Costs penalties for losing parties who refuse to Mediate

Liam O’Shea, Director and Solicitor in Astle Paterson’s Dispute Resolution department discusses the recent ruling by a Court in relation to Costs where one party has refused to engage in Alternate Dispute Resolution (ADR).

Liam said “In the recent case of Reid v Buckinghamshire Healthcare NHS Trust, the Court has recently sent a strong message to litigants – ignore or refuse to accept offers to seek to resolve matters through Mediation or ADR at your peril.

In Reid, the Court ordered that the losing party should not only bear the winner’s legal costs – but that they pay them on the indemnity basis.  This will mean the losing party will most likely end up paying more money toward the otherside’s legal costs than if the Court had ordered they pay then on the normal ‘standard’ basis.

The reason for the Court’s stance related to the losing party’s unreasonable conduct when it took them six weeks to respond to an invitation to Mediate and, when they finally did so, their response was simply to refuse the invitation.”

Liam continued “The Judge said ‘If the party unwilling to mediate is the losing party, the normal sanction is an order to pay the winner’s costs on the indemnity basis, and that means that they will have to pay their opponent’s costs even if those costs are not proportionate to what was at stake. This penalty is imposed because a court wants to show its disapproval of their conduct. I do disapprove of this defendant’s conduct …..’

It appears that this case is the first reported case where the Court further penalised a losing party for the failure to Mediate – rather than in the other reported cases, where the Court has punished the successful party for their failure to Mediate by a reduction in the amount they would receive.”

Liam concluded “It has been the case for a considerable time that the Court expected litigants to enter into Mediation, or some other form of ADR, unless there is some good reason not to do so.

This recent case highlights how important it is to try and settle disputes outside of the Court room – refusal to attempt to settle matters is likely to result in punishment from the Court.”

At Astle Paterson, we attempt to settle disputes outside of the Court process wherever possible and have extensive experience in Mediation, Arbitration and other forms of Alternate Dispute Resolution.  Should you be involved in a dispute and need assistance, please contact Liam O’Shea on 01283 531366 or by email at loshea@astlepaterson.co.uk.