Gardner Leader

'The Mediation Mystery'

It seems that whenever it has the chance, the Court of Appeal reminds disputing parties of the benefits of mediation. Chris Felton, Dispute Resolution Partner at Gardner Leader Solicitors in Newbury, comments on how, despite this recommendation, many courts are still not compelling parties to mediate.

“Mediation has seen an increasing profile over the last few years especially in commercial disputes. It allows parties to keep to their own agenda in terms of time and costs. It can also help in sensitive cases and especially where there is a continuing trading relationship. In short, where successful it usually leads to settling a dispute much more quickly than through the court process.

It is surprising therefore that the courts are still loathed to compel parties to mediate. It is however clear that the consequences of not doing so can be significant. The Court of Appeal made this clear as long ago as 2002 in the case of Dunnett v Railtrack PLC [2002] where is held that a party who refused to mediate without good reason could be penalised in costs.

Conversely, if a party can show good reason for refusing to mediate, then it will not be penalised for that decision, though as the popularity and cost effectiveness of mediation increases, a refusal to mediate is seen to be a high risk strategy.  The Court of Appeal has laid down some ground rules for when a refusal to mediate may be accepted as reasonable. In Halsey v Milton Keynes General NHS Trust [2004] the following list of considerations were set out for determining whether a party had acted unreasonably:

• Nature of the dispute. There are instances, for example when a point of law is in dispute and a decision of the court is necessary.
• Merits of the case. This is of course a very subjective issue. A party who believes they have a strong case still risks a finding that they unreasonably refused to mediate if it transpires their belief was unreasonable.
• Use of other means of settlement. Have there already been discussions or offers to settle made?
• Costs. This is likely to be a more important factor in cases where the sums at stake are relatively low. Mediation can sometimes be as expensive as a day-long hearing.
• Timing. If a proposal to mediate comes late in the day it may be appropriate to decline mediation and proceed to trial.
• Prospects of success. If the prospects of a successful mediation are remote, due to another party’s intransigence, then it may be acceptable to decline (or fail to suggest) mediation.

In this case, the Court again emphasised the benefits of mediation, but stated that any decision to deny a successful party its costs (because it had refused to mediate) was an exception to the general rule that the successful party gets its costs. It therefore ruled that it was for the unsuccessful party to show that the successful party had acted unreasonably in refusing to mediate.”

Details: Chris Felton
Gardner Leader Solicitors
Tel.: 01635 508080

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