By Haris Ahmed
Borneo Martell Turner Coulston
MEDIATION is a form of Alternative Dispute Resolution (ADR) which offers the parties a more flexible, cost effective and speedy way of settling their differences whilst tailoring the procedure to suit their needs.
It can take a variety of forms, even informal negotiation, and has a high success rate. Unsurprisingly, therefore, the courts have actively encouraged parties to consider mediation as a way of resolving their disputes, which also ties in with the old adage that ‘litigation should be used as a last resort’.
Perhaps one of the most potent weapons in the court’s arsenal to encourage the parties to consider mediation is its wide discretion when it comes to the question of costs when the court will consider whether a party’s refusal to engage in mediation should be penalised in costs.
This judicial encouragement springs from the rules of the court themselves which require the courts to actively encourage ADR. Against such a backdrop of judicial enthusiasm in favour of mediation, parties should always bear in mind that an unreasonable refusal to submit to mediation may result in the court making an adverse cost order, even if it ‘wins’ the case.
Historically, the accepted wisdom has been that if the party has a good case then there is no compulsion to settle on less favourable terms through mediation or otherwise. A refusal to mediate in these circumstances was deemed justified and shall not be penalised in costs.
This was until 2013 when our Court of Appeal decided that, as a general rule, silence in the face of an invitation to engage in ADR was in itself unreasonable, regardless of whether such refusal might have been justified.
This resulted in some legal advisers over-emphasising to their clients the need for mediation or for that matter to submit to any other form of ADR even if this were to result in a less favourable outcome. Either that or risk being punished in costs.
Practical experience, however, tells us that there will always be cases where mediation will be pointless. For example where one party disputes liability outright. In such a case mediation will only add to more costs.
Thankfully, such perceived misconception appears to have now been thwarted in the more recent 2017 Court of Appeal decision of Gore -v- Naheed & Ahmed where the court was asked to decide whether the defendants should be ordered to pay the claimant’s costs on account of the claimant’s unreasonable conduct in refusing to submit to mediation.
LJ Patten stated: “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.” The court deciding that the case involved complex questions of law which made it unsuitable for mediation.
So where does this leave a party presented with an invitation to mediate?
Experience tells us that cases are highly fact sensitive and distinguishable from one another and a party will be well advised to seriously consider mediation given its inherent benefits. A party will only escape unscathed following a refusal to consider mediation if there were good reasons for doing so.
Haris Ahmed is a solicitor at Borneo Martell Turner Coulston LLP and is contactable at01604 622101 or email