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My case is solid – do I still need to mediate? A case law update.
Victoria Greenwood • Nov 04, 2019
If a solicitor ever tells you that you have 100% chance of success he does not know what he’s talking about, as there are always the risks of litigation.
However, what if my prospects of success are say 70/30 and my client is prepared to take the risk of the trial? The reality is that current case law states that if you choose to ignore mediation, your client will still probably face the risk of an adverse case costs order even if the case is successful.
The costs position first started to develop with the well known case of Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, which introduced a merits-based approach. The court, in considering whether a refusal to mediate should give rise to costs sanctions, identified certain considerations (the Halsey Guidelines) to determine whether or not a party has acted unreasonably in refusing to mediate. Relevant factors include the merits of the case, the extent to which ADR was attempted and whether ADR would have had a reasonable prospect of success.
The position moved on in the case of PGF II SA v OMFS Co 1 Ltd [2013] EWCA Civ 1288 where the Court of Appeal held that to remain silent to an offer of mediation was, as a general rule, unreasonable conduct meriting a costs sanction. This seemingly applied even in cases where mediation was unlikely to be successful, which clearly undermined the Halsey merits principle.
Keeping with that theme Northrup Grumman v BAE Systems [2014] EWHC 3148 (TCC) again highlighted the court’s attitude that mediation should be used, even in cases where it may not be appropriate. Here, the Defendant believed that it was right to refuse mediation as it reasonably believed the claim had no prospects of success, and it would never have paid out money to settle the case. As such the Defendant saw no reason to engage in mediation. Ramsey J did not agree this was sufficient to avoid a costs sanction stating that:
'[T]he authors of the Jackson ADR Handbook properly, in my view, draw attention at paragraph 11.13 to the fact that this seems to ignore the positive effect that mediation can have in resolving disputes even if the claims have no merit. As they state, a mediator can bring a new independent perspective to the parties if using evaluative techniques and not every mediation ends in payment to a claimant… [On] the merits of the case, I consider that BAE’s reasonable view that it had a strong case is a factor which provides some but limited justification for not mediating.'(emphasis added).
The next significant case didn’t concern a failure to mediate but rather a sluggish approach to responding to an offer of mediation – could that be justification for a costs order? Yes. Thakkar v Patel [2017] EWCA Civ 117 was an appeal against a costs order. The defendants were very slow to respond to the offer of mediation, to the extent that the Claimant wrote to the defendant setting out the history of attempts and concluded that it had lost all confidence in arranging a mediation between the parties.
In considering the appeal, Jackson LJ agreed with the Judge at first instance’s finding that there was a real chance that the case could have been settled by mediation, and that by “delaying and dragging its feet for no good reason” the costs order given was merited.
Only 4 months after the decision in Thakkar the Court of Appeal made a partial U-turn with the decision in Gore v Naheed [2017] EWCA Civ 369. The Claimant had declined an offer of mediation on the basis that the Defendants had no real prospect of success and that mediation would have only added further costs. The Defendants appealed the costs order on the basis of that some allowance should be made for the Claimant’s refusal to mediate, as per the ruling in PGF.
Briggs LJ, did make clear that a failure to engage in mediation, even if unreasonable, does not automatically result in a costs sanction – it is simply a factor to be taken into account by the judge when he exercises his costs discretion.
Patton LJ agreed with the Judge that it was not unreasonable for the Claimant to have rejected mediation, and agreed that the complex nature of the case made it unsuitable for mediation. He concluded that the judge’s “refusal to make an allowance on these grounds cannot in my view be said to be wrong in principle”.
Gore obviously raises some contradictions. It clearly goes against the decisions in PGF and Thakkar that mediation should always be seriously considered, despite the merits of the case. Additionally, the issue of complexity of a case being a barrier to mediation has previously been dismissed in other Court of Appeal cases – see Burchell v Bullard [2005] EWCA Civ 358.
There are some older cases which might provide assistance such as Hurst v Leeming where it has been held to be reasonable to refuse mediation. On that occasion it was held that the professional reputation of the barrister was a good reason for allowing the matter to proceed to trial.
The Gore case has thrown doubt on what had been the clear thrust of the Court that you must mediate or face the potential of the cost sanction. My own view is that to rely on the Gore case you will have to have strong grounds, which you will need to have set out very clearly in correspondence, preferably at an early-stage. The Court will still remain very pro-mediation.
Perhaps the moral of this story is that you will never know which way the Court will turn so it is safer to mediate.
Having said that, I feel there will be very few cases where mediation will not be advantageous in that you will be able:
- To test the reality of the merits of the case through the mediator
- To take the strength of the merits of your case into your negotiating stance to dictate the terms of settlement
- To avoid the risks of litigation and an adverse costs order
- To settle at a much earlier stage
Victoria Greenwood is the managing director at NWMS, and in her spare time is a litigator and partner at Gunnercooke LLP in Manchester.
