Click here to read our latest news and articles addressing the impact COVID-19 is having on the construction industry

Failure to Mediate: A Reminder

By Victoria Russell, Fenwick Elliott

Reid v Buckinghamshire Healthcare NHS Trust [2015] EWHC B21 (Costs) (28 October 2015)

This was a clinical negligence case; Master O’Hare had to rule upon the Claimant’s entitlement to costs.

The Claimant’s solicitors had made two Part 36 Offers to settle, one in respect of all of the costs to be assessed and the other in relation to counsel’s fees, and prior to those offers had invited the Defendant’s solicitors to proceed to mediation. In the end, the Defendants failed to beat either offer, so the Claimant sought remedies pursuant to Part 36.17, together with further penalties having regard to the Defendant’s refusal to agree to mediation.

Master O’Hare said as follows:

“In respect of the Defendant’s failure to mediate, I think the only sanctions available for me to impose are to award costs on the indemnity basis and to award interest on those costs from a date earlier than today, today being the normal date. I am persuaded that the Defendant’s refusal to mediate in this case was unreasonable. It took six weeks to reply to the offer and they then replied in the negative. …

I want to end with a brief note of caution about sanctions imposed on parties who unreasonably refuse to mediate. Case law on this topic is largely about penalties imposed on parties who are in other respects the successful party. In Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576 and in other cases, penalties imposed upon winners. They do not involve the imposition of further penalties upon losers. One can see that throughout the judgment in Halsey. I will read out a sentence from paragraph 28:

“As we have already stated, the fundamental question is whether it has been shown by the unsuccessful party that the successful party unreasonably refused to agree to mediation.”

If the party unwilling to mediate is the losing party, the normal sanction is an order to pay the winner’s costs on the indemnity basis, and that means that they will have to pay their opponents costs even if those costs are not proportionate to what was at stake. This penalty is imposed because a court wants to show its disapproval of their conduct. I do disapprove of this Defendant’s conduct but only as from the date they are likely to have received the July offer to mediate”

Back to the previous page