21 November, 2017
There have been a series of cases where the Courts have been very firmly advising parties to disputes to mediate to try and find a solution outside the Court process. It is clear that mediation is a way of providing a confidential cost effective way to resolving disputes and saving a huge amount of time, cost and uncertainty.
Judges have made it clear that there are potential cost consequences for those parties who refused to mediate or who act unreasonably in failing to participate in Alternative Dispute Resolution in an appropriate form.
The recent case of Gore-v-Naheed shows that not all Judges necessarily share that view and there are cases which are either unsuitable for mediation and where a failure to engage in mediation does not automatically result in a costs penalty.
In that case, the Judge concluded that the dispute raised quite complex questions of law, which made it unsuitable for mediation and where the claimant’s solicitor refused to mediate on the basis that it had no reasonable prospects of success and would add unnecessarily to the costs, the claimant was not acting unreasonably.
The Court of Appeal concluded that a failure to engage in mediation or other form of ADR is only one factor to take into account when looking at costs and the Judge will take in to account all the factors when exercising a discretion.
There is no automatic assumption that a refusal to mediate is unreasonable conduct and will attract a cost penalty.
What is the advice?
It still remains that in the vast majority of cases it is appropriate to invite the other side to mediate or engage in some other form of ADR and a refusal to engage in ADR when invited to do so will in the vast majority of cases be seen as an unreasonable conduct and expose your client to a potential cost penalty irrespective of success or failure in any subsequent Court proceedings.
It is not an automatic sanction but given the clear line of cases where Judges have time and time again emphasised the need to mediate and avoid protracted Court proceedings and its substantial costs unless you have an unusually novel point of law or complex questions of law that require judicial analysis it is safe to assume that mediation remains and excellent way of bringing parties together to try and resolve their disputes and that a failure to engage in mediation or some other appropriate form of ADR will give a high risk of a cost sanction.
While the case of Gore-v-Naheed suggests that not all Judges share the view that it is inevitably right to mediate and that if a party wishes to have their rights determined by a Court of law in preference to mediation it cannot necessarily be said to be unreasonable conduct, it still remains that the vast majority of cases lend themselves to mediation to try and save the time, cost and stress that Court proceedings inevitably bring.
The majority of judicial opinion remains firmly towards mediation as an everyday part of the pre-action conduct before proceedings are issued and some compelling reason will need to be identified not to mediate if cost sanctions are to be avoided.
If you would like to discuss this issues in more detail or would like to consider your legal options please contact Peter Rolph or call 01202 294 566.