Why Mediation ?

Mediation is a means of resolving disputes through a neutral third party. In a time-limited engagement, the Mediator will assist both parties to reach an amicable resolution by providing each party with a better understanding of each other’s position so they can negotiate a mutually acceptable settlement.

 

Our panel of mediators will identify ways of settling a dispute that is acceptable to both parties and avoids the delay and expense of waiting for a court or tribunal hearing. Either in person, or using leading-edge video conferencing technology, mediation can be usually be arranged within a week and concluded within a day at a cost that is a  fraction of the cost of running a dispute to trial.

Our expertise is in the mediation of civil and commercial disputes, including everything from simple disputes about money outstanding to complex contractual disputes; from insurance claims or disagreements about policy cover to arguments concerning building construction, properties or boundary disputes; and from employment contracts to landlord and tenant disagreements,  whether they relate to property repairs, disputes regarding a lease or threats of eviction. We also offer mediation service relating to workplace and employment disputes.

Is Mediation Effective ?

Mediation is effective compared with the alternative of conducting contested litigation through to trial. Litigation is generally expensive, it can take a year or more to conclude and carries a high degree of risk where adversarial behaviour inspires those in dispute to take unrealistic entrenched positions often at considerable cost.  The objections to mediation are many but they are rarely a legitimate basis to justify avoiding what is a more effective attempt to resolve a dispute where the issues are often quite narrow.

 

The argument from those in dispute that there is too big a gap on liability or on the value of the claim is not a sufficient reason to avoid allowing a neutral individual to help identify and lead the parties to a commercially acceptable solution. Mediation is not adjudication or arbitration where the outcome is imposed on the parties by somebody acting as a judge. Mediation is consensual and a mediator has a developed skill set used to enable the parties to reach a common ground, a position where agreement becomes increasingly likely as objections are peeled away. Mediation is also risk free. At any point in a mediation, either party can terminate the process and faces no risk of being compelled to accept an offer of settlement if it is not mutually agreeable.
 

Increasingly, the introduction of an impartial and neutral third party, able to promote a discussion in a safe and protected environment, is something that the Courts recognise as a necessary and important part in either avoiding litigation or in finding a solution without the need to proceed to a trial.

Misconceptions

Many litigants, in civil or commercial disputes, will mistakenly take too robust a view of their prospects of success at trial as the basis for avoiding a mediation. The upshot of all of the judgements considered in the legal analysis below is, however intractable the dispute may appear to be, or however confident the parties are as to the likely outcome, that even if the CPR falls short of compelling the parties to mediate, the perils in cost penalties for those who ignore such invitations ought to be sufficient to bring them into line. Even if one party wins hands down, an unreasonable refusal to mediate will impact upon the costs recovery. The victory will be pyrrhic if the outcome ends up costing more than the recovery.

 

The same considerations apply where the parties claim to have established their “bottom line” with a considered Part 36 offer. Taking that approach will not impress the Court in any subsequent trial, but it also misses the value of a neutral third party and the skills they can bring to bridge the gap and help the parties identify the basis of settlement. In addition, suggestions that the costs of mediation would be too high relative to the cost of litigation is wholly misconceived. Compared to the cost of mediating a dispute, there is no basis on which running a dispute to trial could possibly be considered to be more cost-effective than mediation.  Likewise, arguments that mediation is unlikely to succeed or that it would be impossible to mediate because the parties are too entrenched or distrust each other, entirely misperceives the value, skills and outcomes that a competent, accredited and qualified mediator can bring to the dispute.

 

Mediation is effective because it offers a safe mechanism to resolve disputes more quickly, at lower cost and with less risk than running a claim to trial. 

For the lawyers...

The Courts expect, and case law demands, that the parties in a dispute consider alternative methods of resolving a dispute with the risk of incurring a significant costs sanction for failing to do so.

In the 2013 case of PGF II SA v OMFS Co and Anr1 [2013] EWCA Civ 1537, the Court of Appeal made clear that “silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable...” Lord Justice Briggs said that:

 

this case sends out an important message to civil litigants, requiring them to engage with a serious invitation to participate in ADR, even if they have reasons which might justify a refusal . . . The court’s task in encouraging the more proportionate conduct of civil litigation is so important in current economic circumstances that it is appropriate to emphasise that message by a sanction which, even if a little more vigorous than I would have preferred, nonetheless operates pour encourager les autres.

 

Whilst emphasising the need for the courts to encourage parties to embark on ADR and stating that silence in the face of an invitation to participate should, as a general rule, be treated as unreasonable regardless of whether a refusal to mediate might in the circumstances have been justified, Briggs LJ did not say that a failure to engage, even if unreasonable, automatically results in a costs penalty. It is simply a factor to be taken into account by the judge when exercising his costs discretion.

