Defendant penalised for refusing to mediate

The defendant won on every substantive issue in this case. However, it had refused to engage in  ADR, in part because it believed that the claimant was imposing a pre-condition to mediation that  the defendant’s lawyer have instructions to “make a meaningful offer”.

It is well established that there could be adverse costs consequences if a party unreasonably  refuses to agree to ADR. A list of factors which may be relevant to this issue  was set out in  Halsey v Milton Keynes [2004]. Applying those considerations to this case, Turner J held that the  defendant had been unreasonable and that, as a result, would be entitled to only two thirds of its  costs. In particular, the judge held that:

  1. It could not be said that a mediation would not have had  a reasonable prospect of success. As  mentioned above, the defendant had formed the view that the claimant would only have accepted a  financial offer, which the defendant was unlikely to make, and so it believed that ADR was not  appropriate. However, the judge noted that the claimant had never insisted on the making of a money offer as a pre- condition to ADR and “Simply because  one side makes a prediction of what it might take to reach a settlement does not entitle the other  side to treat such a prediction, without more, as a formal pre-condition. Tactical positioning  should not too readily be labelled as intransigence”.
  2. Nor was this the sort of a case where a defendant would be reasonable in “taking a stand”,  whatever the costs risk of that approach.
  3. This was also not a case where the claimant was seeking to litigate a point of legal principle;  the claimant could have succeeded in obtaining some level of damages even if it had lost on the law.