When two or more parties enter into a dispute, engaging in alternative dispute resolution (ADR) can reduce time and money spent on proceedings and even lead to a resolution before going to court. Although attempting mediation is not obligatory, it is clearly encouraged in the Civil Procedure Rules (CPR). Not only can it reduce the costs of going to court, but it can also foster a more generous view of the willing party/parties in the eyes of the court. This could ultimately influence the court to make rulings which favour the co-operative party/parties.
REFUSAL TO MEDIATE
Historically, the court has viewed failure to mediate unforgivingly, which is clear from decisions made in previous cases both during and at the conclusion of their court proceedings. In the 2002 case of Dunnett v Railtrack, the court penalised the defendant in costs in light of the defendant’s refusal to consider ADR on the court’s recommendation. Lord Justice Brooke drew the court’s attention in particular to CPR Part 44, which states that the court will consider parties’ conduct and all circumstances of the case when awarding costs. Parties should be careful not to incur likely avoidable costs where mediation, or at least an attempt at such, could significantly reduce this risk.
REASONABLE REFUSAL
In 2004, this principle was developed in the case of Halsey v Milton Keynes General NHS Trust, which considered whether refusal to mediate was deemed reasonable. The Court of Appeal listed six non-exhaustive factors which may help determine reasonability:
- Whether the case is suitable for ADR. Would it be useful to set a binding precedent in this case? Were there allegations of fraud? Is injunctive relief necessary?
- The objective merits of the case. The client’s reasonable belief that s/he has a strong case is insufficient.
- Attempts at other settlement methods. However, the court did note that mediation is usually successful where other methods fail.
- Disproportionately high costs of mediation. This is pertinent where a claim is relatively inexpensive.
- Mediation could cause undue delay to a case’s resolution, for example if the suggestion to seek ADR is made fairly late in the process.
- The likeliness of successful mediation. The prospect of successful mediation must be objectively reasonable.
From this case, parties can take comfort in the court’s willingness to allow some flexibility toward refusals of ADR. Though it would be advisable for parties to err on the side of caution, as factors 2 and 6 are to be considered from an objective perspective.
REFUSAL TO RESPOND
In PGF II SA v OMFS Company Ltd, the court considered whether silence is tantamount to unreasonable refusal. Despite both parties showing willing and each making several Part 36 Offers over the course of proceedings, OMFS’s failure to respond to PGF’s two requests for ADR led the court to rule that silence in the face of an invitation to enter into mediation is generally unreasonable. This 2013 case prompted the addition of paragraph 11 in the 2015 ‘Practice Direction Pre-Action Conduct and Protocols’ which adds that in such a scenario, the silent party may be ordered to pay additional court costs.
COMMENT
Litigation parties would do well to approach requests for ADR carefully. Although mediation may not initially seem appealing due to time and costs involved, it should at least be considered. The court has shown that it will not simply ignore a request for ADR. As responding to this request does not exonerate a party from the potential to be penalised by the court either, parties should consider carefully whether their grounds for refusing ADR, if any, are reasonable.
CONTACT US
For advice on ADR procedures please contact Shubha Nath at Nath Solicitors on 44 (0) 203 983 8278 or get in touch with the firm online.