 

Lord Justice Jackson said that the trial Judge’s order was a “tough” one, but within the proper ambit of his discretion and Lord Justice Briggs said:

 

The message which this court sent out in PGF II 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.

 

In Burgess v Penny & anr. [2019] EWHC 2034 (Ch), the judge had to decide what costs order to make in what she described as “Highly contentious litigation” which had left two sisters no longer speaking to their brother. In reaching her decision, the judge made clear that she had in mind CPR 44.2(4), namely the conduct of the parties and whether the defendants had been unreasonable in their complete refusal to mediate. In her view they had:

 

But mediation should not be 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…. Refusal to mediate because one party cannot obtain something which even complete success in the litigation cannot guarantee (the admission the defendants wanted) was in this case unreasonable. Granting the defendants any part of their costs out of the estate would be an encouragement to obduracy."

 

The price that the defendants paid for their unreasonableness was that payment of their costs would come out of their inheritances, rather than out of their late mother’s estate before distribution.

 

In DSN v Blackpool Football Club Ltd [2020] EWHC 670 (QB), Mr Justice Griffiths gave guidance on the appropriateness of mediation when the defendant refused to engage because they were confident they could do better at trial.

In summary, the Defendant in this case failed and refused to engage in any discussion whatsoever about the possibility of settlement. It did not respond to any of the three Part 36 offers (except to reject the final one). It was required by paragraph 4 of the Order of Master McCloud "to consider settling this litigation by any means of Alternative Dispute Resolution (including Mediation)".

 

It was warned by the same Order that if it did not engage in any such means proposed by the Claimant it would have to give reasons, and it was also warned that the reasons it gave might in due course be shown to the trial judge when the question of costs arose.

 

The reasons given for refusing to engage in mediation were inadequate. They were, simply, and repeatedly, that the Defendant "continues to believe that it has a strong defence". No defence, however strong, by itself justifies a failure to engage in any kind of alternative dispute resolution. Experience has shown that disputes may often be resolved in a way satisfactory to all parties, including parties who find themselves able to resolve claims against them which they consider not to be well founded. Settlement allows solutions which are potentially limitless in their ingenuity and flexibility, and they do not necessarily require any admission of liability, or even a payment of money. Even if they do involve payment of money, the amount may compare favourably (if the settlement is timely) with the irrecoverable costs, in money terms alone, of an action that has been successfully fought. The costs of an action will not always be limited to financial costs, however. A trial is likely to require a significant expenditure of time, including management time, and may take a heavy toll on witnesses even for successful parties which a settlement could spare them. As to admission of liability, a settlement can include admissions or statements which fall short of accepting legal liability, which may still be of value to the party bringing a claim. In the present case, for example, I have already in my previous judgment commented (at [2020] EWHC 595 (QB) paras 188-189) on the opportunity missed by the Defendant at the very least to acknowledge and accept that the Claimant was sexually abused by Roper (it having no positive case to the contrary, and no evidence to support a case to the contrary). The passage in the Claimant's witness statement which I quoted in paragraph 188 of my previous judgment shows that the Claimant was not primarily motivated by money (and the low figure of his final Part 36 offer confirmed that). He "expected the club to want to engage and to understand what had happened". The club could have engaged with him (having received his statement, which was dated as long ago as 28 May 2019) without prejudice to what it presented at trial as its strongest defences: namely, that the claim was outside the limitation period and that the club was not vicariously liable for Roper's sexual abuse of the Claimant, even if that abuse were to be admitted. It did not engage at all."

 

"If the Defendant had been correct that it had "a strong defence", its responses to the Claimant's settlement overtures and the statement made in compliance with paragraph 4 of the Order of Master McCloud would still, in my judgment, have fallen short of an acceptable level of engagement with the possibility of settlement or Alternative Dispute Resolution. As Sir Geoffrey Vos C said in OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195 at para 39:

 

"The parties are obliged to make reasonable efforts to settle, and to respond properly to Part 36 offers made by the other side. The regime of sanctions and rewards has been introduced to incentivise parties to behave reasonably, and if they do not, the court's powers can be expected to be used to their disadvantage. The parties are obliged to conduct litigation collaboratively and to engage constructively in a settlement process."

 

As it turned out, the Defendant did not have a strong defence and lost the case. That alone would not justify an award of indemnity costs but the judge determined that their conduct did.

 

However intractable a dispute may appear to be, no matter how confident the parties are as to the outcome,  even if the CPR still falls short of compelling the parties to mediate, the perils in costs penalties for those who ignore such invitations ought to be sufficient to bring them into line. Even if a party wins hands down, an unreasonable refusal to mediate will impact upon your costs recovery, as was the case in Burgess v Perry. The victory will be pyrrhic if the case ends up costing more than the recovery.

info@mediationswork.com

 

Mediations Work Ltd

130  Old Street

London

EC1V 9BD

© Mediations Work Ltd; All rights reserved.