The recent decision of the High Court in White Young Green Environmental (Ireland) Limited v Anne Gethings [2015] IEHC 498 has raised new issues when advising clients on when to make an offer of tender of payment at a late stage in the proceedings and in particular post mediation.

Background

The case was set down for trial in April 2015 however on the second day of the trial, following the urging of the Court, the parties adjourned proceedings to engage in mediation and the proceedings were stayed as a result.  The mediation was unsuccessful and a new trial date was set for January 2016.

The plaintiff subsequently made an application pursuant to Order 22 Rule 1(1) of the Rules of the Superior Courts seeking leave of the Court to make an offer of tender of payment to the defendant in relation to the defendant’s counterclaim.

The plaintiff submitted that nothing was revealed or said during the mediation process that would result in prejudice to the defendant’s case but acknowledged the potential litigation disadvantage to the defendant.  

The defendant argued that although no specific prejudice would occur to the defendant’s case if leave was granted, as a result of the mediation the plaintiff gained unique insight into the defendant’s thinking and strategy in relation to the proceedings. Additionally the defendant submitted that its expert reports were made available to the plaintiff during the mediation process. 

Decision

The Court (Binchy J) acknowledged that it will generally accede to applications for a late tender offer unless by doing so a prejudice is caused to the plaintiff (or in this case to the counter-claimant) or it is unfair to grant the application. The Court noted the public policy consideration in bringing litigation to a swift and economic conclusion as a determining factor.

However, the Court ultimately decided it would be unfair to allow the application in this case for two reasons:

  • The conduct of the mediation gave the plaintiff a litigation advantage(1)into the defendant’s thinking in relation to the proceedings.  A meaningful mediation explores legal, personal and financial issues and it seems very likely that following mediation each party will have a significantly better understanding of the attitude to the proceedings of the other party, putting the defendant in a better position to make a tender offer.
  • The litigation advantage gained by means of mediation undermines the public policy objective behind mediation, which is to encourage the resolution of disputes by means of alternative dispute resolution if it helps to avoid lengthy trials and the attendant costs of same. 

The Court commented that the litigation disadvantage could be avoided if the parties considered the possibility of a lodgement or tender in the event that that mediation is unsuccessful and agreed whether or not such a course could be taken in that event.  The Court pointed out that when the trial of the action commenced, the defendant was not suffering from the litigation disadvantage of a tender offer, she was not obliged to participate in mediation and could have elected to continue the trial if she had wished to do so but instead acceded to the request to mediate in the hope that a two-week trial might be avoided. The Court also considered that the plaintiff had a minimum of two months in advance of trial to consider making a tender offer and could have done so at any time up to the commencement of the trial but did not do so. Against that background, it seemed fundamentally unfair to the defendant that she should now be faced with the litigation disadvantage of a tender offer. 

Conclusion

This case is of particular relevance to insurers who are permitted to make tender offers (in lieu of lodging monies into court), however, it is of general relevance to any defendant who wishes to avail of the rules permitting a defendant to make a lodgement or tender offer to put a plaintiff on risk for costs. 

This case highlights the potential risk in waiting until a very late stage in proceedings to make a tender offer.  At first glance it appears to be a significant decision with the potential outcome that tenders will not be permitted post mediation. However, the case would appear to turn on its facts and it is worth noting that the mediation in this case took place at a particularly late stage, ie after the first day of the trial of the action. A lodgement or tender offer is permitted without the need to obtain the leave of the court at any time after a defendant has entered an appearance and before the action is set down for trial (except in personal injuries actions to which different rules apply).  It would therefore appear unlikely that a defendant would be prevented from making a tender offer post mediation but prior to the matter being set down.

If, however, there is an agreement to mediate post setting down, it should be considered whether an agreement should be put in place to permit the defendant to make a lodgement or tender offer post mediation in the event that the mediation is unsuccessful.