Mediation after Churchill is on the way, but can a party be sanctioned for attending a mediation without any intention of participating in the process?
It’s guaranteed! Mandatory mediation in Civil Litigation is coming, whether you like it or not, before the warring parties can have their day in court.
The evidence for this is both overt and covert.
First, the overt. The now official, (as in government supported) way to keep litigants out of court, is to compel them to settle their differences before they end up at a trial. That is where Alternative Dispute Resolution (ADR) comes in. The government’s intention in this respect is now clear: rule changes to the Civil Procedure Rules 1998 (CPR) (see below) will be made so that parties will be forced to use ADR before they can say to their opponent “See you in court”.
Second, the covert. Whilst successive governments have banged on about “access to justice” and the need for Davids to be able to take on Goliaths without fear of ruin if it all goes wrong in court, their real aim has been to prevent parties in dispute from ending up court. The reason for that has been cost. Not cost to the parties, but cost to the public purse in having to run and maintain the courts and their infrastructures. Thus, in the past two decades, we have seen multiple closures of County Courts to save money: for example, the county of Norfolk stretching 2,074 square miles, now has only one combined court centre at Norwich. Only a politician could believe that pursuing such a course of action has actually improved access to justice. The public knows that closures are simply about penny pinching and it may get worse, for the government now has another string to its bow- ADR. That said, ADR has many real attributes apart from potential costs saving for the government.
What is ADR?
The glossary to the CPR describes ADR as:-
“a collective description of methods of resolving disputes otherwise that through the normal trial process”
The best known form of ADR is mediation is concerned, in Burgess v Penny [2019] Costs LR 1453, Catherine Newman QC gave this view about mediation:-
“…. mediation is not just about one side getting what they want. That is a misconception of the purpose of mediation. Mediation should be about attempting to reach a solution which both parties can live with as a better alternative to litigation.”
Why is ADR, and mediation in particular, prominently now on the government’s radar?
The answer is the Court of Appeal’s decision in Churchill v Merthyr Tydfil [2024] Costs LR 249. Vos MR held that the court can exercise its discretion to order the parties to engage in ADR, and to stay the proceedings until they do so, provided that it is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.
It is clear that Churchill was a mightily encouraging read for the government, as the judgment has provided a judicially approved route to compel litigants to use ADR before the doors of the court will be opened to them at public expense. Thus, and very promptly, the government announced a Civil Procedure Rule Committee (CPRC) consultation operational until 26 May 2024 (see- https://assets.publishing.service.gov.uk/media/661e2f2c0b9916e452bd3d4a/adr-consultation-document.pdf ), which invites views about whether : –
(i) the overriding objective of dealing with cases justly and at proportionate cost under CPR 1.1 should be amended to add that ADR is a key part of that process
(ii) CPR 1.4 and 3.1 be amended to clarify that a judge can order parties to engage in ADR and that under CPR 28 and 29, the court must do so.
(iii) CPR 44 be amended to add that failure to comply with an order for ADR will sound in conduct when the court is deciding what order a judge should make about costs
Given that the one certain thing about consultations is that they consult upon matters about which the government has already made up its mind, we can be confident, therefore, that during the summer, the CPRC will be given the task of amending the CPR in the way envisaged in the consultation.
More encouragement for the government can be found in the just-handed-down decision of the Court of Appeal in Sherman (see [2024] EWCA Civ 412).
The court was concerned with a dispute about a ruined dream holiday to Alaska costing £20,000, which so far has involved eleven days of court hearing time. Troubling for the Court of Appeal was that its decision is not, in fact, the end. On the contrary, it is only the end of the beginning because the appeal has only disposed of liability: the quantum of the holidaymakers’ claim has had to be remitted to the County Court for an assessment of damages, taking up, to the chagrin of the Lords Justices, yet more court time. As Asplin LJ put it somewhat woefully:-
“I agree with the reasons for dismissing the appeal which my Lord, Lord Justice Males, has set out. I reiterate his comments about proportionality. I too urge the parties to reach a pragmatic settlement with or without the assistance of a third party mediator. At this stage, after a total of eleven days before the court plus all the preparation for the hearings, it must be in the interests of both parties to settle this matter rather than embark upon another hearing which is unlikely to be particularly short.”
What Males LJ had said was that:-
“‘At all stages the parties must consider settling this litigation by any means of Alternative Dispute Resolution (including Mediation)’. Such orders are now increasingly common and must be taken seriously. “
The way that the wind is blowing is thus clear: in whatever track or court the case is proceeding, the parties must engage in ADR if ordered to do so, and an unreasonable refusal to do so will result in a costs sanction -see Halsey v Milton Keynes General NHS Trust [2004] 3 Costs LR 393.
That, however, gives rise to another question. What happens if both sides agree to mediate, but for one party, it is just pretence, with no intention of participating constructively in the process?
You can take a horse to water, but…
Mediation is a confidential process. You can order it, but the court cannot compel the parties to drink the water of compromise. If the process fails because one party turns up for appearances sake only, on the basis that the judge can be told later “We tried very hard but we failed”, what can the other party do about it without breaching any confidence?
Therein lies a problem. Mediation agreements provide that what is said at the mediation, stays at the mediation, and documents and without prejudice discussions and admissions, cannot be revealed later to the judge if the mediation fails.
Is there a solution? It is hard to see how the point can be addressed, although there is precedent to establish that a party who does not engage in the process does so at his peril as to costs. In Malmesbury (James Carleton, Seventh Earl of Malmesbury) and Others v Strutt & Parker (a Partnership) [2008] 5 Costs LR 736, Jack J had this to say at [72]:-
“As far as I am aware the courts have not had to consider the situation where a party has agreed to mediate but has then taken an unreasonable position in the mediation. It is not dissimilar in effect to an unreasonable refusal to engage in mediation. For a party who agrees to mediation but then causes the mediation to fail by his reason of unreasonable position in the mediation is in reality in the same position as a party who unreasonably refuses to mediate. In my view it is something which the court can and should take account of in the costs order in accordance with the principles considered in Halsey.”
However, parties should not be put off from mediating just because they fear that the opponent will not take the process seriously, and that it will be a waste of yet more costs. Mandatory ADR, and mediation in particular, is heading the way of the legal profession and their clients, whether that be as a means to settle the case or to resolve the costs of the action itself. At Kain Knight, we have ADR specialists at the ready, available for active service as soon as the CPR are amended, with the smart money on that happening on 1st October 2024. Be prepared!
Author, Colin Campbell, was a Costs Judge at the Royal Courts of Justice from 1996 to 2015 and before that, he sat as a Deputy Taxing Master from 1993 until taking up his permanent appointment. He was also a Costs Officer of the United Kingdom Supreme Court and of the Judicial Committee of the Privy Council from 2010 to 2015. In private practice, he was a partner in a London Solicitors’ practice specialising is commercial litigation. In 2011, he was called to the Bar. Following retirement, Colin now works for Kain Knight as a consultant. His role is to oversee the strong emphasis on learning and development, both internally and externally, and to ensure everyone in the firm is abreast of costs case law and practice developments.
Colin Campbell
Consultant to Kain Knight
Telephone: 01279 755 552
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