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We have previously blogged about the costs consequences a party will face if it refuses to engage in mediation. But what about a case where a party initially refuses to mediate but then changes its mind?

The general rule is that following trial, the loser will pay the winner’s costs of the proceedings. That is, however, only a general rule and the Court has a discretion to displace it, taking various factors into account.

Details

In a recent case [1] the Claimant was successful in the substantive claim. Applying the general rule as to costs, this would mean that the Defendant would have to pay the Claimants’ costs of the proceedings. The Defendant argued, however, that there should be no order as to costs because the Claimants did not accept his offer to mediate. This refusal had been recorded on the Court file and it was the Defendant’s position that at that particular Court hearing the Master stated that that was “potentially a high risk strategy on the part of the Claimants”.

Perhaps unsurprisingly, following that particular hearing the Claimants changed their minds and agreed to mediate. However, by then, the Defendant felt that he was not ready to mediate, his position being that he first of all needed to comply with his disclosure and witness statement obligations; and then he would also need to spend time preparing for the mediation. The Claimants highlighted that the completion of their disclosure and witness statement obligations should not affect mediation (which can take place at any time) and that, “mediation is not a mock trial and a mediator will not decide the points in dispute”.

Based on this correspondence, following the trial of the substantive claim, the Judge stated that “It is apparent from this correspondence that the Claimants did have second thoughts about mediating…and the reason that the mediation did not happen is that Mr Bernard himself did not feel himself ready to mediate although he had wished to do so. This is therefore not a case in which it can be said that the Claimants failed to mediate“.

On this basis, it was his view that the Claimant did not have, “one and one opportunity only to mediate for the purposes of the costs rule“. To find otherwise would discourage parties from attempting to settle their disputes. Whilst the Claimants initially refused mediation they subsequently changed their minds and in the Judge’s view they should not be criticised for that initial refusal.

It is worth noting…

Each case turns on its own facts and the Court does have a wide discretion to displace the general rule. As such, whilst it is true that it is “never too late” to mediate, this does not necessarily mean that a Court will always make a costs award in favour of a party who initially refused to mediate but subsequently had a change of heart.

We would be interested to hear your views on this decision. Do you think it was fair that the Defendant was ordered to pay the Claimants’ costs in circumstances where he was initially amenable to mediation but later felt unable to engage? Or should there have been a split order? Please feel free to comment below.

For more information, email blogs@gateleyplc.com.

[1] Murray & Another v Bernard [2015] EWHC 2395 (Ch)


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.