New powers for judges to order participation in ADR may have taken away the onus on parties to consider mediation
We previously reported on a Court of Appeal decision which confirmed that the English courts can order unwilling parties to mediate (although that will not be done in every case). The English Civil Procedure Rules have now been amended to reflect that power. Mediation has continued to be a topic considered by judges in the last few months.
It has long been established that a costs sanction can be imposed if a party unreasonably refuses to participate in alternative dispute resolution (ADR) Halsey v Milton Keynes [2004]). There is also Court of Appeal authority that failing to reply to an offer to take part in ADR can itself be unreasonable, even if the party had reasonable grounds for not taking part in ADR (PGF II v OMFS [2013]).
In Northamber PLC v Genee World Ltd & Ors, a case management order required the parties to consider ADR at all stages of the litigation and any party that did not engage in ADR proposed by the other side must file a witness statement explaining why.
The claimant's solicitors asked the defendant's solicitors if the defendants would be willing to mediate. No response was ever received and no witness statement was filed by the defendant explaining why not. Despite that, at first instance, no costs sanction was imposed on the defendant: instead, it was said that the offer to mediate had only been "half-hearted", especially as the claimant had never chased for a reply.
The Court of Appeal has now allowed the appeal from that decision. There was no onus on the claimant's solicitors to chase for a response. They had made a clear offer and the ball was in the defendant's court.
Although it was accepted that it is not always the case that silence or an unreasonable refusal to mediate automatically results in a costs sanction, the Court of Appeal did impose a costs sanction here: the claimant's costs recovery was increased by an additional 5% to 75%.
Arguments like the ones in this case might become less frequent in future, given the new powers granted to judges to simply order parties to take part in ADR. That takes away the onus on parties (which arises out of orders like the one made in this case) to themselves consider if and when to take part in ADR. But this case serves to demonstrate again the importance placed by the English courts on encouraging parties to try to settle their disputes.
In Invenia Technical Computing v Hudson, a different issue arose. A party did respond to an offer to mediate, but it did so by imposing a pre-condition to mediating: it said that the defendant must first drop certain claims which it had threatened to bring if the claimant did not stay its claim.
The judge said that that did not amount to an unreasonable failure to mediate. The claimants reasonably believed they had a strong case, had already attempted to settle with the defendant (albeit not via mediation) and the offer to mediate was made at a time when the parties already had a final half-day hearing listed.
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