I hope to have God on my side, but I must have Kentucky.
-Abraham Lincoln
I have been watching the American presidential election with interest for the last few weeks, and the serial car crashes experienced by Mr Trump’s legal team, in various American courts litigating his attempts to alter the balance of votes cast.
Truly, the United States and the United Kingdom, are two countries divided by a common language. A particular image that will remain in my mind, is the demonstration outside a polling station in Arizona shown on TV, where the demonstrators were armed to the teeth, and carrying machine guns.
Much of the vitriol released in the media about Trump’s refusal to concede the election, prior to the formal declaration of the result, has interesting parallels in the Brexit controversy in our own country.
Then there was a palpable refusal to accept the result of a close election, on the part of the 48% of the electorate who lost the referendum and arguments that dragged on for years, rather than the weeks of the American election.
But all things pass.
This week I attended (remotely) the Law Society Commercial Litigation Conference to speak about the judicial push towards mediation, where there is a discernible trend in the caselaw to inflict costs penalties at the end of a case, for those parties who decide that mediation would be a waste of time, or do not condescend to reply to their opponents requests for a mediation.
By mediation, I mean the process described by CEDR as “a flexible process conducted confidentially in which a neutral person actively assists the parties in working towards a negotiated agreement of a dispute or difference, with the parties in ultimate control of the decision to settle and the terms of the resolution.” Mediation is one type of Alternative Dispute Resolution (ADR), the deployment of which is now part of the Civil Procedure Rules.
Rule 1.4 CPR as part of the overriding objective notes the court will:
(e) encouraging the parties to use an alternative dispute resolution(GL)procedure if the court considers that appropriate and facilitating the use of such procedure
And has also taken on board to supplement mediation and other more traditional forms of ADR the process of early neutral evaluation in rule 3.1(m):
(m) take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an Early Neutral Evaluation with the aim of helping the parties settle the case.
In practical terms, the court will consider inflicting costs penalties, on parties who unreasonably refuse to engage in mediation (or some other form of ADR). The leading case on when a refusal to engage in mediation is reasonable or not, remains that of Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 where the Court of Appeal explained that the reasons which might justify the refusal of an offer of mediation included:
(a) The nature of the dispute. Some types of case might be simply unsuitable for mediation.
(b) The merits of the case. A mediation might be a waste of time where the merits of a party’s case were very strong.
(c) Other settlement methods have been attempted. And failed.
(d) The costs of mediation would be disproportionately high. Particularly if the costs of a trial then had to be added on, as well.
(e) Delay. Whether the mediation would cause delays in the court process.
(f) Whether the mediation had a reasonable prospect of success. Although this might involve a difficult evaluation of what might have happened.
The guidelines were modestly extended in the case of PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288 where the Court of Appeal decided that silence in the face of a reasonable request for mediation could also be unreasonable.
The Court of Appeal however seemed to sound a retreat from this approach in the case of Gore v Naheed [2017] EWCA Civ 369 where the judge at first instance refused to apply a costs penalty for failing to engage with mediation and instead Patten LJ opined:
Speaking for myself I have some difficulty in accepting that the desire of a party to have his rights determined by a court of law in preference to mediation can be said to be unreasonable conduct particularly when, as here, those rights are ultimately vindicated.
In November 2018 the Civil Justice Council issued its Final Report on ADR: significantly the authors of that report noted:
It is with greatest deference that we offer any criticism of the carefully considered guidance given by the Court of Appeal on a case management issue. But that is where we find ourselves and it is significant that some of the feedback we received seeking clarification of the inconsistencies in recent Court of Appeal decisions came from the judiciary.
The Working Group put forward a number of recommendations including a revised and considerably narrower list of what might be good reasons for refusing mediation:
(1) The parties have already attempted mediation (or possibly ENE or some other form of ADR) without success.
(2) The parties are already committed to an ADR process in the near‐ term.
(3) The parties (or a party) satisfy the Court of a need to wait (often until after disclosure) for any meaningful negotiations to take place, but they will commit to using ADR at that stage if the case has not otherwise settled.
(4) There has been unreasonable or obsessive conduct by one or other party (of the Hurst v Leeming Variety).
(5) There is a genuine test case in which the court’s judgment on an issue of principle is required.
They also went on to say what they considered did not amount to “good reasons” for refusing mediation:
In our combined experience of the way ADR and in particular mediation has worked in complex and entrenched disputes, we do not think that any of the following are acceptable opt‐outs:
(1) That the case appears complex (this seemed to be accepted as in part justifying a refusal to mediate in Gore v. Naheed).
(2) That the case involves serious issues such as fraud.
(3) That the ADR process appears to be unlikely to succeed.
(4) (Given the increasing flexibility of the ADR offering) that the cost of ADR is too great.
(5) That one or other party believes he or she has a strong case.
Recently there have been a string of first instance decisions whereby fairly stringent costs penalties have been applied to parties who refuse to engage in mediation: including DSN v Blackpool Football Club Limited (1) and BXB v Watch Tower and Bible Tract Society Ofpennsylvannia, Trustees of the Barry Congreation of Jehova’s Witnesses.
Both of these cases concerned allegations of sexual abuse: hitherto, it may have been thought that this was a type of case, where mediation had little prospect of success: whether the abuse occurred or not, would appear to be one of those issues forming a chasm between the parties. But in each case a failure to engage in mediation proved to be an expensive course.
Looking forward, it would appear that the move to ADR is part of a culture shift which is accelerating, not least because of the current demands on the court system, and also I suspect because of a generational shift amongst the judges.
The influence of the ADR working party is probably also discernible, in the decisions at first instance. It may also be that a key factor is working ADR into the court timetable: in which case failure to engage in ADR, is failure to comply with a court order.
It follows that genuine requests for mediation, have real force in relation to potential costs outcomes at the end of the case. That in turn means that those requests must be considered genuinely, and any letters written by either side, should be written, as ever on the premise, they may be read out in court, two years after they were written.
Returning to America: for an interesting exposition on mediation in the United States, here’s Jonathan Pollard:
Where one party has far greater resources than the other and the more monied party refuses to mediate, there must be a presumption that this party cannot recover any costs, save in exceptional circumstances.