She can be contacted on vgreenwood@nwmediationsolutions.co.uk or 01663 719442
We like to think we will always be around. Unfortunately, our inability to confront our own mortality can have a disastrous effect on those closest to us and our businesses. All businesses need to deal with succession, but farming families are particularly vulnerable to the effects of failing to deal with succession. Why is succession planning so important within farming? One of the main reasons is that children are often involved in working on the family farm and there is this unwritten understanding that one day all of this will be yours. Farming families are also notorious for not having partnership agreements in place, which again can leave the business open to potential disputes over the ownership of the business and its assets. Issues within farming One of the most common disputes that arise in farming families from a lack of succession planning is a proprietary estoppel claim – briefly put this is where: A representation, promise, assurance or other encouragement by the defendant giving rise to an expectation by the claimant that he/she would have a certain proprietary interest. There is reliance by the claimant upon that expectation. Finally, the claimant suffers a detriment in consequence of his/her reasonable reliance on the promise. When can mediation help? During the planning discussions Getting to the actual discussion about succession is often the first hurdle. Farmers are often so busy running the farm that they don’t have time to think about succession planning and for many people having this sort of discussion doesn’t come easy. Family members don’t want to rock the boat – children don’t want to disappoint their parents by admitting they don’t really fancy running the farm. Parents may feel that they are forcing their children into running the farm, but then equally children can be insensitive with their new ideas for the farm, which can often lead to disputes with their elders. Having an open and honest conversation as early as possible – and before a problem arises, is the best course of action. The children may not want to carry on the farm, but by knowing this the parents can plan for their retirement and have something to aim for. Sometimes these discussions will get out of hand. Heated debate may take place and people may get offended and upset. Mediation enables an independent third party to come in and speak with all of those involved. The mediator can: Explore the goals of each family member and what they want to achieve Facilitate conversations between family members so that they understand what others feel and want Enable the family to come up with a way forward together Where no discussions have taken place and litigation ensues Proprietary estoppel cases are fuelled with emotion and often to lead to lengthy, bitter and very expensive litigation. Whist there are practical steps you can take to avoid claims such as avoiding making promises and succession planning, this isn’t always the case. If faced with a claim for proprietary estoppel the parties should consider the use of mediation over litigation as the advantages of using mediation include: Confidentiality – farming communities are small, and these cases are ripe for local gossip and media attention. Cost – a mediation costs between £1500 - £3000 per party vs legal costs of around £100,000 if it went to trial. Speed – the mediation can be arranged within a few weeks and dealt with in one day - in comparison to the time it will take to bring the matter to trial (at least a year) and a possible 3 to 5 day hearing. The parties decide on the solution rather than a Judge making a decision (which often suits neither party).
Despite popular opinion they are not something which should be only considered in later life, or at the onset of an illness but right now to ensure your wishes will be respected should you lose mental capacity, be that temporarily or indefinitely. Lasting Powers enable you, the donor, to appoint someone you know and trust to act in your best interest, when you are unable to do so. Their purpose is to promote your independence. Most attorneys will be appointed family members – children and grandchildren. Families do not always agree on things, and this will be no exception when it comes to making decisions as an appointed attorney. What can cause issues? • Underlying family tensions o The initial appointment of the attorney(s) may have exacerbated tensions between family members, with some questioning why they were only appointed as replacement attorney for example. • Lack of consensus of agreement between attorneys • Lack of agreement between attorney(s) and other family members • Lack of agreement/consultation between attorneys, family members and medical professionals • Lack of inclusion/consultation with the donor What kind of disputes can arise? • Accommodation decisions • Financial management • Property management • Care/treatment decisions • Gifts Family disputes can increase the risk to the donor as the disputes may mean that not all decisions are being made in the donor’s best interests, which can have a negative effect on the donor’s care, health and wellbeing. The Court of Protection and the Mental Capacity Act Code of Practice encourage those involved in an attorney dispute to attempt mediation. The mediator must have regard to the Mental Capacity Act 2005 (“MCA”), and one of the areas where mediation helps rebalance the power between donor and attorney(s) is that any settlement must comply with Section 4 of the MCA: “a decision made for a person who lacks capacity must be made in the best interests of that person” Mediation is ideal when people are not communicating well or not understanding each other‘s point of view. It can improve relationships and stop future disputes, so it is a good option for attorneys as it is in their interest to maintain good relationships in the future. Mediation • ensures issues are addressed in the best interests of the donor • involves the donor and takes into account their wishes and feelings • supports the donor in making decisions • enables parties to communicate effectively and understand each other’s points of view • likely cheaper than going to the Court of Protection
The latest Arcadis Global Construction Disputes Report 2020 has revealed that the average time taken to resolve construction disputes in the UK has fallen by 23% to just 9.8 months (previously 12.8 months). This reduction in time doesn’t correspond to a reduction in the average value of disputes, which have remained constant. So why is the average length of dispute in the UK the lowest in the world? The report looked at how the UK deals with its construction disputes with the top 3 most common methods pf resolving a construction dispute being: 1. Adjudication 2. Party to Party negotiation 3. Arbitration So why doesn’t mediation make the top 3? Mediation has lost its place in the top 3, having been overtaken by Arbitration – most likely due to the introduction of new low-cost schemes, such as the Chartered Institute of Arbitrators’ Business Arbitration Scheme. Efforts have been made to encourage the early use of dispute resolution in the construction sector – such as the Construction Industry Council’s Model Mediation Agreement and Procedure, but this doesn’t seem to have made much of an impact. Mediation offers a lower cost and a quicker option to those involved in the construction industry, so perhaps in time and with ongoing education as to the benefits more will come to use it. Whatever the method – alternative dispute resolution is here to stay, and the construction industry success certainly serves as a shining example.
