Laporte v Commissioner of Police of the Metropolis [2015] EWHC 371 (QB); [2015] 3 Costs L.R. 471

In this case, the Court considered the extent to which a refusal to engage with alternative dispute resolution ("ADR"), (in this case mediation), should attract a costs penalty. It was decided in this case that it should. A Police Commissioner (the defendant), was found to have failed, without adequate justification, to have engaged in the ADR process. The court reflected that in the costs order made, and ordered that the defendant should only recover two thirds of its costs.

Background Facts

Two protestors alleged that they had been assaulted by the police, falsely imprisoned and maliciously prosecuted. The criminal case was dropped, however the protestors pursued a civil claim. They also made a claim for a declaration that their human rights had been infringed under the Human Rights Act 1998.

The claim ultimately failed on every point, and the claimants came away from the litigation with no award. Having won at trial, the defendant sought to recover their legal costs in full. The claimants argued that the defendant should not be awarded their costs in full because of their unreasonable refusal to engage in ADR.

The defendant had defended the claim from start to finish and had made no offers to settle it at all, and had ignored a CPR Part 36 offer to settle from the claimants. The defendant was consistent in their approach of not responding to any of the several offers to engage in ADR, despite a court order to do so.

The defendant’s reason for refusing to engage in ADR was that they had formed the impression that the claimants considered a monetary payment to be a prerequisite to settlement. The defendant did not intend to offer a monetary payment to the claimants, therefore ADR was inappropriate.

However, the defendant did not ever tell the claimants that this was their position, and instead either ignored the invitations to refer the matter to ADR, or said that it was something that they would consider but did not ever respond.

The Court's Approach

The Court applied the factors that had been set out in the earlier case of Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 1 W.L.R. 3002. In this case, the Court of Appeal had laid down some guidelines in justifying its view that the refusal to engage in ADR in any case was prima facie unreasonable and should be penalised in costs. They laid down several factors, which were applied by the Court in the Laporte case.

The court considered the following factors, although they emphasised that the Halsey factors are not exhaustive:

  • The nature of the dispute: 

The defendant argued that the claimants were seeking to litigate a legal point of principle, and that this made it unsuitable for ADR. The Court disagreed, because the claimants could have obtained some level of damages. There were issues of fact to be resolved upon which both parties ran the risk of adverse findings. There was no commercial relationship between the parties. The Court found that it was unrealistic to suggest that ADR would have been inappropriate for this dispute.  

  • The merits of the case:

In Halsey, the Court said that "the fact that a party reasonably believes that he has a strong case is relevant to the question whether he has acted reasonably in refusing ADR". The defendant accepted that they were prepared to mediate up to the point when it was apparent that there was no scope for narrowing the issues. The Court took this to be a concession that the merits of the defence were not perceived to be strong as to have justified a refusal to engage in ADR.  

  • The extent of other settlement attempts:

The defendant had made no offers to settle the case before the claimants suggested ADR, and so all opportunities of resolving the case without the need for proceedings had not been exhausted.  

  • Proportionality of the cost of mediation:

The defendant accepted that the cost of a mediation in this case would not have been disproportionately high, so it was not an issue in this case.  

  • Prejudicial delay of case:

The Court concluded that delay would not be an issue in this case, as the first offer of ADR was made long before the date when the hearing was likely to take place.  

  • Prospect of a successful mediation:

The Court said that the question of whether the mediation had a reasonable prospect of success would often be relevant to the reasonableness of refusing to participate in it, but would not be determinative of it. In this case, the Court found that the defendant had never excluded the possibility of making a money offer, and the claimants had not insisted that such an offer was a prerequisite to ADR. The defendant was not entitled to view to invitation to ADR as purely tactical, as the claimants had clearly tried to pursue it throughout the course of litigation. The defendant had not prioritised ADR. The Court found that there was a reasonable chance that ADR would have been successful, and the defendant was not justified in coming to an alternative conclusion.

The Court found that the defendant had failed without adequate justification to engage in ADR which had a reasonable prospect of success. Consequently, the court held that this would impact on their discretion as to costs, and awarded the defendant two thirds of their costs.

Conclusion

This case is a strong lesson for parties in the risks of ignoring an invitation to mediate or engage in ADR without adequate justification.

The defendant’s attitude towards mediation in this case is typical of a party who feels that there is no merit in a claim brought against them, and is to some extent understandable.

However, that is irrelevant, as this case makes it clear that the courts are taking a strong line on ADR and are to some extend forcing the parties’ hands. Failure to engage with a mediation at all when offered by the other party is punishable in costs. It is not acceptable to simply ignore an invitation by the other party to mediate or engage in another form of ADR.

If a party wishes to reject an invitation to ADR, then they must justify why they are refusing. The grounds on which a party can refuse to engage in ADR are very narrow. The factors that the court set out in Halsey may be considered. In some ways Laporte suggests that the grounds are even narrower, because even in cases where a party thinks that there is merit in refusing to engage in mediation, this case suggests that the court is able at a later date to review that decision and disagree with the party’s approach.

Therefore, even in a case where the claim against them is weak, and the defendant does not want to offer a nuisance value payment, refusing to mediate may be costly if that party successfully defends the claim but is penalised in costs.

The first practical point is that a party in receipt of a request to mediate or engage in ADR should genuinely consider it. There will be cases where a party has justifiable reasons for rejecting an invitation, but it is almost always more cost effective to resolve disputes without a full hearing. Therefore, even if a party considers their opponent’s invitation to be tactical, it is in the receiving party’s best interests, regardless of the Laporte decision, to properly consider whether the case is capable of resolution through ADR.

In terms of practical advice for a party who wants to reject an invitation to ADR or mediation, the best approach is to reply promptly in writing to the other party explaining fully and clearly the reasons why the invitation is rejected. The invitation to ADR should not be ignored or rejected outright.

The reasons for rejecting the offer should cover each of the Halsey factors, explaining in respect of each one why they do not justify mediation or ADR taking place in the particular case. If any shortage of information or evidence is believed to be an obstacle to ADR, then this should be raised with opposing party.  The party rejecting the ADR should also be careful not to close off all ADR of any kind at any time, in case another method at a later date might be worth pursuing.

Unless a party does this, then they will be at risk of being subject to the cost penalty that the police defendant subject to in the Laporte case, of having their costs award reduced significantly.