Civil Mediation: “Get On With It”

In the case of Thakkar and Another v Patel and Another [2017] EWCA Civ 117, the Court of Appeal has given further credence to the risks parties face by not committing to mediation as an alternative to having their dispute resolved by the court at trial.

Mediation is an alternative to litigation when resolving disputes in which a trained third party mediator assists the parties to negotiate a compromise. The process is flexible and agreed by the parties and there is no obligation to accept any terms suggested. Mediation is however statistically very successful in assisting the parties reaching a reasonable settlement and in avoiding the inherent risks and costs of a trial.

In summary the facts of the case were:-

1. A Landlord made a £210,000 dilapidation’s claim against its Tenant, who brought a £41,875 counterclaim.
2. The Tenant made an offer to settle the claim and counterclaim for £30,000 plus costs which was not accepted and withdrawn in August 2011.
3. Both parties stated they would mediate, but only the Landlord was pro-active in making any arrangements over the next year. The Tenant delayed for so long that the Landlord gave up on the process.
4. At trial the Judge awarded a balance in favour of the Landlord in the amount of £28,692.55 (including interest as of August 2011).
5. Ordinarily the Tenant might have expected an order that the Landlord pay his substantial costs of the action post its August 2011 offer, given the offer was better than the final award, however whilst the Landlord was ordered to pay the costs of the counterclaim the Judge ordered the Tenant to pay 75% of the costs of the claim, and criticised the Tenant for his unenthusiastic attitude to mediation particularly as if mediation had taken place it was likely the matter would have settled.
6. The Tenant appealed to the Court of Appeal

The Court of Appeal Decision

The Court of Appeal dismissed the appeal and the Judge, Jackson LJ commented:-

“In my view that was a tough order, but it was within the proper ambit of the judge’s discretion. I would therefore dismiss this appeal.

The message which this court sent out in PGF II v OMFS Company [2013] EWCA Civ 1288 was that to remain silent in the face of an offer to mediate is, absent exceptional circumstances, unreasonable conduct meriting a costs sanction, even in cases where mediation is unlikely to succeed. The message which the court sends out in this case is that in a case where bilateral negotiations fail but mediation is obviously appropriate, it behoves both parties to get on with it. If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction. In the present case, the costs sanction was severe, but not so severe that this court should intervene.”

Comment

There is nothing new in this. It has been clear for a long time that not engaging in settlement discussions and particularly a suggested mediation is likely to provoke the court into making adverse costs orders against you regardless of the outcome of the case.

Whilst the risk of such cost sanctions however is reason alone to mediate, the foremost reason must surely be that the case will likely be resolved by mediation, on terms reasonable to the risks of the case, much sooner, and more cheaply than ploughing on to trial (in this case for example for several years, and at a cost of nearly £300,000).

At Nelsons we are committed to finding solutions to disputes wherever possible, and we regularly use mediation to achieve successful outcomes for clients.

How can we help?

If you have any queries on the above subject, please contact our expert Dispute Resolution team on 0800 024 1976 or contact us via our online enquiry form.