Mediation and the Courts

Mediation and the Courts

Compulsory participation in voluntary negotiations?

Anyone involved in court proceedings will need to consider whether to engage in mediation to try to resolve the dispute, before the case is decided by a judge. But do you have to agree to mediate if you do not believe the process will assist, and what will happen if you say “no thanks”?

What is mediation?

Mediation is a confidential form of alternative dispute resolution. It involves appointing an independent, neutral trained professional mediator to help you reach a solution that is acceptable to everyone. The mediator will ask questions that help to reveal underlying problems, assist the parties to understand the issues, and help them to clarify the options for resolving their dispute.

Does it work?

The available statistics suggest it does. The Centre for Effective Dispute Resolution published their fifth mediation audit in May 2012 whereby 238 civil and commercial mediators reported that just over 70% of their cases settled on the day, with another 20% settling shortly thereafter.

Why mediate?

The main advantages of mediation are that it is quicker, cheaper, less stressful and less time-consuming than litigation. This is because mediation is conducted privately and under less pressure than if the matter were to progress to a court hearing. However, these will only be advantages if the mediation is successful. If mediation is unsuccessful, not only will the parties incur the costs of taking the matter to court but they have also incurred the cost of a failed mediation. Mediation is therefore only cheaper if settlement is reached.

In a time where litigation is becoming more expensive and court fees are being increased significantly, mediation is becoming particularly more attractive. However, some people simply do not want to mediate and many still do not see it as a credible alternative. Some simply want their day in court. A 2007 survey reported that 47% of respondents in commercial litigation cases admitted that personal dislike of the other side had been responsible for driving them into protracted litigation. Some people will think that they are entitled to prove their case in court and they do not want to be forced to compromise for commercial expediency.

However, it appears that this attitude will not be accepted by the courts who have displayed a tendency to impose sanctions on a party who has unreasonably refused to participate in mediation.

The first main case on the use of mediation is Halsey v Milton Keynes General NHS Trust [2004] which highlights several factors that judges should take into account when considering whether a refusal to mediate is reasonable, including the nature of the dispute; the merits of the case; whether the cost of ADR would be disproportionately high and; whether the ADR had a reasonable prospect of success.

If the Court decides that a party has unreasonably refused to consider or engage in mediation, it can order cost penalties against that party.

The recent case of Bristow v The Princess Alexander Hospital NHS Trust and others heard in November 2015, involved a defendant who had rejected the Claimant’s offer to mediate three months after the offer had been made, citing no reason for that refusal. The judge decided that the defendant hospital had to pay the costs of the court hearing at an enhanced rate (the indemnity basis substantive costs).

Similarly, in Reid v Buckinghamshire Healthcare NHS Trust [2015] the defendant rejected an offer to mediate 6 weeks after the offer was made. The court found this to be an unreasonable refusal to mediate and awarded the claimant their costs to be assessed on the indemnity basis from the date that the offer to mediate was made. The court noted that an order to pay the winner’s costs on the indemnity basis was standard for a party who was unwilling to mediate.

Another 2015 judgment, Laporte v Commissioner of Police of the Metropolis [2015], demonstrates that a winning party may also be penalised if they unreasonably refuse to engage in mediation. The Court held that the defendant, who was the successful party in this case, had failed without adequate justification, to fully and adequately engage in the ADR process, which had a reasonable chance of success. As a result, the court only awarded the defendant two thirds of his costs on the standard basis.

The defendant in Garitt-Critchley [2014] also unsuccessfully argued that hostility and dislike between the parties rendered mediation unsuitable. The court found that, as the parties are engaged in legal proceedings, the mediator would expect nothing less than to deal with hostility and therefore this was not a reasonable refusal to participate in mediation.

So where are we now?

Mediation remains a voluntary process; the courts have no power to impose it on parties to civil disputes. Indeed, the statistics of success without doubt reflect that the parties using mediation have chosen to do so and want to reach a settlement. However, the sanctions the courts are now imposing make it very difficult for anyone to refuse to mediate, even if they do not really want to.

Based on these recent cases, it appears that we may effectively be heading towards a compulsory mediation process. The court requires parties to have an exceptional reason for refusing to engage in mediation. A party refuses at their peril and places themselves at the mercy of the court when it comes to a decision on who pays the costs of the claim.