Monday, 1 June 2020

Wales (t/a Selective Investment Services) v CBRE Managed Services Ltd & Aviva

[2020] EWHC 1050 (Comm)

This was a judgment on costs following the dismissal of Mr Wales’s claims. CBRE had not provided a detailed response to the original letter of claim. Further their response did not deny allegations that had been made about termination, something which HHJ Halliwell considered to be “unfortunate as it could only have encouraged Mr Wales in his erroneous impressionthat CBRE had purported somehow to terminate his contract”. 

Both Mr Wales and Aviva indicated a willingness to mediate. However, CBRE said they would not participate in the proposed mediation. This led Aviva to state that it had concerns about the viability of a mediation without CBRE and that such a mediation would be “premature”. Aviva’s position changed slightly, just after receiving notice that Mr Wales was about to issue proceedings, in that it said it would participate in a mediation provided CBRE did as well. This was not enough to stop Mr Wales proceeding. 

Aviva suggested for the CMC that the provision for a stay to mediation be deleted from the standard directions on the basis that the “proposed timetable allows sufficient time for the parties to engage in ADR and settlement discussions once issues surrounding clarification of the parties’ pleadings have been resolved”. As required, CBRE’s solicitor filed a statement explaining why CBRE had not engaged in ADR, stating that it was “premature” to consider arranging a mediation pending the conclusion of pleadings. 

The case proceeded and at the end of May 2019, Mr Wales’ solicitors proposed mediation. Again, Aviva said they were willing and suggested 17 or 19 June 2019, but there was no reply from CBRE who later said there was insufficient time to prepare as the mediation would have interfered with their preparations needed to comply with the court timetable. There were also factual issues in dispute. Witness statements were exchanged on 21 June and there was no further suggestion of mediation.

Following the trial, CBRE and Aviva were successful and so Mr Wales would usually be ordered to pay their costs unless there was good reason to the contrary. 

HHJ Halliwell agreed that there was good reason to show that CBRE had unreasonably refused or declined to participate in ADR. This failure was compounded by CBRE’s failure to provide a detailed response to the letter of claim in breach of the requirements of the Practice Direction for Pre-Action Conduct and Protocols. This meant that the parties were denied the opportunity to fully canvass and engage with the underlying issues. Had CBRE been willing to engage in mediation, there would in all likelihood have been a tripartite mediation in which all the material issues were properly considered and addressed. The Judge also noted that many mediations were successfully concluded without witness statements and there was no reason to believe there were features of the current dispute which would dictate a different outcome. 

The Judge was therefore satisfied that CBRE should be deprived of a substantial proportion, 50%, of its costs in the period up to the date when CBRE made an offer to compromise the proceedings. The Judge considered that in acting in this way, CBRE had “opened negotiations” and it was incumbent on Mr Wales to explore the available settlement options with them. However, this changed when CBRE again refused to engage in mediation at the end of May 2019. From this period the Judge disallowed 20% of CBRE’s costs. This was in part because the landscape had changed, in that CBRE’s and Aviva’s case had become stronger, although this did not mean that a mediation would have been unsuccessful.

The Judge also deprived Aviva of a part of their costs. This was because they made a late amendment which substantially altered the case Mr Wales had to meet. This not only shaped Mr Wales’ initial approach to the case but also led to changes to the pleadings and wasted costs as a result of those changes. The Judge reduced Aviva’s costs by 20% up until the date of the amendment.

However, it was not unreasonable of Aviva to decline to participate in a mediation. Aviva repeatedly indicated a willingness to engage in the mediation process. Further, Aviva “reasonably” took the view that, in the absence of CBRE, the prospects of achieving a satisfactory compromise or substantially reducing the relevant issues would be substantially diminished. Ultimately it was not prepared to enter into a bilateral mediation with Mr Wales in the absence of CBRE. However, in this respect, it did not act unreasonably at any stage of the dispute. 

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