Kerry Underwood provides our latest guest article. Here he considers the recent case of Gore v Naheed & Anor [2017] where the court veers away from the trend of imposing penalties where a party refuses to mediate. If you find it useful, please share it with your contacts.

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.

50. 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.

Kerry Underwood 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.

Mediatelegal Comment

Sadly, it would require a wholly unexpected and seismic change in attitude from the government to see our court system become more efficient and less expensive. For some time now the onus seems to be to increase court fees and close courts. Will this change? Hopefully. Whether the appeal of mediation declines or grows . . . . well that remains to be seen!

Kerry Underwood is a Senior Partner at Underwoods Solicitors. He is also a widely respected legal blogger at (https://kerryunderwood.wordpress.com). Kerry regularly tours England and Wales delivering training courses on the latest in civil litigation developments. His upcoming Autumn Tour begins on 25 September 2017 in Birmingham. You can book your place on the Kerry Underwood course here, and access an early bird discount.

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