Legal questions: mediation

Going to mediation

21 August 2015

Jacqui Joyce looks at the legal ramifications involved in a refusal to go to mediation in a dispute

I am in a dispute and the other party wants to go to mediation, but I don’t wish to – are there any legal ramifications if I refuse?

Parties who want to use the courts in England and Wales are subject to the Civil Procedure Rules, which set out the steps to take in litigation. These rules include the Practice Direction – Pre-Action Conduct (PDPAC). This provides that:

"Litigation should be a last resort… the parties should consider whether negotiation or some other form of alternative dispute resolution (ADR) might enable them to settle their dispute without commencing proceedings.

"‘Parties should continue to consider the possibility of reaching a settlement at all times, including after proceedings have been started."

One of the forms of ADR specifically mentioned is mediation.

The consequences

PDPAC also states that the court has power to impose sanctions on a party that has "unreasonably refused to use a form of ADR, or failed to respond at all to an invitation to do so."

The sanctions available include staying any proceedings, interest and costs penalties. There are many examples where the courts have imposed harsh costs consequences on parties who have unreasonably refused to mediate, e.g. not recovering costs to which they would otherwise be entitled and having to pay costs on an indemnity basis.

Reasons given by parties that have been held by the courts to be unreasonable reasons to refuse to mediate include:

  • wanting your 'day in court'
  • having to 'accept guilt'
  • failure of a previous mediation between the same parties on another dispute
  • wanting disclosure or expert evidence first
  • considerable dislike and mistrust between the parties
  • belief in a 'watertight' case
  • wide gulf on amount
  • costs of mediation are disproportionate to the sums involved
  • ignoring an offer to mediate is itself an unreasonable refusal.

Compulsory mediation

In Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, the Court of Appeal decided that to oblige truly unwilling parties to refer their dispute to mediation would be an unacceptable obstruction on their right of access to the court and a violation of Article 6 of the Human Rights Convention.

However, more recently, in Wright v Wright [2013] EWCA 234, one of those judges, Sir Alan Ward, intimated very strongly that he has changed his mind, stating: "Perhaps it is time to review the rule in Halsey…" He questioned whether a stay of proceedings to try mediation is really an unacceptable obstruction to the parties' right of access to the court if they had to wait a while before being allowed across the court's threshold. He even went so far as to invite "some bold judge" to rule on these questions so that "…the court can have another look at Halsey in the light of the past 10 years of development in this field".

More recently, in Bradley v Heslin [2014] EWHC 3267 (Ch), which was an argument about a pair of garden gates in Formby, Mr Justice Norris suggested a form of wording for directions in boundary disputes and rights of way disputes, which in effect, would make it compulsory to attempt mediation in such cases. He said:

"I think it is no longer enough to leave to the parties the opportunity to mediate and to warn of costs consequences if the opportunity is not taken. In boundary and neighbour disputes the opportunities are not being taken and the warnings are not being heeded, and those embroiled in them need saving from themselves. The court cannot oblige truly unwilling parties to submit their disputes to mediation: but I do not see why directing the parties to take (over a short defined period) all reasonable steps to resolve their dispute by mediation before preparing for a trial should be regarded as an unacceptable obstruction on the right of access to justice."

The benefits

It is clearly a big risk for a party to refuse to mediate and there can be huge benefits to mediating. Mediating is much quicker and cheaper and the parties can agree solutions that a court could never order. Mediations are generally confidential and enable the parties to preserve relationships and move forward to concentrate on their businesses and/or lives.

The latest figures state that 86% of mediated cases result in a successful outcome with 75% settling on the day of the mediation. Also that mediations save businesses around £2.4bn a year in wasted management time, damaged relationships, lost productivity and legal fees. That surely has to be worth considering.

Jacqui Joyce is a founder member of The Property Mediators and Chair of the RICS Mediation Guidance Note Working Group

Further information

This feature is taken from the RICS Property journal (July/August 2015)