There have been several cases this year concerning the costs consequences of refusals to mediate. The first, P4 Ltd v Unite Integrated Solutions plc [2007] EWHC (TCC) 2924, has been described as the strongest signal yet from the courts that refusing to mediate will be penalised. The losing claimant was awarded its costs prior to the date of the defendant’s Part 36 offer on the ground that the defendant had unreasonably declined an invitation to mediate or have a meeting in accordance with the Construction and Engineering Pre-action Protocol. The Technology & Construction Court judges have indicated their commitment to mediation in their pilot scheme in which they offer their services as mediators. The TCC scheme, however, looks to be doomed to fail. It has been used only twice during the first 6 months of the two year pilot. A third of the disputes during this period settled as a result of mediation with almost half of the mediators being barristers. Parties clearly prefer to use private or commercial mediation and do not see judges as mediators.

In Palfrey v Wilson [2007] EWCA Civ 94 the Court of Appeal refused to give the claimant credit for an offer to mediate made only two months before trial and upheld the first instance judge’s order of indemnity costs against the claimant for failing to accept the defendant’s Part 36 offer. Indemnity costs were also awarded in Rowallan Group Ltd v Edgehill Portfolio No 1 [2007] EWHC (Ch) 32 but on this occasion against a recalcitrant claimant whose lack of good faith was manifested by issuing a claim form during the mediation process with no letter before action and asking the mediator to find out whether the defendant’s solicitors would accept service. Describing it as a “totally unusual case”, Lightman J said “indeed (please God) it will never happen again that a solicitor will behave this way in circumstances such as the present”. For further details, see the CEDR website.