Two recent cases: Reid v Buckinghamshire Healthcare NHS Trust1 and Bristow v The Princess Alexander Hospital NHS Trust & Ors2 suggest that an offer to mediate should not be declined without good reason. However neither case provides guidance as to what would be considered a “good reason”. Both cases were costs proceedings in cases involving clinical negligence. In both cases, the court decided that the defendants’ refusal to agree to mediate should be penalised by an order requiring the defendant to pay the claimants’ costs on an indemnity basis.
In the Reid case, where a defendant refused an offer to mediate, the court decided to award costs on an indemnity basis from the date “the defendants are likely to have received the claimant’s offer” (i.e. three days after the offer to mediate was sent.) The Reid case does not make clear the grounds on which the court found the refusal to mediate to be unreasonable, which could suggest that the threshold which would prompt the court to impose costs sanctions is low. What is however clear from the judgement is the court’s sense of exasperation at the defendant’s six week delay in responding to the offer to mediate.
In the Bristow case, the court provided a more detailed explanation as to when it would be appropriate to make an order for indemnity costs. In this case, as with Reid, the claimant made the offer to mediate. It was not until three months after the offer was made that the defendants rejected it on the grounds that the parties were too far apart, and that the case had already been set down for a detailed assessment. The court emphasised first that parties should be encouraged to mediate. Secondly, it considered that the defendants had given “no good reason [not to do so] other than the fact that the case had already been set down for a detailed assessment” and went on to state in conclusion that the defendants had “not given any reasonable reason why they refused to engage in mediation”. As a result, it was ordered that the defendants pay the claimants’ costs on an indemnity basis.
In both these cases it was the defendants who refused to mediate and both lost in the underlying proceedings. It should however be noted that the successful party can also be penalised as a result of not participating in mediation.
Some might argue that these cases are not applicable to those engaged in general commercial litigation. It is possible that the fact that the defendants were public bodies apparently wasting the time and expense of both sides weighed on the courts’ mind, and this was a factor in the imposition of costs sanctions. Inevitably, however, where one area of law moves others will follow. It is suggested that these cases therefore contain important lessons regarding mediation offers made not only in the course of costs proceedings, but also in the course of commercial litigation generally.
Decisions such as these render offers to mediate a means of applying pressure on opponents as well as an end in themselves. In that connection, one as yet unanswered question is what would happen if a defendant, having accepted an offer of mediation, attended a mediation but in reality declined to engage meaningfully in the process.
What is clear from these two cases is that if a party does not want to accept an offer of mediation, it should respond promptly, and set out detailed reasons as to why mediation would not be appropriate. To do otherwise would expose that party to the risk of costs sanctions. We will have to wait to discover what the court would accept as a sufficiently good reason to refuse mediation.