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We like to think we will always be around. Unfortunately, our inability to confront our own mortality can have a disastrous effect on those closest to us and our businesses. All businesses need to deal with succession, but farming families are particularly vulnerable to the effects of failing to deal with succession. Why is succession planning so important within farming? One of the main reasons is that children are often involved in working on the family farm and there is this unwritten understanding that one day all of this will be yours. Farming families are also notorious for not having partnership agreements in place, which again can leave the business open to potential disputes over the ownership of the business and its assets. Issues within farming One of the most common disputes that arise in farming families from a lack of succession planning is a proprietary estoppel claim – briefly put this is where: A representation, promise, assurance or other encouragement by the defendant giving rise to an expectation by the claimant that he/she would have a certain proprietary interest. There is reliance by the claimant upon that expectation. Finally, the claimant suffers a detriment in consequence of his/her reasonable reliance on the promise. When can mediation help? During the planning discussions Getting to the actual discussion about succession is often the first hurdle. Farmers are often so busy running the farm that they don’t have time to think about succession planning and for many people having this sort of discussion doesn’t come easy. Family members don’t want to rock the boat – children don’t want to disappoint their parents by admitting they don’t really fancy running the farm. Parents may feel that they are forcing their children into running the farm, but then equally children can be insensitive with their new ideas for the farm, which can often lead to disputes with their elders. Having an open and honest conversation as early as possible – and before a problem arises, is the best course of action. The children may not want to carry on the farm, but by knowing this the parents can plan for their retirement and have something to aim for. Sometimes these discussions will get out of hand. Heated debate may take place and people may get offended and upset. Mediation enables an independent third party to come in and speak with all of those involved. The mediator can: Explore the goals of each family member and what they want to achieve Facilitate conversations between family members so that they understand what others feel and want Enable the family to come up with a way forward together Where no discussions have taken place and litigation ensues Proprietary estoppel cases are fuelled with emotion and often to lead to lengthy, bitter and very expensive litigation. Whist there are practical steps you can take to avoid claims such as avoiding making promises and succession planning, this isn’t always the case. If faced with a claim for proprietary estoppel the parties should consider the use of mediation over litigation as the advantages of using mediation include: Confidentiality – farming communities are small, and these cases are ripe for local gossip and media attention. Cost – a mediation costs between £1500 - £3000 per party vs legal costs of around £100,000 if it went to trial. Speed – the mediation can be arranged within a few weeks and dealt with in one day - in comparison to the time it will take to bring the matter to trial (at least a year) and a possible 3 to 5 day hearing. The parties decide on the solution rather than a Judge making a decision (which often suits neither party).
Despite popular opinion they are not something which should be only considered in later life, or at the onset of an illness but right now to ensure your wishes will be respected should you lose mental capacity, be that temporarily or indefinitely. Lasting Powers enable you, the donor, to appoint someone you know and trust to act in your best interest, when you are unable to do so. Their purpose is to promote your independence. Most attorneys will be appointed family members – children and grandchildren. Families do not always agree on things, and this will be no exception when it comes to making decisions as an appointed attorney. What can cause issues? • Underlying family tensions o The initial appointment of the attorney(s) may have exacerbated tensions between family members, with some questioning why they were only appointed as replacement attorney for example. • Lack of consensus of agreement between attorneys • Lack of agreement between attorney(s) and other family members • Lack of agreement/consultation between attorneys, family members and medical professionals • Lack of inclusion/consultation with the donor What kind of disputes can arise? • Accommodation decisions • Financial management • Property management • Care/treatment decisions • Gifts Family disputes can increase the risk to the donor as the disputes may mean that not all decisions are being made in the donor’s best interests, which can have a negative effect on the donor’s care, health and wellbeing. The Court of Protection and the Mental Capacity Act Code of Practice encourage those involved in an attorney dispute to attempt mediation. The mediator must have regard to the Mental Capacity Act 2005 (“MCA”), and one of the areas where mediation helps rebalance the power between donor and attorney(s) is that any settlement must comply with Section 4 of the MCA: “a decision made for a person who lacks capacity must be made in the best interests of that person” Mediation is ideal when people are not communicating well or not understanding each other‘s point of view. It can improve relationships and stop future disputes, so it is a good option for attorneys as it is in their interest to maintain good relationships in the future. Mediation • ensures issues are addressed in the best interests of the donor • involves the donor and takes into account their wishes and feelings • supports the donor in making decisions • enables parties to communicate effectively and understand each other’s points of view • likely cheaper than going to the Court of Protection
