In this fast growing area of law, it is important for legal practitioners to keep apprised of legal developments and judicial trends vis-a-vis ADR. The Jackson ADR Handbook referred to below forms essential reading for anyone working in this sphere as it has a significant impact on the current judicial attitude towards mediation and ADR in general. I’ve listed three recent cases here of which practitioners ought to be aware:
The Court of Appeal confirmed that since Halsey v Milton Keynes General NHS Trust  1WLR 3002, an unreasonable refusal to engage in ADR is unreasonable conduct in response to which the court can order costs penalties. In deciding whether a refusal to engage in ADR is indeed unreasonable, the court refers to the non-exclusive guidelines that it has laid down and that have, ‘stood the test of time, and the crucible of application in subsequent reported cases’. It was however a feature of the two cases reviewed in Halsey that, ‘the refusing party had communicated its refusal to the inviting party, with succinct reasons for doing so.’
In this case, Mr Jonathan Seitler QC made the argument that, ‘silence in response to an invitation to participate in ADR was itself unreasonable regardless whether it amounted to a refusal, or whether there were reasonable grounds to refuse.’ In support of this novel argument, Mr Seitler relied on the contents and, ‘general thrust,’ of the ADR Handbook.
In confirming this argument, the Judge states at paragraph 34,
“In my judgment, the time has now come for this court firmly to endorse the advice given in Chapter 11.56 of the ADR Handbook, that silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable, regardless whether an outright refusal, or a refusal to engage in the type of ADR requested, or to do so at the time requested, might have been justified by the identification of reasonable grounds.”
The court therefore confirmed that failure to reply to an invitation to mediate will, as a general rule, be unreasonable and carry a costs penalty from the time the invitation was made.
A useful insight into the current thinking of the judiciary vis-à-vis the ADR Handbook can be found at the end of this judgment at paragraph 56:
“Finally, as is recognised by the weight placed on the judge’s decision in the passage in the ADR Handbook to which I have referred, 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, or the undertaking of some other form of ADR, or ADR at some other time in the litigation. To allow the present appeal would, as it seems to me, blunt that message. 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.”
The case involved an application by the claimant, Mr Barden that the Defendants pay a sum of £673,177.16 in alleged outstanding balance payable pursuant to a settlement agreement which was drawn up in the early hours following a mediation.
At paragraph 3, Vos J outlines, “The crucial clause 3 of the SA (“clause 3”) was headed “PAYMENT OF AGREED SUM” and provided that “[t]he CRU Parties shall by 4pm on 1 November 2012 pay £1,350,000 (the Settlement Sum) by telegraphic transfer into the Cheyney Goulding LLP client account at HSBC Bank…”
Mr Barden alleged that the Defendants were obliged to pay the full £1.35 million sum to him, and a further similar sum by way of PAYE income tax to HMRC. The Defendants counter argued that they were entitled and obliged to pay only a net sum to Mr Barden, having deducted PAYE income tax.
Rejecting Mr Barden’s claim, Vos J stated at paragraph 65:
“I have reached the clear conclusion that the SA is to be construed as meaning that the payment of £1.35 million due to Mr Barden should be paid net of any PAYE due to HMRC thereon. If I were wrong about that, I would have ordered common mistake rectification of clause 3 as set out in paragraph 62 above.”
This is a Family case in which the relevant passage regarding mediation can be found at paragraph 9:
“The mediation did not take place as agreement could not be reached as to the identity of an appropriate mediator and W accordingly made an application for a legal costs order. On 30 October 2013 Mostyn J refused her application, saying in his ruling that the W had been unreasonable in her approach to the mediation; first in her insistence on using a top-drawer and top-price mediator and secondly that her insistence on attendance of legal representatives at mediation was neither necessary nor reasonable; in my experience this would be unusual and arguably unhelpful. Mostyn J pointed out that there was still time for mediation to take place. Unfortunately it has not done so and out of this modest matrimonial pot H’s costs of the appeal are £22,320 and W’s £25,372.”
Produced in partnership with the ADR Group