REUTERS | Ali Jarekji

Mediate or not, that is the question

Any advice given to clients should be tempered, as far as possible, with how that advice may impact on them in the future, as well as with how a judge might view that advice in determining the reasonableness of a decision taken on its basis.

To my knowledge, nobody has a crystal ball to see into the future, but good practice should afford protection. In particular, careful analysis, deliberation and recording the reasoning behind a decision can assist in mitigating the future impact of whether or not to mediate. The simple things learnt early in a legal career will stand all in good stead when deliberating whether to mediate or not; lest we forget at great expense to our client.

The decisions of Reid v Buckinghamshire Healthcare NHS Trust and Bristow v The Princess Alexander Hospital NHS Trust sent shock waves through the costs industry, as many commentators saw the decisions as a gateway for mandatory ADR to be subsumed within the assessment process, without there being any formal requirement for it within the CPR. The judgments appeared to signify yet another layer of administration for a paying party to contend with before getting judicial oversight in determining the reasonableness of a claim for costs presented for payment.

Any mandatory requirement for mediation that includes nonsensical attempts to apply early neutral evaluation hearings to costs (incidentally, to my mind, valuable judicial time would be better spent in getting a decision to concentrate the parties minds, rather than simply a steer) must be optional. As recourse to the courts should be seen as a last resort, forms of ADR such as open negotiation and the exchange of offers are a necessary step in minimising disputes. However, it must be for the parties to determine what form and to what extent ADR should arise. Stealth implementation via judicial oversight as a result of ever growing overburdened court lists should be avoided at all costs.

Ultimately, the lesson to be learnt from the Reid and Bristow decisions is simply that if a party does not wish to engage in ADR, that party must be prepared to justify the reasoning for taking that decision at a later point in time, in order that it may stand up to judicial scrutiny. Should that reasoning not be reasonable, the costs consequences may be severe and may include costs awarded on the indemnity basis.

Conduct and reasoning is key, as evidenced by the decision of Lord Justice Jackson in Altrincham Preparatory School v Martin and Vera Cockx. In that case, the claimant was faced with an application to appeal premised on determining whether the claimant’s recoverable costs should be reduced by reason of the refusal to mediate. The defendants were undaunted by the fact that both district and circuit judges had previously either held against or dismissed an appeal. The decision would also appear to demonstrate that the significance of principles appears to be lost upon many commentators when grappling with proportionality and the relationship between the issues and costs; in many instances, one or both parties are not interested in costs, but in the principle.

The defendants’ argument was predicated on conduct being one of the factors to be taken into account by the court in making an order for costs (under CPR 44.3 (5)(d)). Lord Justice Jackson returned to established principles in making it clear that hindsight cannot play a part in assessing whether or not a decision taken at a salient point in time was a reasonable one. Determining whether the decision to refuse to mediate was reasonable is akin to reflecting whether the position of the claimant at that salient point in time was reasonable, as set against the known circumstances. Having relied on the decision of the district judge in the lower court relating to the circumstances for the decision to refuse mediation, Lord Justice Jackson refused permission to appeal.

As in Altrincham, any decision to refuse mediation must be based on sound reasoning and supported by evidence, to be produced at a later point in time should an opponent take the point. The fact that one party to a dispute wishes to mediate does not mean that mediation is automatic or seen as a weapon by those simply wishing to bully a payment from unknowledgeable paymasters or those acting on their behalf. Careful deliberation and the recording in writing of any reasoning behind a decision is not only good practice, but also affords protection should an issue arise at a later point in time.

Iain is Chairman of the Association of Costs Lawyers and a partner at Weightmans.


Association of Costs Lawyers Iain Stark

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