The move towards using mediation as a form of alternative dispute resolution has accelerated in recent years. The Court of Appeal decision in Rolf v De Guerin [2011] C P Rep 24 underlines that the courts will not look kindly upon those who unreasonably refuse to attempt mediation.

The initial claim was brought by Mrs Rolf after her builder, Mr De Guerin, walked off site part way through the construction of a garage and loft conversion.  Mr De Guerin cited repudiatory breach of contract on Mrs Rolf's part due to her failure to make weekly payments and due to excessive interference from her husband (this last point was not actually pleaded in Mr De Guerin's defence but was allowed in any case, and was the main ground on which he succeeded).  Mrs Rolf employed another builder to finish the work and sued Mr De Guerin for damages.

In an early letter, Mrs Rolf wrote to Mr De Guerin's solicitors setting out her willingness to explore a settlement.  The offer was spurned until such time as she had repleaded her claim.  Mrs Rolf, or her solicitors, during the course of the litigation, proposed either mediation or an informal round table discussion on several occasions, but the proposals received no response.  This included a Part 36 offer from Mrs Rolf which also received no response.

Five days before the start of the trial, Mr De Guerin's solicitors made a low Part 36 offer (which the Court of Appeal described as 'totally unrealistic') and indicated that he was now prepared to agree to mediation or a without prejudice settlement meeting.  This offer was not taken up and the trial proceeded.

The judge found in Mrs Rolf's favour on one point only and awarded her nominal damages of £2,500.  Unfortunately, the judge confused the Part 36 costs rules and instead of giving her credit for her timely Part 36 offer and repeated attempts to mediate, he in fact held the offer against her, and ordered her to pay Mr De Guerin's costs from the date that the offer expired.

The case went to appeal on this point and the Court of Appeal had no hesitation in overturning the judge's decision on costs.  In doing so, it analysed the parties' pre-trial behaviour and contrasted Mrs Rolf's willingness to go to mediation with Mr De Guerin's blanket refusal to do so until a few days before the trial.

When asked by the court why he was unwilling to mediate, Mr De Guerin said he thought mediating would mean having to accept he was guilty.  He was concerned he would not be able to persuade a mediator of Mrs Rolf's husband's behaviour, and he wanted his day in court.  The Court of Appeal found that these were not adequate reasons and that Mr De Guerin's position was unreasonable. 

Rix L J giving the leading judgment, observed '[a party wanting its day in court] is of course a reason why the courts have been unwilling to compel parties to mediation rather than litigate: but it does not seem to me to be an adequate response to a proper judicial concern that parties should respond reasonably to offers to mediate or settle and that their conduct in this respect can be taken into account in awarding costs.'

Rix L J added that 'the spurned offers to enter into settlement negotiations or mediation were unreasonable and ought to bear materially on the outcome of the court's discretion.'

The case affirms the importance of parties to litigation giving proper consideration to mediation and not dismissing offers to meditate from the other side out of hand.  It underlines the premise set out in the Civil Procedure Rules that the courts will give due consideration and weight to the parties' conduct when awarding costs, which includes the willingness of the parties to attempt mediation or other forms of settlement.

It is no surprise that the courts are increasingly adding weight to the importance of mediation, as the courts are burdened with an ever increasing case load and statistics suggest that 80-90% of mediations will be successful and result in a settlement, whether on the day of the mediation itself or shortly thereafter.  For a party to a dispute, the benefits can be substantial.  The value of ending the dispute quickly, without the time and expense of lengthy legal proceedings and trial costs (including the need to divert management time to dealing with the litigation), and even the possibility of walking away with an amicable relationship with the other side intact cannot be overstated.