Nelson says: "Mediation is preferable to litigation"



In an article by Thelma Nwagboso “Mediate or Else”, the writer provides a useful guide to cases where the courts have considered the costs consequences of a party refusing to mediate. The Court of Appeal has recently again had to consider whether the costs of an appeal should be awarded to the successful appellants (here the Defendants), notwithstanding the fact that they had rejected the Claimant’s offer to mediate the matter: Valentine v Allen & Others [2003] EWCA Civ 915 (substantive hearing) and LTL 29/074/2003 (costs hearing).




A similar situation had arisen in Dunnett v Railtrack (2002) EWCA Civ 302; (2002) to All ER 850. Briefly, Miss Dunnett sought leave to appeal against a judgment given by the Court of first instance in favour of Railtrack. When the Judge granted her that permission, he put it to the parties that they should attempt to resolve the matter by arbitration or mediation. Subsequently, Railtrack refused to do so. At the appeal, the Court of Appeal found in Railtrack’s favour but took the view that, despite its success, it would be highly inappropriate to compel Miss Dunnett to pay Railtrack’s costs because it had refused to mediate.




If you refuse to participate in a mediation that you have already agreed to attend, you may be penalised in costs even if your case is ultimately successful. A successful appellant suffered this fate in the Court of Appeal earlier this month (Leicester Circuits Ltd v Coates Brothers plc [2003] EWCA Civ 333) as a result of its withdrawal from a mediation to which it had previously agreed, just 2 days before it was to take place.


Considering the parties' attitude toward mediation, and relying upon the judgment in Dunnett v Railtrack [2002] 1 WLR 2434, the Court made it clear that having agreed to mediation, it was not open to a party to withdraw from it because they thought it had no realistic prospect of success. While the Court did not assume that the mediation in this case would have been successful, there
was a prospect it would have been, if it had been allowed to proceed. As a result, this impacted upon the issue of costs. While the appellant was awarded costs of the appeal, it was only entitled to its costs of the proceedings up until the date it agreed to mediate, losing out on the costs of trial preparation and the trial itself.




The case shows that, where there has been a refusal to mediate, the courts will look at the surrounding circumstances and the parties’ behaviour so that they can take a view as to whether that refusal is reasonable. If the court considers that it is reasonable as was the case of Watson & Wyatt v Maxwell Batley and Hurst v Leeming [2002] EWHC 1051 (CH)), then there is no reason to deviate from the usual order as to costs. The message to any party involved in a dispute is clear: it should think carefully before it turns down an offer to mediate. Equally, you should not agree to a mediation unless you intend to proceed with it.


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