Change is on the horizon, in the form of compulsion to mediate civil disputes. In the meantime, the ebb and flow of a judicial policy of “encouragement” and “sanction” continues.
The court’s efforts at encouragement have fortunately not taken the extreme form contemplated in 2013 in Wright v Michael Wright Supplies:
“You may be able to drag the horse (a mule offers a better metaphor) to water, but you cannot force the wretched animal to drink if it stubbornly resists. I suppose you can make it run around the litigation course so vigorously that in a muck sweat it will find the mediation trough more friendly and desirable. But none of that provides the real answer.”
(Paragraph 3, judgment.)
Instead, judicial focus has been on sanctioning in costs those who unreasonably refuse to mediate (and possibly those who mediate but do so unreasonably).
Anecdotally, the threat of costs sanctions appears to have some effect. In its October 2021 Response to the Ministry of Justice’s (MoJ’s) call for evidence on dispute resolution in England and Wales, the Civil Mediation Council commented that:
“The CMC is not aware of any statistical evidence of the threat of costs sanctions as a driver of parties to mediation. The majority of CMC members do believe that the threat of costs sanctions pushes people to mediate, although this view was not universal.”
Any “push” is not without its critics. The MoJ’s March 2022 summary of responses to its call for evidence recorded (in the context of prospective compulsion) some concerns:
“Others expressed the view that compulsion would risk dispute resolution becoming a “tick-box” exercise in which parties did not genuinely engage and therefore simply an additional barrier (both in terms of time and cost) to users’ ability to access justice.”
Judges have, at times, indicated an apparent willingness to consider “genuine engagement” – not just whether parties agree to mediate, but how they conduct themselves in the resulting mediation.
An article, by Legal Futures, boldly claimed that the “first ever order for compulsory alternative dispute resolution (ADR)” had been made, which would include such an approach. The order apparently provided that the “mediation shall be conducted on a without prejudice save as to costs basis and either party shall be at liberty to make an application relying on evidence as to the conduct of the parties at the mediation either with regards to the cost consequences of that conduct or with regards to the court deciding whether or not either party has failed to engage with the mediation process.”
However, this was not an order for “compulsory ADR” at all, but an order “made by consent”. Nonetheless, the master’s reported willingness to endorse judicial consideration for costs purposes of “evidence as to the conduct of the parties at the mediation” remains interesting.
Whether the parties found a willing mediator is not known. Mediation is premised on without prejudice privilege. It could be argued that there is no difference in principle between a pre-agreement that such privilege will be “save as to costs”, and a later joint waiver by the parties in costs arguments. One suspects, however, probable instinctive resistance to acceptance of appointment as mediator, where the privilege is already diluted.
The court has in at least one case enquired directly into the conduct of the parties at mediation, when considering costs. In Malmesbury v Strutt and Parker, Jack J considered the consequences of a party taking an “unrealistic and unreasonable” position at a mediation, saying:
“a party who agrees to mediation but then causes the mediation to fail by his reason of unreasonable position in the mediation is in reality in the same position as a party who unreasonably refuses to mediate. In my view it is something which the court can and should take account of in the costs order in accordance with the principles considered in Halsey.”
(Paragraph 72, judgment.)
However, this was only possible because (as the judge expressly recorded) privilege was waived by the parties in respect of all without prejudice matters.
Stephen v Lewis is an example of the normal position – where attempts to rely for costs purposes on party conduct within mediation are simply “disregarded”.
Judicial encouragement has not always made this distinction between agreement to participate, and “genuine engagement” within mediation. In 2016, David Richards LJ in Guinee v Micklewright made a direction that parties consider mediation and explain their reasons if mediation did not take place, but went on to add that the “parties should know that I would regard a failure to engage seriously in mediation as being highly relevant to any question of costs.” (Paragraph 10, judgment.)
It is unclear how the court was to know whether a party which agreed to attend had “engaged seriously” or not.
In a more recent (family) case, the court applied the established authorities on without prejudice (Unilever v Proctor and Gamble) and mediation confidentiality (Farm Assist) in cross-applications, concerning admission of evidence of discussions at a mediation, concluding:
“There is undoubtedly a public interest in the court being able to “get at the truth” in the words of Baroness Hale in Re A. However, the pathway to the truth is unlikely to lie through disclosure of the otherwise privileged discussions within mediation. Parties must be free to discuss candidly all options for settlement and ‘think the unthinkable’ without fearing that their words will be used against them in any subsequent litigation. Mediators must be free to perform their valuable role without fearing they will be dragged into that litigation either by court orders for provision of their notes” (paragraph 35, judgment).
Given the privilege, the whole issue of engagement – whether this is a real problem, likely to endure and, if so, how to address it – will require more consideration as we move towards the prospect of compulsion to attend.
For now, the only real issue in costs arguments will normally be that of refusal to participate at all.
Against this backdrop, a recent case on costs sanction for unreasonable refusal to mediate is a reminder of the current law, and an illustration of how it may perhaps not always produce the expected result.
In Richards v Speechly Bircham LLP and another, the claimants succeeded at trial and the defendants accepted that they were liable to pay the claimants’ costs. The issue was whether those costs should be assessed on the indemnity basis.
Judge Russen QC found that the defendants failure to engage the claimants’ repeated proposals for a mediation was unreasonable. Given that the losing defendants were already to be the paying party, the claimants argued that an appropriate sanction for this unreasonable conduct would be to uplift the basis for assessment from the standard basis to the indemnity basis.
In exercising his discretion under CPR 44.2, the starting point for the judge was the decision of the Court of Appeal in Gore v Naheed where Patten LJ, citing Briggs LJ in an earlier case, said of mediation that “a failure to engage, even if unreasonable, does not automatically result in a costs penalty. It is simply a factor to be taken into account by the judge when exercising his costs discretion.
The judge took into account factors which included the defendants’ successful resistance of part of the claim and doing better than the claimants’ Part 36 offers. He declined to award indemnity costs, adding that: “an order that they pay the claimants’ costs down to and including trial on the standard basis … is an appropriate “sanction” for them not engaging in a process of ADR which might have curtailed those costs in a significantly lower sum at an earlier stage of the proceedings”.
That statement has attracted some debate. Ordering a losing defendant to pay the claimant’s costs on the standard basis may not involve the application of any additional “sanction” at all for unreasonable conduct. On the other hand, judges exercising discretion are required to take all factors into account and not elevate mediation refusal to a special status.
This blog will not second guess the exercise of discretion by a trial judge in a complex case. However, by way of musing upon the position we have reached – and given the defendants were firms of solicitors – it is perhaps ironic to recall Ward LJ’s comments in Burchell v Bullard as long ago as 2005:
“The court has given its stamp of approval to mediation and it is now the legal profession which must become fully aware of and acknowledge its value. The profession can no longer with impunity shrug aside reasonable requests to mediate.” (Paragraph 43, judgment.)
Perhaps, we are not quite there yet.