme and directed the parties to Early Neutral Evaluation, which took place before HHJ Pearce on 21 April 2026, ahead of the scheduled exchange of witness statements.

The ENE broke down after counsel for the defendants raised an unheralded and previously unpleaded argument that Roberts had not competed with the claimants' business at all, on the basis that the two operated in different markets: corporate trustee services as against individual trustee and non trust management services. HHJ Pearce found that this argument required an amendment to the defence, which was later granted, and concluded that it was not realistic to continue with the evaluation without the claimants and the court having had the opportunity to consider it properly.

Following the adjournment, the claimants declined to resume the ENE and applied for their costs of the aborted process, contending they should be paid on the indemnity basis given what they characterised as the defendants' late change of case. The defendants resisted, describing the application as satellite litigation and arguing that any adverse costs order risked undermining the ethos of ADR more broadly.

In his judgement, HHJ Pearce set out several reasons for treating costs disputes arising from failed ENE with caution. He pointed to strong judicial support for ADR generally, citing Halsey v Milton Keynes General NHS Trust and Lomax v Lomax, and warned that routinely penalising a party for an unsuccessful evaluation could discourage parties from engaging with such processes at all. He also observed that courts are rarely well placed to determine with confidence what would have happened had an evaluation proceeded differently, and that scrutinising the reasons for failure risks generating disproportionate satellite litigation.

Applying those principles, HHJ Pearce declined to find that the defendants' conduct was solely responsible for the ENE's failure. He noted uncertainty over whether the claimants' own amendments to their case had contributed to the difficulty, and observed that both parties had agreed to proceed with the evaluation before witness statements were exchanged, contrary to the timetable originally envisaged by HHJ Halliwell.

He therefore ordered that the costs of the ENE be costs in the case, rather than payable immediately by either side or assessed on an indemnity basis. He further dismissed the defendants' cross-application for the costs of resisting the claimants' costs submissions, describing such an outcome as perverse given the criticism levelled at the defendants' own conduct.

The costs judgement follows HHJ Halliwell's ruling on the substantive claim, [2026] EWHC 2300, in which the claimants secured only nominal damages of £100 against Roberts, with the remainder of the claim and counterclaim otherwise dismissed.