Office Holders - Early Neutral Evaluation

Posted on 21 March 2016

Office Holders - Early Neutral Evaluation

The brutality of modern professional rugby is not a bad comparison to litigation; it's damaging and it hurts but one can, reason permitting, have a beer afterwards.  This is particularly so when office-holders[1] either enter into or are forced to enter into litigation, for example where a decision on a proof of debt is challenged. 

The 2016 Six Nations competition is now well under way.  From the safety of the pub or our sofas, we can avoid being hit, stamped on, or eye-gouged (if you've played in some of the rougher leagues).

But imagine if you were transported to the kick-off in a professional rugby match, with the referee about to blow his whistle.  You would want to learn pretty quickly how to survive and come to understand useful tactics that may help you in the 80 minutes ahead.  You would want to know the intricacy of the rules and what, for example, "playing to the referee" means.  Also, should it come to it, you would want to know how to deal with an aggressive and/or irrational opponent looking to damage you. 

In rugby there is no opportunity to prepare other than watching clips of your opponents' previous matches.  But in litigation, there is.  It's called ENE. 

What is ENE? 

ENE stands for Early Neutral Evaluation.  ENE is a process that parties can voluntarily enter into where an independent and neutral evaluator is engaged in order to give parties an evaluation of the merits of their case.   It is non-binding and can be a useful insight into how the issues that would eventually go to a full trial will likely be determined. 

ENE is a form of Alternative Dispute Resolution ("ADR") and, consequently, the courts encourage parties to enter into it.  Further, as parties are under a duty to promote the overriding objective, it is arguable that ENE should at least be considered.  From 1st October 2015, the Courts have fully endorsed ENE within all its divisions, by particular reference to it within the Civil Procedure Rules.  

Reverting to the rugby analogy, if you're facing the prospect of a lengthy and damaging rugby match, the prospect of choosing to play a shortened form that is both less costly and potentially advantageous is beneficial.  ENE is like taking an 80 minute 15 a-side game (a trial) and, instead, playing a 10-minute 7's match (ENE).

Why ENE for office-holders?

ENE is advantageous when parties have reached deadlock on either legal or technical issues on a case or where there remain significant differences between pleadings.  For example, where there is an issue as to quantum on s.214 IA'86 application or where a party whose proof of debt has been rejected cannot accept the reasons for such a rejection. 

Office-holders are duty-bound to benefit the creditors of the entity/individual over which they have been appointed.  This includes minimising costs in a litigation process where such costs would otherwise decrease the funds to be distributed to creditors.  ENE is a process that could save significant costs if it facilitates settlement. 

There are tactical considerations and the request to use ENE can be used to pressurise opponents.  Using yet another tenuous rugby analogy, those well-resourced teams that prefer to stifle and extend matches, wearing down opponents, may now have to take note of a process that highlights their weaknesses earlier than anticipated. 

From a costs perspective, an office-holder may wish to highlight to the court a party's reluctance to engage with ENE or, where engaged, highlight the result[2].  There may be some merit in seeking costs against a party who has not engaged in ENE and subsequently lost the trial[3] or who has engaged ENE, had a decision that does not favour them, but continues to trial and loses. 

Final whistle

For office-holders, ENE can be a useful objective review of the case by a judge who has experience in dealing with such cases. 

Why not ask the Court to review a discrete issue and/or the case as a whole and provide an evaluation of the same?   For an office-holder, this can only be advantageous when a priority is to maximise realisations for the benefit of creditors – utilising ENE and in so doing limiting costs would achieve this or when dealing with a party who cannot look at their case objectively. 

There are negatives to any process and, as such, the pros and cons of using ENE in any given case will vary.  However, for office-holders (or any party engaged in litigation) it is an option that – to end on one final rugby pun – is certainly worth a try (and conversion).

[1] Either in the capacity as office-holder or by procuring the company/estate to which they are appointed over. 

[2] Subject to how parties agree ENE terms. 

[3] A party who refuses to considered ADR at will risk a costs sanction Dunnett v Railtrack Plc [2002] EWCA Civ 303

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