Kerry Underwood

FAILURE TO MEDIATE AND COSTS

with 3 comments


There seems to be disagreement in the Court of Appeal as to the extent to which a party should be punished in costs for failing to mediate.

 

Generally the courts had been stating that silence in the face of an invitation to participate in Alternative Dispute Resolution (ADR) should, as a general rule, be treated as unreasonable regardless of whether a refusal to mediate might in the circumstances have been justified.

 

PGF II SA v OMES Company 1 Limited [2013] EWCA Civ 1288 is an example of such a decision.

 

A more recent case broadly taking the same line was Thakkar v Patel [2017] Civ 117.

 

However in a judgment given on 24 May 2017 the Court of Appeal takes a very different view.

 

In Gore v Naheed & Anor [2017] EWCA Civ 369

 

Lord Justice Patten said:

 

“49.        Mr McNae referred us to the decision of this Court in PGF II SA v OMFS Company 1 Ltd in which Briggs LJ emphasised the need, as he saw it, for the courts to encourage parties to embark on ADR in appropriate cases and said that silence in the face of an invitation to participate in ADR should, as a general rule, be treated as unreasonable regardless of whether a refusal to mediate might in the circumstances have been justified. Speaking for myself, I have some difficulty in accepting that the desire of a party to have his rights determined by a court of law in preference to mediation can be said to be unreasonable conduct particularly when, as here, those rights are ultimately vindicated. But, as Briggs LJ makes clear in his judgment, a failure to engage, even if unreasonable, does not automatically result in a costs penalty. It is simply a factor to be taken into account by the judge when exercising his costs discretion.

 

  1. In this case the judge did take it into account but concluded that it was not unreasonable for Mr Gore to have declined to mediate. His solicitor considered that mediation had no realistic prospect of succeeding and would only add to the costs. The judge said that he considered that the case raised quite complex questions of law which made it unsuitable for mediation. His refusal to make an allowance on these grounds cannot in my view be said to be wrong in principle.”

 

Here the claimant had obtained an injunction and was held to be the winner overall, but the defendants submitted that the judge should have made some allowance in costs in their favour for the fact that the claimant had refused or failed to engage with their proposal that the dispute should be referred to mediation.

 

Comment: It may be that this apparent move away from a requirement to mediate or be punished in costs, even where there is no realistic point in mediation, is linked to the proposed extension of fixed costs to all civil work with an as yet undetermined upper damages limit.

 

There is an inherent tension between fixed costs and the requirement to mediate.

 

That tension is the fact that there are no extra costs allowable for mediation in the current fixed recoverable costs scheme and thus mediation imposes an extra layer of work for which costs are not recoverable by the winner.

 

Generally, in a more efficient and cheaper court system, mediation should become a thing of the past except in cases where there needs to be a continuing relationship between the parties, for example family matters for which mediation is eminently suitable.

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Written by kerryunderwood

June 8, 2017 at 9:47 am

Posted in Uncategorized

3 Responses

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  1. Hi Kerry, Might it be related to the proposals to bring in online courts and doing away with pre action protocols ? ( Stages 0, 0.5 and 1 – NLJ 19 May 2017 page 18 article re online court proposals ) .

    Sarah Lapsley

    June 8, 2017 at 3:45 pm

    • Hi Sarah

      I am not sure that the Court of Appeal’s decision in Gore v Naheed [2017] EWCA Civ 369 was directly related to the proposals to bring in online courts and to do away with the Pre-Action Protocols.

      Generally, the Senior Judiciary have either supported the concept of online courts, or have kept quiet about them; there has been very little judicial criticism of them.

      This is now a political issue as the Courts Bill, bringing in online courts, is currently before Parliament and there is certainly very considerable opposition to the concept amongst those advising and representing the less well-off people in society and the sub-text is that poor people just have to put up with telephone and video courts whereas rich people can still have the full works.

      Also, it all depends what you mean by Pre-Action Protocols.

      The portals, highly successful in low value personal injury work are a form of Pre-Action Protocol, and indeed, although universally known as Portals, their correct title is “Protocol”.

      It seems to me that what is proposed is not too much different from the portal.

      No doubt time will tell!

      Kerry

      kerryunderwood

      July 7, 2017 at 5:10 pm

  2. I went to an employment tribunal. My employer led me to believe that we would have in house mediation, but then withdrew this. They also refused to participate in ADR. The decision made by the judge was clearly perverse. There was no evidence presented to support their accusations against me. I presented clear evidence ( from the Respondent’s own records) which fully supported my case. It made no difference. The judges all support ‘management’ regardless, especially when the Respondent is a County Council. I started a blog and have tried to make a stand.

    mrs Sheila Lawrence

    June 9, 2017 at 6:36 am


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