ADS Aerospace Ltd v EMS Global Tracking Ltd

[2012] EWHC 2904 (TCC)

Following judgment in favour of EMS, ADS said that there should be a substantial reduction in EMS’s entitlement to costs - of at least 50% - because of its unwillingness to enter into mediation. The claim was issued in August 2011 and the trial was heard in early July 2012. In March 2012, EMS’s solicitors tried to initiate a settlement dialogue but were told that ADS wanted to wait for the exchange of witness statements (March and June 2012) or possibly expert reports (May 2012). In April 2012, EMS offered £50k to settle the claim. There was no response. EMS made other approaches in April and May. On 31 May ADS’s solicitors wrote referring to the £50k offer as a “nuisance” payment. However ADS did, as both parties appeared to be willing to discuss settlement, propose mediation, although ADS said that could not take place until the week commencing 11 June 2012.

On 1 June 2012, EMS’s solicitors replied saying that they did not think that mediation was likely to be a worthwhile investment of time and cost as “each side is now familiar with the other’s case, and each ought to be able to assess with a reasonable degree of accuracy the relative strength of its position”. There was nothing to suggest that ADS would accept much less than $16 million and “absent any such indication we risk doing no more than waste time and (irrecoverable) cost when both parties should instead be focusing on the trial”. That said, EMS stressed that they would “in good faith consider any reasonable offer” and they would welcome a without prejudice discussion sooner rather than later. On 6 June 2012, ADS again proposed mediation suggesting that a skilled mediator could help settle disputes that appeared to be incapable of resolution and that mediation was the better option than without prejudice discussions. EDS’s position was that a formal mediation was not necessary given that it was less than three weeks before the trial. EDS repeated their offer of without prejudice discussions. ADS repeated the mediation offer and made a settlement proposal of £4.2million. On 11 June 2012, EMS made a further offer of £100k.

Mr Justice Akenhead did not consider that EMS had acted unreasonably. ADS had not been willing to engage even in a without prejudice discussion until 31 May 2012, whereas EMS had been attempting to start talks since early March 2012. As EMS was at all times prepared to engage in without prejudice discussions, there appeared to be little reason why that approach should not have been tried at some point before June at least on a “nothing ventured, nothing gained” basis. Such an approach might have “bottomed out” where the parties stood. That would have helped. Then there was the timing of the mediation proposal. It was less than 20 days before the hearing. Without prejudice discussions would have been quicker, cheaper and less intrusive into the trial preparations. A mediation even if it lasted only a day, would have diverted everyone for far longer because of the need to prepare. It would also have been more costly than without prejudice discussions. Finally, the Judge considered the merits of the parties’ positions. ADS held a strong view that it was entitled to substantial compensation. In particular, based on his views of the witness evidence, the Judge had doubts as to whether ADS would have accepted a nuisance offer. He also thought that EMS was right in its view that it had a very strong case both on liability, causation and quantum. Accordingly, EMS was entitled to its costs in full.